Venture capital investment in the Portland area reached a near 10-year low in the first quarter of 2024, according to new data from the Venture Monitor Report.
Investors put $43 million into Portland area companies across 20 deals in the quarter. The last time the amount was that low: the third quarter of 2014, well before the historic heights of VC investment between 2018 and 2022.
It’s a continuation of the story from last year, when VC investment in the metro dropped 59% compared to 2022.
For comparison, $62 million in 23 deals was invested in 2023's first quarter, compared to $509 million across 45 deals a year earlier and $339 million in 49 deals during 2021's first quarter.
Diane Fraiman, the Portland-based partner for Seattle investment firm Voyager Capital, cautioned against blaming the drastic fall to a lack of available funds.
“There are monies available up and down the venture funnel in Portland but there is a reduction in the number of qualified deals to invest in overall, specifically in the tech industry,” she said.
Coming out of the Great Recession in 2008, several high-profile Portland startups secured large amounts of venture capital and many founders insisted on staying here to build. Before that, the investment requirement included moving to the Bay Area. The experiment played out and many of those companies have sold: Elemental Technologies (to AWS), Puppet (to Perforce Software), Janrain (to Akamai), Viewpoint (to Trimble).
Others have remained private: Smarsh, Airship, Act-On Software. Two have gone public: Vacasa and ZoomInfo. New companies have emerged that have garnered venture attention like TrovaTrip, ConductorOne, and Eclypsium. But the landscape has changed.
“This town is very cyclical in nature,” said Fraiman. “The ‘Portland Experiment’ we talked about 10 years ago will look different in its next iteration. But one thing is true in my mind — Portland is a great place to build great companies. Portland is a great place for tech talent. And, while there is still work to be done to revitalize the ecosystem, the investment ecosystem is ready to write checks for great opportunities.”
Fraiman added she's seen more interesting deals in the Portland area over the last four months than in the last two years.
VC investment also dropped at the state level. In the first quarter, $47.9 million was invested across 27 deals, according to the report. That’s down from Q1 last year when $67.2 million was invested across 32 deals, and down significantly from Q1 2022 when $468.7 million was invested across 50 deals.
Nationwide, $36.6 billion was invested across 2,882 deals in the first quarter, compared with $51.6 billion invested across 4,026 deals last in Q1 last year.
John Gabbert, CEO at research firm Pitchbook, which authors the report along with the National Venture Capital Association, echoed Fraiman’s assessment of reasons for the slowdown. Money is available, but investor requirements have tightened.
“Investor expectations and benchmarks have increased for deals, leading to fundamentally strong companies attracting investment, while those unable to achieve the growth and profitability characteristics expected by today’s VCs are struggling to find capital,” he said in a written statement. “Unless we see a significant improvement in VC capital deployment, the market for platform add-ons and small-market M&A could start to consolidate sectors and talent.”
