Washington-area businesses raised more venture capital in the fourth quarter than they had in any quarter since 2001 — largely due to a few large deals.
The surge is not likely to be repeated soon given the recent stock market turmoil. Indeed, venture funding nationally declined during the period.
In all, though, 29 companies received $556.22 million in venture capital last quarter, a 53 percent increase from a year earlier, according to a report released Friday by PricewaterhouseCoopers and the National Venture Capital Association, with data by Thomson Reuters.
For the full year, the region’s companies secured 169 deals totaling $1.41 billion, up from 197 deals totaling $1.09 billion in 2014. On average, the region’s firms received $8.4 million in venture capital in 2015, up from $5.5 million a year earlier.
“The average deal size was up, and it was up significantly,” said Brad Phillips, a director at PwC.
The flow of deals is likely to slow this year. Nationally, U.S. companies raised $11.34 billion in venture capital during the fourth quarter, a 28 percent decrease from the year before, as a wobbly stock market gave investors pause.
During the fourth quarter, “it appears the volatility in the financial markets affected [venture capital] funding,” Phillips said. “Equity market declines were broad-based.”
In Washington, however, fourth-quarter funding remained robust.
Tenable Network Security, a Columbia, Md.-based cybersecurity firm, led the way with a nearly $250 million investment from Accel Partners and Insight Venture Partners. It was the region’s second-largest deal in the report’s 20-year history. (The largest was for XM Satellite Radio Holdings in 1999 for $250 million, a mere $100 more than the Tenable deal.)
“It’s a record-setting deal,” said Ron Gula, chief executive of Tenable. “Not only is this good for our company, it’s generally a really, really good message for the industry and our approach to doing cybersecurity.”
Tenable has plans to open six international offices this year, including in Ireland and the United Arab Emirates, Gula said. The company hired roughly 200 new employees last year, and plans to add even more workers in 2016.
“An investment of this size allows us to accelerate even faster,” he said.
Throughout the region, software and biotechnology companies continued to receive the largest share of venture capital, or about 84 percent of total dollars awarded during the fourth quarter.
The recipients of the largest deals included Precision for Medicine, a Bethesda, Md.-based biotechnology firm (which received $75 million); IronNet Cybersecurity, a Fulton, Md.-based software company ($25 million); and ZeroFox, a Baltimore software company ($22.04 million).
“It’s a pretty good quarter when the two traditionally strong industries went up and we still saw other industries land funding as well,” Phillips said.
Businesses in Maryland received 81.3 percent of fourth-quarter funding in the Washington area, which the report defines as Maryland, Virginia, West Virginia and the District.