Report: Venture capital investments are down in Washington region compared to historic highs of 2013

Entrepreneurs and investors who hoped to see venture capital dollars come flooding into the Washington region during the second quarter as they did last year are bound to be disappointed by a report published today.

The  slow pace of investment during the first three months of the year continued into the second quarter as venture capital firms put a total of $247.3 million into 58 firms across the region during April, May and June.

That marks a decrease of nearly 50 percent in total dollars invested compared to the same three-month period during 2013, when data show investors shoveled $493 million into 32 companies around the region.

But don’t be staggered by the steep decline. Brad Phillips, director of emerging company services at PricewaterhouseCoopers, said the 2013 numbers represent a historic high that the region had little chance of topping this year.

“We’re a little bit of the victim of our own success because last year was an anomaly,” Phillips said.

Perhaps the most optimistic trend in today’s report is the relatively high number of start-ups snagging checks compared to previous quarters. That means investors are making a larger number of small investments that could become bigger investments if the ventures take off.

The figures appeared in a report compiled each quarter by PricewaterhouseCoopers and the National Venture Capital Association using data provided by Thomson Reuters.

The report defines the Washington region as Maryland, Virginia, West Virginia and the District, though the list of deals published in Capital Business strips away those outside of D.C. and its neighboring counties.

Software continued to be a strong sector for the region. Twenty-five investments were made in software companies during the second quarter for a combined total of $83.9 million. The largest was a $15.6 million investment in APX Labs, the makers of software for computerized glasses.

The media and entertainment industry followed with six deals worth $43.4 million. That category was buoyed significantly by the region’s largest deal for the quarter: a $31 million investment in District-based Fundrise, a real estate crowdfunding site.

The region’s biotechnology sector, once a major draw for venture capitalists, posted a modest but healthy sum for the second quarter of $34.8 million invested in seven companies. Of that total, $21 million went to District-based Chase Pharmaceuticals.

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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