Local startup funding plunges 30 percent amid market rout

People walk past the Nasdaq MarketSite, on July 13, 2022, in New York. Companies hit the brakes on deal-making during the first half of 2022 as concerns over pervasive inflation, interest rate hikes, and the threat of a recession loomed over Wall Street.Julia Nikhinson/Associated Press

Massachusetts startups raised $12.5 billion in venture capital in the first half of the year, marking a 30 percent decline from a year earlier amid the plunging stock market, rampant inflation, and weakening economy.

A total of 505 local companies raised money in the first half of 2022, a 15 percent decline from 2021, according to data released Thursday by PitchBook and the National Venture Capital Association. Among the largest deals of the year, Wakefield-based Agilitas raised $350 million to expand its clean energy storage business, and Boston-based Biofourmis, which is developing a platform for virtual healthcare, raised $300 million.

While the S&P 500 Index lost 20 percent in the first half of the year, tech-sector stocks — often used as a benchmark for venture-backed startups — lost 27 percent. A year ago, tech stocks were hitting new heights and Massachusetts startups raised a record $17.8 billion in the first half of 2021, more than had been raised in any prior full year.

The 2022 drop in local fundraising was more severe than in California and New York, the only two states where companies raised more money than in Massachusetts. California startups raised $68 billion in the first half, down 12 percent from 2021. And New York startups raised $19 billion, down 13 percent.