Young companies in Maryland, Washington and Northern Virginia raised 14 percent less venture capital funding in the third quarter than they did last year during the same period, according to a new report from PricewaterhouseCoopers.
Mid-Atlantic companies attracted $215.7 million from venture capitalists from July to September, compared with $245.7 million in the same period last year, the report showed. The regional decline mirrored a national one. Nationwide, $6.5 billion was invested in companies, down 11 percent from the third quarter last year.
"We're seeing venture capitalists be very cautious with the capital that is available due to the lack of a significant number of liquidity events," wrote Tracy T. Lefteroff, global managing partner of the U.S.-based venture capital practice at PricewaterhouseCoopers. "Instead, venture capitalists are continuing to support the companies already in their portfolio."
So-called 'liquidity events" include sales and initial public offerings that allow venture capitalists to recoup their investments.
Nine of the companies that received funding in Maryland were based in the Baltimore area, while the other 11 were based in the state's Washington suburbs, according to the quarterly PwC MoneyTree report.
Statewide, biotechnology and medical device companies attracted more than $51 million in venture capital. But software and information technology services dwarfed the state's life sciences sector, luring more than $158 million from venture capitalists, according to the report.
Two companies received $75 million of the $86 million in venture capital invested in Baltimore-area businesses: Tenable Network Security Inc. and Zenoss Inc.
Columbia-based Tenable, which focuses on network security for government, commercial and university customers, raised $50 million from Accel Partners last month in its first major round of funding. Tenable says the U.S. Department of Defense uses its "vulnerability management" software. It employs 200 people, having doubled its staff over the past year.
Annapolis-based Zenoss Inc., which unifies information technology operations for companies, raised $25 million in its third major round of funding since its formation in 2005.
The company has raised a total of $45 million since its formation. Zenoss helps companies enable the smooth operation of Internet services to customers who may use a website or a mobile app.
Bill Karpovich, CEO and founder of Zenoss, said the company intends to use the new capital to develop its sales and marketing operations globally. The company employs about 100 people in offices in Annapolis, Austin, Texas, and San Jose, Calif. — and it could double that number over the next 18 months, he said.
"You've got a business that's working and improving and doing well, and now it's time to take it to the next level," Karpovich said. "For us, this [investment] translates into us building our field operations."
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