Can the biotechnology sector remain the king of venture funding in Massachusetts, or will the technology set topple it from the throne?
For now, bragging rights belong to the biotech community, which received nearly $1 billion in venture capital funding in 2013 and had 10 companies go public during the year. However, during 2014, some dozen or so computer technology firms, mostly in the software trade, are expected to hit Wall Street with initial public offerings.
Either way, both industries have a lot to look forward to in 2014: The region’s venture capital firms are brimming with cash after raising some $5.4 billion in new funds last year, and are looking to anoint the next hot companies with their backing.
On Friday the venture capital industry is scheduled to release its funding report card for 2013, which will show biotechs receiving the nearly one-third of all investments in Massachusetts. More amazing is that much of that new investment was in the second half of 2013.
In total venture funds, some $3.3 billion was invested in New England companies during the year —
“The Cambridge and Boston biotech community has clearly emerged as the most exciting and vibrant in the country,” said Doug Cole, a general partner of Flagship Ventures, a Cambridge venture firm that focuses on biotech.
“It is absolutely tangible if you walk around the streets of Kendall Square,” he said. “You can see it in the construction, you can observe it in talking with the people who work in these companies, and you can sense it in the interactions with the academic community.”
Cole’s firm had a hand in two of the biggest deals at the end 2013: a $110 million funding of Moderna Therapeutics and $43 million for Editas Medicine. Both companies are based in Cambridge.
In second place was the software sector, which amassed $793 million in venture investment during 2013, according to the MoneyTree Report; in 2012 the software industry here got $836 million.
But now there’s more money to throw into the startup world — the $5.4 billion raised by Massachusetts venture capital firms during 2013. The youngest companies in particular are expected to be a prime target for those additional funds. Across the United States, the number of seed financing deals —
“Going into 2014 there’s a lot of momentum because there’s a lot of capital and a lot of other types of investors going into companies,” said Anand Sanwal, chief executive of CB Insights.
While the MoneyTree report shows overall venture spending is down slightly for New England startups, that may not provide a complete picture of the total amount of money going to young businesses taking shape in places like Kendall Square or the Innovation District.
With the excitement around startups and the lower cost of launching an Internet startup, said Sanwal, often friends and families or wealthy angel investors will be the first ones to fund companies. “There’s a lot of money available,” he said.