The amount of venture capital invested in Portland-area startups this year remains well below the levels the region has received in recent years.
The latest data from the Venture Monitor report by Seattle research firm Pitchbook and the National Venture Capital Association show that the amount invested into area startups for the first three quarters of the year is off 59% from where it was the same time last year.
Investors in the third quarter put just $79.6 million into startups in the Portland-Vancouver MSA. That’s a huge drop from the third quarter of 2022, with $207.2 million invested, and the third quarter of 2021, with $446 million invested.
Deal volume for the third quarter of this year was 28 compared with 34 in the third quarter last year.
So far this year, investors have put $360.2 million into Portland-area companies compared with $886.4 million invested by this time last year.
Nationwide numbers are also down.
“The third quarter of 2023 nearly saw the lowest overall venture deal value in six years and the lowest deal count in roughly three,” according to the report. Nationwide, $125.9 billion was invested across 9,962 deals.
The report likely reflects the importance of investment from outside Portland as local investors say their activity and deal flow have not changed this year.
Oregon Venture Fund, which invests between $15 million and $20 million a year, is on track for a record year, said founder Eric Rosenfeld. The group typically counts 250 startups a year from Oregon and Southwest Washington and this year expects 300. It invests in just a handful of the startups it sees.
“We have seen (bigger) VCs focus on their portfolio companies versus new investment,” said Rosenfeld. “And the bulk of venture capital funds (coming to Portland) are from out of state, so if they are supporting their existing portfolio we see less funding.”
Local firms like OVF and others might be active but their overall funds under management are small compared to the big funds in California and Washington.
“To get to $1 billion in VC investment (in the state or region) we need the California and Seattle VCs to really provide the fuel for local companies,” Rosenfeld said. In 2022 and in 2021 investment in the Portland metro surpassed $1 billion.
For the state of Oregon, $88.3 million was invested across 37 deals in the third quarter. For the first three quarters of the year, $457.5 million was invested across 116 deals. That compares to $885 million invested in the first three quarters of last year.
As noted in the second quarter Venture Monitor, the rise in interest rates is hitting the sector at large.
“With interest rates low for so long, more dollars were willing to take the risk and invest in early-stage companies for 10-plus years and that party is over,” Rosenfeld said. “In general, if rates stay high there may be less VC in general because those dollars earn returns in other instruments and asset classes.”
