Oregon venture capital plunges again, to lowest point in 6 years
Oregon startups endured an anemic year of fundraising in 2023, with venture capital investment in the state plunging by more than half, according to new data from the National Venture Capital Association and PitchBook.
The $460 million raised by Oregon entrepreneurs was the state’s weakest total since 2017. It’s the second straight year that venture activity in Oregon declined by around 50%.
Venture capital is the fuel that powers ambitious young companies, aimed at igniting explosive growth and big paydays for their investors. When the money flows, it’s a sign that the state is producing lots of promising new businesses that have captured investors’ imagination, or that those startups could soon become viable — and profitable — for the long-term.
The state netted a record haul of $2.1 billion in 2021 as investors poured money into startups while the economy roared back from the pandemic recession.
That excitement fell off as the economy cooled and interest rates rose, a response to the Federal Reserve’s fight against inflation.
Venture funding has been down nationally over the past two years, but the fall hasn’t been nearly as steep as in Oregon. Investment fell by 30% nationally in 2022 and another 30% last year.
Unlike Washington and California, though, startups have never been a major part of Oregon’s economy. The state rarely produces large companies.
Even by Oregon’s meager standards, 2023 was particularly dreary. High-profile startups like battery innovator ESS Tech and software firm Expensify — now maturing companies looking to expand beyond their venture-funded beginnings — floundered after going public. And few promising new companies emerged.
The Portland Incubator Experiment, launched in 2009 to help nurture Oregon startups, announced plans to remake itself this past year. It’s now focused on entrepreneurship and manufacturing, sectors that generate fewer fast-growing businesses but may produce more durable ones.
The reasons Oregon produces few big startups are well known.
The state lacks a large concentration of wealthy investors to fund ambitious companies, it lacks major research universities with a track record of spinning out valuable innovations, and Oregon’s concentration in electronics and computer hardware hasn’t meshed with a succession of software-based innovations over the past two decades.
Still, there were a handful of bright spots among the state’s startups last year.
PitchBook reports Beaverton-based YorLabs raised the most money of any Oregon startup last year, $17.3 million. The company is making a new medical imaging system that it says is more affordable and efficient. PitchBook says an October funding round valued the business at $65 million.
Portland-based Phylos Bioscience ranked second, raising $8.2 million for marijuana seed lines it says grow more consistently productive plants. No. 3 in PitchBook’s Oregon rankings was Portland marketing technology startup Ignition, raising $8.0 million.
This is Oregon Insight, The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.
— Mike Rogoway | mrogoway@oregonian.com |
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