Pittsburgh punches above its weight in attracting venture capital

Venture capital firms invested $333 million in the Pittsburgh region in 2014, more than double that of 2013.

Investments in Pittsburgh companies and the city’s technology sector continue to grow. A report by Innovation Works, an investment firm, and Ernst & Young LLP, a professional services company, found:

Venture capital firms invested $333 million in the Pittsburgh region in 2014, more than double that of 2013 (though 2013 was the lowest year from 2010-2014).
Local angel investors contributed $73 million in 2014, a 35 percent increase over 2013.
Pittsburgh’s technology sector saw $438 million in investments, a 46 percent increase over 2013.
Since 2012 the local supply of venture capital funds has been growing.

The size of the deals has followed national trends, growing in dollar amount. So the number of deals grew more slowly, by 26 percent in the same time. In 2014, almost half of available venture capital went to just three large deals.  

Pittsburgh is still far behind places like Silicon Valley in terms of money available, but according to the report the region does really well. “Pittsburgh, which ranked 22nd in population in 2014, ranked 11th in venture capital investment dollars per capita…and 5th in deals per million residents, behind only notable tech hubs Silicon Valley (San Jose and San Francisco), Austin and Boston. Additionally, Pittsburgh was the 8th fastest-growing region over the past 10 years in terms of dollars invested,” the report states. On a per capita basis, Pittsburgh, which has $143/per person in venture capital, outperforms Philadelphia ($72/per person) and Cleveland ($35/per person).

The information technology sector received the largest chunk of all funding across industries; within the tech sector, electronics, medical device companies, and energy companies were the top three recipients of total dollars invested.        

Add to all of this the fact that  patents and licenses coming out of the city’s research universities have been growing. It’s no secret that Pittsburgh—as well as other post-industrial cities in the Commonwealth—has been nurturing its eds and meds sectors after the collapse of the industrial base. According to the report, Pittsburgh universities have produced 88 companies in the last five years, and “local universities have created numerous resources to promote company formation, including entrepreneurship curricula, incubators, business plan competitions, funding programs and a variety of other commercialization services.”