2021 was a year of mega rounds and unicorns in the Triangle, as at least 132 funders raised at least $1 million in the year. At least 24 Triangle area funders topped $20 million. About six entities topped $100 million. And one – Epic Games – raised $1 billion.
Of the top 10 fundraises for growth companies in 2021 in the Triangle, a sweep of securities filings and corporate disclosures show, half were in the technology space – including four of the top five.
And the Triangle isn’t alone. Data released by PitchBook show capital investments in U.S. startups nearly doubled year-over-year to $330 billion.
But there are challenges, particularly when it comes to minority-founded firms, which were absent from the top five funders in the Triangle.
While it remains to be seen whether companies can meet investor-driven expectations in 2022, the statistics are clear: Companies can raise capital outside of Silicon Valley. And they can do it over a Zoom (Nasdaq: ZM) call.
Here’s a look at who was raising capital in the Triangle, even as Covid-19 numbers continued to climb.
Technology
The money was flowing in 2021 and valuations were high – too high, say some investors.
Mitch Mumma, a partner at Durham’s Intersouth Partners, said the biggest challenge for 2022 for startups will be “growing into the valuation of the last round of financing.”
In the technology space, tenured entrepreneurs were the ones best able to swing the big raises in the Triangle.
Take Scot Wingo, the serial entrepreneur behind ChannelAdvisor (NYSE: ECOM). His latest startup, on-demand car care startup Get Spiffy, secured $22 million to expand its national reach. While Wingo said it was tough raising capital over Zoom, investors such as Jason Caplain of Bull City Venture Partners said virtual negotiations were an easier sell with people such as Wingo, who they’d worked with on past deals.
Other seasoned entrepreneurs raising capital included Levitate and Pryon. Levitate, founded by Sharefile founder Jesse Lipson, raised $8 million. Pryon, a Raleigh AI startup helmed by Igor Jablokov (whose last startup sold to Amazon), clinched $12 million – including from Silicon Valley backers.
And the biggest raise of all came from an entrepreneur who has eclipsed them all in tenure at his company. Epic Games, still led by founder Tim Sweeney, secured $1 billion in April.
Cloud firms were also among those getting beefy funders, such as Chapel Hill-based data integration startup CData Software, which scored $140 million from a single investor, Updata Partners, in December.
“With Covid, the need for the cloud has grown more rapidly than any of us had anticipated,” CEO Amit Sharma said. “Getting people to work together and collaborate requires these cloud systems, and so data is increasingly going toward the cloud.”
Agtech
Big ambitions – it’s what companies successfully raising capital in the agtech space had in common in 2021.
Raleigh-based Harpe Bioherbicide Solutions, for example, leveraged experience to sell those ambitions to investors as it was raising $1.1 million. Company CEO Bill Buckner, an 18-year veteran of crop sciences giant Bayer, could leverage his resume while showcasing the demand for something like what Harpe is creating. In the U.S. alone, farmers experience $33 billion in economic losses annually from weeds overtaking crops, and Harpe is trying to answer that challenge with its natural biological herbicide portfolio.
As with other sectors, it wasn’t just the seasoned companies getting the dollars. Crop protection startup 5Metis, for example, was founded in 2021 with the merger of Boragen’s crop protection division and AgriMetis, and it reeled in $10 million in October (after previously raising $600,000 in July).
Life sciences
A nearly 7-year-old startup with Duke University roots seems the perfect example of what investors were looking for in Triangle innovation in 2021.
Investors, big and small, wanted to fund growth opportunities stemming from the ongoing pandemic.
And Durham’s Evecxia Therapeutics delivered, with its technology targeting something that has been on the rise as Covid-19 lingers: depression. The company, which had raised more than $8.6 million of a planned $35 million round last year, was targeting an unmet need – one heightened by the pandemic. And it was backing its pitches with science.
But investments varied in 2021 – and included huge coffers for early stage science.
“In biotech, the volatility of the public markets has made earlier-stage private investments more appealing to some investors, which seems to reinforce smaller early stage rounds,” said Art Pappas, CEO of Pappas Ventures in Durham.
That could be why so many dollars were funneled into new companies.
Take Tune Therapeutics, a startup led by former Precision BioSciences (Nasdaq: DTIL) CEO Matt Kane, that emerged in December with a $40 million coffer, a team of 35 and an aggressive goal: to target common diseases with genetic medicines.
Gene therapy, too, was a repeated trend in 2021.
Opus Genetics, for example, raised $19 million. The Raleigh gene therapy startup is targeting retinal diseases and secured $10 million of that sum from the venture arm of the Foundation Fighting Blindness.
And female founders, too, found success, such as Isolere Vio, which raised $7 million to scale up its purification technology for biotherapeutics.
“The first phase is really for us to send our materials out and our protocol to these collaborators to make sure that it’s repeatable in someone else’s hands,” CEO Kelli Luginbuhl said. “And then from there we’ll be working with these companies to demonstrate that the technology scales up.”
Consumer goods/other
From a toy subscription company (Durham’s Tiny Earth Toys, which raised nearly $1.5 million in October), to vegan dog food (Wild Earth raised $23 million in August), consumer goods had it all in 2021.
Companies new and old reeled in dollars for often out-of-the-box ideas such as Wild Earth, which is trying to break vegan dog food into the mainstream. The company, which moved from California to the Triangle, is led by “Shark Tank” alum Ryan Bethencourt.
Bethencourt moved the company to the Triangle as a cost savings play, and the firm cut expenses in half by just changing its address. But the move did not inhibit its ability to reel in venture financing.
In consumer goods, beverages were hot – at times literally, as coffee startup 321 Coffee (which differentiates with its neurodiverse workforce) raised a $300,000 debt round in October to keep the hot beverage flowing as it expanded into downtown Raleigh. But it was one of many. Non-alcoholic cocktail startup RSRV Collective, for example, closed on $820,000 of a planned $1 million round in November. Durham tea infuser maker Mosi Tea added $440,000 to its coffers in December. And Durham Distillery raised $4.5 million to expand its spirits company in December.
But the category did veer outside of the beverage aisle, with Raleigh’s all-natural outdoors company Murphy’s Naturals adding more than $4.2 million in November.
The “other category” was also expansive – showcasing the area’s industry diversity with firms such as Raleigh’s SinnovaTek raising nearly $4 million to open up the world of food processing to small companies.
For consumer-facing companies, funding is only one challenge. John Replogle, an investor with One Better Ventures whose portfolio includes beverage startups such as Slingshot Coffee, said the route to market will be a big one. For beverage companies, it’s controlled by a few big companies. And if a startup can’t get an in, they’ll have to use a broker, where the markup can be high.