Venture capital funding in the Chicago region fell in the second quarter of 2020 as the coronavirus continues to slow the pace of deals across the U.S.
Chicago companies raised $364 million last quarter, which is down nearly 22% from the previous quarter and down 41% from the same quarter last year, according to a report from Pitchbook and the National Venture Capital Association. Deal volume was also lower last quarter, with 54 Chicago companies raising funding in Q2 compared to 70 in Q1 and 69 in the second quarter of 2019.
Nationally, companies raised a total of $34.3 billion across 2,197 deals last quarter, which is a 23.2% decrease in deal volume from the previous quarter, according to the report.
"The uncertainty surrounding both the Covid-19 pandemic and the macroeconomic market conditions are beginning to take a toll on early venture investments; Q2 was the first full quarter to bear the headwinds of shelter-in-place and work-from-home policies across the United States," the report said. "We have spoken to many investors who have yet to make an investment via teleconference, particularly in sectors that require more rigorous and hands-on due diligence."
Investors told Chicago Inno in April that they expected deal volume to decrease over the coming months as VCs focus on their portfolio companies and become more selective of the new startups they back.
With $830 million raised by Chicago companies in the first half of 2020, area startups will have to finish the year strong to catch up to the $2.2 billion raised by local tech companies in 2019.
But Q3 did get off to a hot start thanks to Walgreens' $250 million investment in Chicago's VillageMD, which is part of a three year, $1 billion investment that will allow the pharmacy giant to open in-store primary care clinics.
Some of the larger funding rounds for Chicago startups last quarter include LanzaTech's $50 million round, M1 Finance's $33 million round, and Higi's $30 million round.
