The streak of entrepreneurial fundraisers in the Triangle is continuing this month as local companies add millions to their coffers.
Securities filings show that, month to date, companies – from startups to seasoned companies and investment firms – had disclosed nearly $52.3 million in new capital raises in the Triangle as of Friday.
Four local funders closed on a single day, Nov. 10. Of those successful funders, half were companies founded in the past year.
Funders that closed Nov.10:
- K4Connect: The technology firm out of Morrisville closed on nearly $3.1 million in a debt round. K4Connect offers technology products that serve older adults and those living with disabilities. Its first product, K4Community, was designed for senior living communities. Its founder, Scott Moody, was on the team credited with creating the TouchID technology used on Apple iPhones. That company, AuthenTec, went public in 2007 and sold to Apple (Nasdaq: AAPL) in 2012. Moody cofounded K4Connect in 2013.
- InnAVasc Medical: The Durham firm, founded in 2013, reported a $1 million raise. The medical device company, founded by Duke University surgeons and scientists, designs and develops products for vascular access for hemodialysis. The company is currently enrolling patients for a clinical study evaluating its InnAVasc Ateriovenous Graft.
- TonoTech: The Raleigh company, founded earlier this year, closed on $75,000. The company has developed a smart, handheld tonometer (a device that is used by your eye doctor to determine intraocular pressure) to aid in treating glaucoma, an eye disease affecting more than 76 million people globally. According to the company, its device can be used by both physicians in clinics and patients at home.
- Casalu: The Raleigh company closed on $1.3 million in equity financing. The firm, previously called Tropicalation, was founded earlier this year out of North Carolina State University. It has developed a rum-based hard seltzer.
Add in fundraises by Dart Innovations ($5.5 million Nov. 9), a special purpose vehicle closed by investor Oval Park ($4.6 million Nov. 8) and a commercial real estate fund and that's nearly $27.3 million in a single week.
We asked local investors what's behind the fundraising tear.
Lister Delgado, managing partner of Durham venture capital firm IDEA Fund Partners, said two factors are at play in the entrepreneurial fundraising arena – the availability of capital and high valuations.
“I think there are several reasons for this,” Delgado said. “For one, the public markets have been going up for a long time. This always creates a ripple effect in the private markets.”
Second, the pandemic has actually made it easier to raise money, he said.
“Local funds are investing outside of the traditional geographies we have invested in before, and local companies are raising money from funds that traditionally have not invested here,” Delgado said. “It is a more global market, and a more virtual fundraising process.”
Add in the fact that disruptions – in this case the Covid-19 pandemic – typically spur innovation, and it means opportunities for investors looking to fund new technologies, particularly in places like Raleigh.
David Gardner, who heads up startup funder Cofounders Capital in Cary, said that while valuations are up, there are still deals to be had in the Southeast, in particular.
“Our historically early-stage valuations in the Southeast are still less than half that of all other major markets,” Gardner said. “Our investment dollars still buy us twice as much equity in the [region].”
However, Gardner warned that valuations “too far outside of the norm” can cause problems for founders.
“It can lead to unrealistically high investor expectations,” he said, noting that when forecasts slip, it can put co-founders in “a very difficult spot in later rounds and exit negotiations.”
As for startups, they're not slowing down when it comes to fundraising.
The biggest Triangle funder of the month to date disclosed through a filing is that of Aerami Therapeutics Holdings, which added nearly $20.1 million to an existing round that now exceeds $22.2 million. The Durham-based biopharmaceutical company focuses on treating respiratory diseases. Its lead candidate is an inhaled treatment targeted at pulmonary arterial hypertension.