Venture capital investment has seen an uptick as business leaders still try to grasp where America is headed next. With significant changes in the economy in the last year, many VCs have adapted their spending strategies and, as a result, more funding than ever has been funneled into startups promising innovation and brighter, better futures.
As for Massachusetts? The Commonwealth ranks third in the entire country for venture capital investment, falling behind only New York and California.
This year, Bay State startups have received more funding in the past six months than they have in the entire year of 2020 - totaling an incredible $17.4 billion to a core group of Massachusetts-based startups.
While COVID-19 negatively impacted many businesses, the overwhelming characteristics for companies who score funding is either a thriving business despite COVID-19, or a direct capitalization on the pandemic’s ill-effects. That is to say, the services they offer were more in demand during the pandemic than they were before, or their value and success have scaled so much that it’s led to a sharp increase in VC interest. Companies garnering funding include biotech, cybersecurity, and e-commerce institutions, earning Massachusetts the well-deserved number three spot overall in the country for VC investment.
Unsurprisingly, the healthcare industry has boomed during the pandemic, which explains the increase. And successful biotech companies, such as Adagio Therapeutics and Affinivax, have been just two of the more recent companies that benefited from the increase in VC funding. With the race toward the COVID vaccine and the demand for adaptable, high-tech healthcare systems and technology, VCs have rapidly shifted their attention to startups like these. As a result, it’s more important than ever that these enterprises continue their research and development momentum to ensure that they can keep up with demand.
Cybersecurity firms Snyk and Aura also received a hefty amount of funding. The world has been turning increasingly virtual this last decade but nothing quite propelled the space like the onset of COVID. Consumers turned online to conduct business, shop, and socialize - leading to a concurrent increase in demand for quality cybersecurity systems. Similarly, Boston-based high-tech company, Circle, raised $440 million in May alone, cementing its position as one of the top cryptocurrency brands to take over the market.
While the investment in cybersecurity and biotech is impressive, none fared as well as online sales and marketplaces. Perch, a Massachusetts-based e-commerce brand, landed $775 million during the first six months of 2021. Deemed the largest 2021 deal in Bay State, Perch’s substantial funding is entirely on par with a post-pandemic world leaning into online sales.
Each of these companies puts the Commonwealth on a hopeful path toward a recuperating, post-pandemic economy. We can expect the trend to continue through the second half of 2021 with hot spots including green tech, software, cybersecurity, biotech, and e-commerce spheres, all promising futures for investment groups.
Massachusetts is the only New England state to rank in the top ten venture capital-backed states. Though Connecticut sits 14th with a total of $1.4 billion in funding raised, Massachusetts far outweighs its neighbor.