The number of venture capital dollars and deals across the U.S. has been generally declining over the last several years, but Pittsburgh is bucking that trend.
“Since 2009 we’ve had the credit crisis, and probably the most severe national recession we’ve ever had, and during that period Pittsburgh has seen an increase in early stage capital and the number of financings," said Lynette Horrell, managing partner with Ernst & Young Pittsburgh. "The number of financings has grown over 50 percent.”
Over a five-year period (2008 to 2012), the Pittsburgh region saw $1.3 billion invested in the region’s early-stage technology companies.
A joint report by Ernst & Young and Innovation Works looked at past five years and variety of sources of capital that support growing tech companies in Pittsburgh: venture capital firms, angel investors, corporate strategic investor seed funds, accelerators, etc.
The report, “Optimizing Opportunities,” found that nationally the number of venture deals declined 6 percent last year, and dollars invested declined 10 percent.
In Pittsburgh, however, there were increases. That is linked, in part, to diversity.
“It signifies that we’re growing in this region," Horrell said, "and it’s going to be even more so in the future because it’s starting at the earliest stage of companies across all industries.”
The report comes the same week the Pittsburgh Technology Council held its “Made in PA Expo” and released its annual State of the Industry Report. That report found that early stage companies benefited from an infusion of nearly $400 million in 2011-2012.
Horrell said the number of research institutions helps make Pittsburgh unique.
“I think it’s the support we have here,” she said. “We had the venture fair in Pittsburgh, and there were over 600 participants and almost 100 different investors here to look at a whole showcase of startup companies. I’m not real sure what happens in other cities, but I feel like there’s just a lot of energy surrounding that there.”
Horrell called Pittsburgh a model for many regions in the country and said the growth in capital venture investment is expected to continue.