Big 4Q boosts investments in Pittsburgh tech firms while national VC data hits record high

Pittsburgh’s tech sector finished 2021 with the year’s biggest quarter by investment dollars as $121.2 million was raised by 15 companies.

Half came from the $67.4 million plugged into Watt Fuel Cell Corp., a Mt. Pleasant-based clean tech firm, at the end of December. It was the largest local round of the year, according to data supplied by the PitchBook-NVCA Venture Monitor, released on Friday. NVCA is short for National Venture Capital Association.

The Pittsburgh region saw $349.36 million invested in 88 companies over the 12 months, according to PitchBook. That’s down from 2020 by both deals and dollars as 101 companies raised $648.73 million.

And the local totals didn’t mesh with the national picture as a record $329.9 billion was invested in 17,054 deals, almost doubling the prior dollar high set in 2020. During the fourth quarter, $88.2 billon was pumped into 4,591 tech firms, PitchBook said.

But a deeper dive shows that Pittsburgh during 2021 dovetailed with other national trends. The region saw two tech companies go public — Duolingo in July and Aurora Innovation in November, as well as Cognition Therapeutics, whose executive offices are now in New York but with operations in the South Side — after a decades long drought of local tech IPOs. Nationally, PitchBook said about $681 billion was realized through public listings.

And several new Pittsburgh-based funds were raising capital. PitchBook said countrywide VC fundraising activity for 2021 was $128.3 billion across 730 funds, topping $100 billion for the first time and a 47.5% year-over-year increase.

“By all metrics, 2021 was a banner year for the U.S. VC ecosystem,” John Gabbert, founder and CEO of Seattle-based PitchBook. “A fair portion of the new investment records can be attributed to the record levels of capital washing through the system. VC dry powder at an all-time high and a rapidly growing number of crossover investors are participating in, or even leading, VC deals. With VC returns outpacing every other private capital asset class, we expect (investors) to continue to allocate capital toward venture at unprecedented rates in the coming year.”

Almost all of the local funds have footprints beyond southwestern Pennsylvania, while outside investors have been pumping millions into startups here so Pittsburgh firms stand to benefit.

Activity in Pittsburgh last year was not dominated by a particular industry sector.

“I think it bodes well for the entire local tech community,” Zach Malone, a partner at new Magarac Venture Partners, which is raising a $150 million fund, said of the 2021 deals. “It’s good to see companies at all stages and sectors raising capital. There’s clearly a lot of momentum and I see no reason why it won’t continue.”

It's clear 2022 is off to a strong start. In early January, RoadRunner Recycling closed on $70 million.

According to PitchBook, 10 Pittsburgh companies raised $1 million or more during the fourth quarter with five raised at least $4 million. They were:

During full-year 2021, 10 local companies raised $10 million or more, according to PitchBook: