Report: Q2 VC funding continues to fall in North Texas amid pandemic

As the pandemic continues to create uncertainty in the market, especially as Texas eyes increased lockdown measures due to spiking cases across the state, venture capital funding in North Texas is taking large hits.

The number of VC deals and funding amounts has dropped again from the previous quarter, marking a nearly 50% year-over-year decline.

“The second quarter of 2020 was truly unprecedented for the venture capital (VC) industry, as the COVID-19 pandemic, nationwide lockdowns, stay-at-home orders, and a major economic downturn shook the entire country,” the report states. “The lockdowns majorly disrupted general business practices in the VC industry, as investors have traditionally relied heavily on in-person meetings before making new investments. Venture firms generally became much more conservative around dealmaking as the pandemic hit the US in March and early April, leading to a downturn in both VC invested and number of deals completed in Q2.”

In Q2, startups in the Metroplex raised a total of $167.46 million across 29 deals, according to a new Venture Monitor Report by the National Venture Capital Association and PitchBook. That marks a nearly $250 million drop from Q1, which saw $417.41 million over 47 deals.

Those numbers are dramatically down from the previous year. Although, it should be noted that 2019 was a particularly strong year for VC funding in North Texas. Q2 of 2019 saw $264.61 million in 44 deals, while Q1 saw $972.01 million across 52 deals.

Across the state, VC funding had remained strong in Q1, with nearly $1.2 billion over 147 deals. However, Q2 is starting to show a decrease in activity with $832.39 million across 111 deals. For comparison, Q1 of 2020 saw $1.72 billion in 183 deals and Q2 posted nearly $1.05 billion over 183 deals.

The report notes that while across the country VC funding has slowed, the impact was not as “apocalyptic” as expected, which it attributes to federal PPP funding. It also notes that mega funding rounds ($500 million+) have increased nationally, with 24 so far in 2020, which puts the U.S. on track to beat its numbers from 2019. And on another positive note, late-stage VC rounds have increased, though early-stage rounds are likely to be lower this year than in 2019. Different industries have also been impacted differently, with startups working in software, biotech, health care and digital enterprise faring better than most other industries – a trend which tracks with what the North Texas ecosystem has seen.

“Despite several positive trends in the latter half of Q2, uncertainty will persist in the next few quarters,” The report states. “There are still dark clouds looming on the horizon; whether they fade away or collect into a new storm could determine how the rest of 2020 unfurls for the entrepreneurial ecosystem.”

Below are the top 10 Q2 funding deals for North Texas.