Venture Capital

Indicator 16:  Venture Capital

 

How Does Massachusetts Perform?

Indicator 16:  Venture Capital text box stats: $6.9B in VC investment in 2016 (3rd Nationally), Trailed only California ($35.9B) and New York ($11.3B),  The top 3 states for VC investment (CA, NY, MA) account for 72.8% of VC investment in the U.S., Massachusetts has the Highest VC funding per $1,000 GDP

Massachusetts’ average share of annual VC investment from 2007 to 2017 was 9.2%, ranging from around 8% to 11% annually. The Commonwealth’s VC investment fell to 9.4% of the U.S. total in 2017 down from 10.21% in 2016. California continued as the number one destination for VC investment, growing 5% from 2016. The largest gain from 2016-2017 was in Rhode Island, which had an 81% increase in VC investment from $35 million to $193 million. Massachusetts had the highest VC investment per $1,000 GDP at $15.20, with California in second at $14.87.

Healthcare and Internet were by far the largest target industries for VC funding in Massachusetts in 2016, representing 53.7% and 21.0% respectively of total VC funding for the state. This reflects the Commonwealth’s strength in these sectors as well as their broader appeal to investors. Venture Capital investment in Massachusetts rose 4.8% ($6.6B to $6.9B) from 2016-2017, with Healthcare growing 5%. Massachusetts is also home to eight 'unicorn' companies (private companies with valuation above $1B) with seven additional national unicorn companies having presence in Boston.

The majority of total VC funding in Massachusetts went to Healthcare (53.7%) and Internet (21.0%), with other categories ranging from 5.9% in Mobile & Telecommunications to 1.9% in Automotive. The 11 specifically tracked categories represent 98.9% of all VC funding, with “Other” making up the remaining 1.1%. The fastest growth came from Automotive, going from $1.5M to $132M 2016-2017 (8,516%), followed by Industrial which grew $185M (149%).

Seed funding from VC in Massachusetts decreased from 2016-2017 by $57M (24%), but overall has increased by $167M from 2007 to 2017, rising to $180M. Early stage financing has increased every year since 2012, increasing by $87M in 2017. Expansion financing increased 54% since 2007, the lowest amount compared to the other stages, and a similar amount to the 2016-2017 growth of 47%. Late stage financing fell $205M (9%) from 2016-2017, becoming the 2nd largest category of financing, having grown 315% since 2007. Every stage of VC peaked in 2016, with the exception of Expansion, which peaked in 2015 and then fell 33% in 2016, increasing in 2017 to within 1% of that peak.

 

 
 
 
 

Data Source for Indicator 16: Kauffman Foundation, PricewaterhouseCoopers MoneyTree Report, CPI, BEA, NVCA