A new report found that fundraising within Pittsburgh’s tech economy had a near record year in 2023, raising $3.12 billion, second only to 2021’s $3.59 billion.
The report shows a 203.3% increase in funding from 2022, far different than the national fundraising decrease of 29.6%. Over 130 Pittsburgh companies attracted investments, with those that disclosed deals averaging $27.1 million. The report was compiled by Innovation Works and Ernst & Young.
“The strength and resiliency of the regional tech ecosystem was reaffirmed in 2023, despite macro headwinds and significant contraction in venture funding nationally,” Ven Raju, Innovation Works president and CEO, said in a prepared statement. “Almost every indicator related to the local fundraising environment saw a material uptick.”
A significant amount of investments in 2023 came from a category encompassing corporate investments, private placements, private equity investments, buyouts, mergers and acquisitions. This $2.18 billion amounts to approximately 69.8% of the $3.12 billion figure.
By comparison, the majority of investments in 2021 came from companies going public. Companies raised $2.69 billion in initial public offerings, which amounted to approximately 74.9% of the $3.59 billion. Pittsburgh companies that went public in 2021 include Duolingo and Aurora, two of the city’s biggest tech companies.
Investments in 2023 were largely in the robotics and autonomous vehicle spaces. Hardware and robotics accounted for 68% of total tech sector investments in 2023, compared to just 39% in 2022. The report ranks Pittsburgh in the top 10 for deals in the artificial intelligence and autonomous vehicles industries.
“While we saw some outsized investments in robotics and autonomous vehicle companies in 2023, the three-year rolling averages suggest sustained and broad-based growth for the region,” Raju said in a prepared statement. “The 2023 data also suggests emerging trends in automation and AI, key regional clusters, are helping to catapult investment in Pittsburgh.”
Despite significant investments outpacing the national average, the report shows shortcomings in the region as well. A significant amount of investments have come from outside sources, with a low supply of local venture capital fundings.
“By addressing the gap of local investment in Pittsburgh’s tech economy, we can unlock new avenues for development, creating an environment where local investors can play a larger role in fostering our community’s growth,” Darrell Smalley, Ernst & Young Pittsburgh office managing partner, said in a prepared statement. “With a healthy pipeline of local funding sources, the region can retain more of the financial rewards that come with the innovation Pittsburgh is increasingly known for."
