Last year proved too be fruitful for the state’s venture funding activity, as investors nearly doubled the amount of capital they made available to Connecticut startups.
Venture capitalists injected $521.4 million in Connecticut companies in 2014, compared to $212.5 million invested a year earlier. That was the highest level of annual investment since 2001, indicating that Connecticut startups are finding it easier to access capital outside traditional banks.
Overall, 54 Connecticut companies received funding last year, according to the latest MoneyTree report, a joint effort of PricewaterhouseCoopers and the National Venture Capital Association (NVCA), using data from Thomson Reuters.
That was two more deals compared to 2013.
Nationwide, venture capitalists invested $48.3 billion in 4,356 deals in 2014, an increase of 61 percent in dollars and a 4 percent increase in deals over the prior year.
Venture funding in the state peaked in 2000 — right before the dot-com bubble burst — when investors poured an astounding $1.5 billion into Connecticut companies. The state hasn’t gotten close to that level of investment since.
Connecticut is working hard on multiple fronts to develop a more innovative, entrepreneurial economy, but significant challenges exist. The state isn’t considered a technology hub making it hard to retain or recruit entrepreneurs who attract venture funding.
Still, it appears the state’s startup and investment prospects are brightening. Connecticut’s 2014 performance, however, was helped by a few big deals that boosted the investment total.
In the fourth quarter, for example, Connecticut attracted $146 million, led by a $100 million investment in Guilford medical device maker Butterfly Network.
Such large venture deals aren’t common in Connecticut.
New Haven Pharmaceuticals in Branford raised $11.8 million in the fourth quarter, while Trevi Therapeutics in New Haven raised $11 million.
Greater Hartford did not see any venture funding in the fourth quarter.
Across the country, investors continue to be most bullish on software companies, which received $19.8 billion last year, a 77 percent increase over 2013.
Biotechnology investment dollars, which Connecticut is trying hard to attract, rose 29 percent in 2014 to $6 billion, making it the second largest investment sector for the year.
“With the fundraising environment improving in 2014 and non-traditional investors increasingly joining venture capital firms in later-stage funding rounds, more capital was deployed to the startup ecosystem in 2014 than any year since 2000,” said Bobby Franklin, president and CEO of National Venture Capital Association.
— Greg Bordonaro
