fb-pixelStartup fund-raising in Mass. drops to 2020 levels - The Boston Globe Skip to main content

Startup fund-raising in Mass. drops to 2020 levels

Still, Massachusetts pulled ahead of New York for first time since 2020

Among the largest funding deals in the third quarter was $460 million for battery recycler Ascend Elements in Westborough.Ascend Elements

Venture capital funding for Massachusetts companies shrank in the third quarter, dropping 18 percent from a year ago, though that marked an improvement from earlier this year, according to a report Thursday from the National Venture Capital Association and PitchBook. Funding had dropped by 29 percent year-over-year in the first half of 2023.

Startups in the state raised $4 billion across 163 deals — the lowest amount of money in a quarter in three years, and the fewest number of deals in a quarter since 2016.

The VC slowdown started last year after the Federal Reserve started raising interest rates and tech stocks plunged, discouraging investors from taking risks on smaller companies. Despite the continued slowdown in the third quarter, some bright signs have emerged, including the initial public offering of Boston marketing software company Klaviyo and a handful of other startups.


Among the largest funding deals in the third quarter were $460 million for battery recycler Ascend Elements in Westborough, $300 million for biotech Cardurion Pharmaceuticals in Burlington, $273 million for Generate Biomedicines in Somerville, $262 million for green steel maker Boston Metal in Woburn, and $250 million for agtech firm Indigo Ag in Boston.

Nationwide, startups raised $36.7 billion in the third quarter, down 21 percent from a year ago, NVCA and PitchBook said.

Massachusetts trailed only California in startup fund-raising, as emerging companies in the western state collected $17.3 billion in the third quarter, a decline of 9 percent from a year ago. And for the first time since 2020, Massachusetts startups surpassed peers based in New York that raised a total of $3.3 billion, reflecting a 46 percent drop.

Massachusetts startups had not raised less than $4 billion since the first quarter of 2020, when they raised $3.97 billion. And the last time fewer than 163 startups got funding in a quarter was the third quarter of 2016, when PitchBook tallied 162 deals.


Venture capital firms based in Massachusetts have raised $5 billion in 19 deals this year through the end of September, on pace to raise about $6.7 billion for the year. That would be down about 40 percent from last year and the lowest total since 2018. Nationally, VC firms have raised $42.7 billion in the first nine months, on pace for a 67 percent full-year decline from 2022.

“With high hopes for a rebound in 2024, the market is certainly hoping that [the fourth quarter] can show signs of growth,” PitchBook analyst Kyle Stanford said in an email. “Though low fund-raising numbers from this year don’t bode well for future dealmaking growth, the record amount of US fund-raising in 2021 and 2022 can bolster cash reserves for the near term.”

Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.