2007 Pittsburgh VC Totals

For several years, Innovation Works (IW) has been tracking data about venture investment in the Pittsburgh region, which we view as one of the most objective ways to measure the health of the local early-stage tech community. Our 2006 year-end report noted that the region's 2006 VC investment total of $230 million was the highest amount received by local companies in the post-bubble era, and gave Pittsburgh one of the fastest 10-year growth rates for VC investment among all regions in the United States. At the time, however, we were cautious in our enthusiasm due to the fact that $100 million (43%) of the 2006 VC investment came from a single deal.

So, how did the region do in 2007? According to data from the PWC MoneyTree Survey, 2007 was Pittsburgh's second-highest year in the post-bubble era, with 43 companies in the Pittsburgh region obtaining a total of $206 million in venture investment. Here's a chart showing the total amount and number of companies receiving investment in the Pittsburgh Metropolitan Statistical Area since 2002 [note that MoneyTree is now showing the 2006 total as $242 million]:


Unlike 2006, no single deal dominated the results in 2007. The largest investment was a $47 million investment in Millennium Pharmacy Systems, Inc., which accounted for approximately 22% of the total for the year. Including Millennium, four local companies attracted investments larger than $20 million, six companies obtained investments of $5-20 million, seven companies received investments of $1-5 million, and the remaining 26 companies received investments of less than $1 million each (23 of which were seed investments).

Despite the fact that the total amount of venture investment was down from its post-bubble high, the total was still well-above the region's prior 5-year average ($139 million), and the investments seem to be spread more broadly across a large number of companies without one big deal skewing the results. The average investment per company declined from an average of $6.4 million per company in 2006 to $4.8 million in 2007, which was still above the prior 5-year average of $3.9 million per company.

In the next post, I'll talk about the trends we're seeing in venture funding by tech sector.