NC Venture Capital Slow To Return Post-Recession

Jan 22, 2014

Venture capital investment is best known for funding technology start-ups, including, once upon a time, Google and Facebook. The amount of venture capital funding is also an indication of how many start-ups or early stage companies a region is producing. The latest numbers in North Carolina show the state still has not recovered from the recession.

New figures from the National Venture Capital Association show $260 million in statewide investment in 2013, an increase of $80 million from 2012, but still only about half the amount from 2007 and 2008. To some degree, that is to be expected, says Patrick Vernon, the executive director of UNC-Chapel Hill’s Center for Entrepreneurial Studies.

“We are a small market, so we are necessarily kind of at the fringes. I think we’re always going to be lagging,” says Vernon. “We are just as quick to the take the fall, and a little less quick to recover, as any smaller market is going to do.”

Nationwide, venture capital investment has almost recovered to pre-recession levels, which means North Carolina has a smaller piece of the pie. In 2008, the state was pulling in about one out of every 60 venture capital dollars. In 2013, that number is one out of every 130. Another reason for that drop, may be how much funding goes to North Carolina’s life sciences sector, which includes biotechnology, pharmaceuticals, and medical devices. Traditionally, those companies have received roughly half the state’s venture capital investment. But, life sciences funding across the nation has fallen by about a third from 2008 to 2012, according to the NVCA.

Data from National Venture Capital Association
Data from National Venture Capital Association
Credit Ben Bradford / WFAE