The number of venture capital deals flowing to Greater Washington companies is continuing to see an overall decline, a trend mirroring national investment activity that appears to favor bigger bets at the expense of more frequent ones.
It's estimated that local firms reached terms for 67 venture capital deals between April and June, according to a report from data analytics firm PitchBook and the National Venture Capital Association. That's down from 102 deals in the second quarter of 2023 but a slight uptick from the 64 deals in the first quarter, a revision from initial findings.
It's the continuation of a downward trend since a peak of 119 deals in during the first quarter of 2021. Year-to-date, D.C.-area companies have amassed an estimated 131 deals, a slight improvement from the 99 obtained through this point in 2023.
NVCA President and CEO Bobby Franklin attributes the heights of the Covid-19 pandemic as being a time with "unprecedented levels of investment" in technologies like artificial intelligence, autonomous vehicles, virtual reality and others. But that interest, he said in the report, has largely subsided as investors turn toward supporting companies with a more favorable path to maturity.
He blamed an environment that's proved difficult for investors to cash out of initial investments for a decrease in venture capital activity as well, but conditions seem to be improving, especially as it relates to an increase in M&A activity for Greater Washington tech firms.
"Overall, the direction of the market appears to give modest cause for optimism, and — in hindsight — to be relatively predictable," Franklin said in the report. "In short, the market had to adjust to a major shock, and the first actors to recover from that shock have already established a successful track record. VC is still navigating choppy seas, but steady hands are finding a way forward."
Local firms raised more than $1.7 billion combined from April to June, according to the report. That's up 101% from the first quarter's revised figure of $858 million and up 38% from the $1.2 billion local companies raised in the second quarter of 2023.
But the numbers were skewed by capital raise for Juul Labs Inc., the e-cigarette maker that relocated its headquarters from San Francisco to D.C. in 2020 to be closer to federal regulators.
Juul disclosed in an amended May 23 filing with the Securities and Exchange Commission that it raised $1.2 billion in equity funding, halfway toward a $2.4 billion offering amount. The company has not shared how it plans to use the funding, and it could not be determined if this capital marked fresh investment compared with the $1.27 billion it landed in November 2023, then part of an offering amount equal to $1.6 billion.
Juul did not immediately respond to a request for comment.
Other notable funding raises during the quarter included $60 million that Reston software engineering firm Raft LLC raised in April, which it plans to use to hire more senior executives who can increase business for the 6-year-old government contractor. ShiftMed, a health care workforce management startup based in McLean, scored a $47 million investment during the last quarter and Arlington telecommunications startup Cape raised $40 million last quarter as part of an aggregate of funding has reached $61 million since its founding.
