Record Year of Venture Capital Investments in Pittsburgh Region Driven by Technology
Venture capital dollars spent in the Pittsburgh region more than doubled from 2013 to 2014, according to a new report from economic and social trend tracker PittsburghTODAY.
In 2014, venture capital firms invested $338 million in local companies, up from $138 million in 2013.
“That was driven largely by several very large growth capital financings,” said Mike Stubler, managing director with Draper Triangle Ventures, an early-stage venture capital firm based in Pittsburgh. “Almost half of the money went to three large deals.”
Cheswick-based Dynamics, Inc., a payment technology firm, snagged $70 million from MasterCard for the development of interactive credit and debit cards. The cards are embedded with circuit boards, which allows users to turn them on or off, increasing security.
4Moms is located in the Strip District and creates robotics products for kids and parents; it pulled in $1 million in investments from Castanea Partners.
And Lawrenceville-based Aquion Energy, an energy storage company, brought in $37 million from a variety of investors.
Stubler said such expansion-stage investments are on the rise in the Pittsburgh region, but that there’s still a shortage of early-stage investors. However, he said that problem is not unique to Pittsburgh.
“There are a few funds here, including mine, that focus on this region, but it’s a problem that many areas of the country actually have,” Stubler said. “So much of the early stage venture capital you hear about it Silicon Valley-based, Boston, New York – the coastal money.”
Stubler said that’s because, at the early stages, venture capital firms want to be close to the companies in which they’re investing, so they can better keep an eye on how money is being spent.
But he said as research at the University of Pittsburgh and Carnegie Mellon University continues to drive the creation of start-ups in the region, more and more venture capital firms are turning toward the Pittsburgh region. Stubler credited the universities for spinning off companies “as opposed to … just licensing the technology out.
“We’re seeing more and more startup activity,” Stubler said. “As you see these companies grow, we’re being successful in attracting significant capital from outside the region. I think it’s all very positive and exciting.”