After booming venture capital activity in the last half of 2020 and a lucrative first month of the year, technology attorney John Yates sees a bright outlook for funding into Atlanta technology companies.
According to a report from Pitchbook and the National Venture Capital Association, Georgia technology companies raised $1.3 billion in the second half of the year, as compared to $650 million in the first half.
The third-quarter raise of $897 million was the most of any quarter in the past six years. Most of the deals throughout the years are concentrated in Atlanta, according to the data.
The capital raised in 2020 despite the year’s uncertainty is a testament to the adaptability of local companies and the bottleneck of capital that needed to be distributed after the pandemic slowdown, said Yates, who's chair of the technology group at law firm Morris, Manning & Martin.
“Most companies have done a remarkable job in morphing their business in a way that allows them to increase and grow in the technology area, with the exception of those fully reliant on the lodging and restaurant markets,” Yates said. “The good news is we don’t have a lot of companies that fully rely on those.”
Yates attributed the third-quarter pickup to optimism about a vaccine and a backlog of capital that needed to be deployed. He said his firm saw its most active quarter in terms of deals at the end of 2020.
A dip from 2019
Despite the increased activity in the last half of the year, 2020 wasn’t a record breaker for Georgia's tech scene. Companies raised about $2 billion in venture capital, as compared to about $2.2 billion in 2019, according to the Pitchbook data.
In 2019, the deal flow was more consistent. In both halves of the year, Georgia technology companies raised more than $1 billion, according to the data.
The past two years are the only to breach the $2 billion venture capital benchmark — the next highest year was 2017 at about $1.3 billion, according to the data. The past five years have shown a general upward trend in VC raised.
The first month of 2021 reflects that trend in capital growth. Already, two Atlanta companies reached unicorn status — SalesLoft with a $100 million raise and Calendly with a $350 million raise.
Atlanta companies have raised about $636 million in venture and private equity funding in January, according to Atlanta Inno’s coverage.
Past Januarys have shown a slowdown in capital because of new-year transitions, Yates said, but that hasn’t been the case in 2021.
Yates expects a booming year for capital raised by Atlanta companies.
Across the country, Yates said there’s more venture and private equity firms forming, which are looking toward funding companies in areas with little competition, such as the Southeast.
“Atlanta is the capital of the Southeast, so that bodes well for companies here,” Yates said.
Pitchbook held the same optimism for the rest of the country. Nationally, 2020 broke records in the venture capital industry with $156.2 billion invested, according to the report, a trend the company sees continuing.
