Central Ohio software, robotics and biotech companies raised more venture capital in 2021 than the entire state has before.
Columbus-area companies accounted for $1.4 billion of the record $2.3 billion raised year-to-date in Ohio, most of it pouring in from out of state, according to Columbus Business First research and data through September compiled by PitchBook and the National Venture Capital Association. Local companies in the Drive Capital LLC portfolio alone accounted for $983 million.
And still, as VC shattered records nationwide, Ohio accounts for less than 1% of the total.
As of mid-November, investors had poured $293 billion into 1,763 deals around the country, for an average of $158 million per round, according to PricewaterhouseCoopers. The total was a staggering 27% higher than 2020, a combination of a rebound from the slowdown early in the coronavirus pandemic and a structural shift as more institutional and corporate investors enter the space.
"However, risks remain: Looming regulatory scrutiny and the potential for government intervention may soften deal activity in 2022," PwC said in its 2022 tech outlook. Congress is debating several privacy regulations and antitrust legislation that tech advocacy groups – including a nationwide one that in November hired its CEO in Columbus – argue could discourage startup acquisitions and in turn investment.
Ohio first passed $1 billion in VC in 2018, and hit a then-record of $1.13 billion in 2020, according to PitchBook/NVCA. This year's total included big-name firms such as SVB and Sequoia Capital in Silicon Valley, Tiger Global Management in New York City and General Catalyst in the Boston Area. Several huge rounds started when the firms cold-called the Columbus companies, when they weren't actively raising.
Olive AI Inc., among the first two companies in Drive's portfolio in 2013, was valued at $4 billion with the $400 million round it raised in July, the single largest in state history. In 2020 Olive raised $384 million over the year's top three rounds. The maker of AI-powered automation and analytics for healthcare administration has in turn acquired other software and analytics companies to speed growth, and started spinning off specific applications of its core technology. That includes Columbus-based Circulo, which raised $50 million from Drive and others to bring down costs and improve patient health in Medicaid, and was licensed as an Ohio insurer in November.
Central Ohio saw five and Cincinnati two mega-rounds greater than $100 million this year. There were four rounds that size in Columbus in 2018-20 combined. Besides Olive, Drive companies with mega-rounds were gene therapy startup Forge Biologics and autonomous welding system Path Robotics.
Digital insurer Root Inc., a Drive company that had a $7 billion IPO in October 2020, this year raised another $126 million as digital auto seller Carvana took a minority stake. That would have put it among mega-deals if it weren't already public. However, the stock by year's end dropped below $4 a share, a fraction of the $27 IPO price, as Root revamped its business model, reduced advertising spending and coped with higher-than-expected claims costs. Root Insurance keeps expanding to new states, and in 2022 will seek to prove to investors its adjustments are working.
Drive wasn't the only driver. Other mega-rounds included $100 million to digital mortgage lender Lower.com (which also became the naming sponsor of the new Crew stadium in the Arena District) and Battelle's regenerative medicine spinoff AmplifyBio in West Jefferson. The Columbus research giant provided about $100 million worth of property, equipment and staffing while attracting an equal amount of outside investment to rapidly grow the business.
Notable acquisitions included Athens-based ultra-low temperature freezer maker Stirling Ultracold, in a stock deal valued at $234 million according to regulatory filings, plus insuretech Bold Penguin, arts audition platform Acceptd and cybersecurity business Covail (formerly Columbus Collaboratory) for undisclosed terms.
Central Ohio's talent pool not only kept operations of those acquired companies growing in the region, but attracted significant and fast-growing operations from coastal companies. Lending platform Upstart Financial expanded its Short North office and is subleasing from Alliance Data at Easton, as Columbus operations outgrew the Silicon Valley HQ. Boston's Sarepta Therapeutics opened its main R&D center at Easton powered by its earlier acquisition of a Nationwide Children's Hospital spinout. Biotech giant Amgen started construction of a New Albany pharmaceutical packaging facility, and said it could lead to more operations.
The flywheel effect also sped from high-growth tech companies that in recent years were acquired or went public: Veterans of companies including Root, Updox and CoverMyMeds are founding their own companies. That effect should become even more apparent in 2022, as those startups announce their own funding rounds and start to grow.
Nearly five years after its $1.4 billion acquisition by McKesson Corp., CoverMyMeds celebrated the opening of a Franklinton headquarters, contributed to the parent's profitability and was merged with other technology units into a 5,000-person division with multiple locations under the CoverMyMeds brand and mission. But amid that rapid change more than a dozen top executives departed, some forming new startups. Several engineering managers and staff also left the company, citing corporatization of the company's celebrated culture of innovation and autonomy. David Holladay, president of access and adherence and the top leader in Columbus, stepped down in November.
