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January 11, 2017

Venture capital slows nationally, but Maine has comparatively large deal in Q4

Courtesy of PricewaterhouseCoopers
Courtesy of PricewaterhouseCoopers
Tom Ciccolella, U.S. Venture Capital Leader at PricewaterhouseCoopers.

As venture capital dollars and deals went soft in the fourth quarter of last year, one Maine company, Tilson Technology, pulled in a respectable $3 million in investment from CEI Ventures and additional private investors.

The Portland-based IT services company was a runner up in Mainebiz's 2016 Fastest Growing Companies in Maine list.

CEI Ventures said it invested $200,000 of the recent $3 million round, with private investors providing the balance of $2.8 million. CEI Ventures has a total of $900,000 invested in Tilson Technology.

For the year, Maine had three venture capital deals totaling $6,350,000. That's down from five deals totaling $72,790,000 in 2015, an amount that was skewed high by one large deal of $52.3 million to Direct Vet Marketing Inc., a Portland-based veterinary services company that does business as Vets First Choice.

The data was released today by PricewaterhouseCoopers MoneyTree Report with data from CB Insights.

"I like the number of deals that got done, even though they continued to decline quarter-to-quarter," Tom Ciccolella, U.S. Venture Capital Leader at PricewaterhouseCoopers, told Mainebiz.

He added that despite the continued deceleration in venture capital investment activity, the startup ecosystem remains flush with quality deals. "As industries continue to be disrupted by technology and Internet capabilities, new opportunities are emerging. It's these opportunities, despite the decline, that continue to drive venture capital momentum," he said.

Nationwide, investment in venture capital-backed companies based in the United States saw deals and dollars drop 16% and 20%, respectively, in 2016, compared to the previous year. Globally, the trend was similar, with global deals and dollars declining 10% and 23%, respectively, in 2016, compared to full-year 2015.

In the fourth quarter of 2016, investors deployed $11.7 billion to U.S. venture capital-backed startups across 982 deals, down 17% in dollars and 14% in deals from the third quarter of the same year. Both quarterly figures also were down from the final quarter of 2015, and set the quarterly lows for 2016.

The U.S. full-year funding total of $58.6 billion represented a 20% drop from 2015, while cumulative deals of 4,520 fell 16%. Some of the falloff, Ciccolella said, was because of super-large deals in 2015.

All three major technology and startup hubs of Silicon Valley, New England and New York Metro saw deal activity declining from the quarter prior. New England's total funding was down 41% to $1.3 billion and deals were down 7% to 104.

Ciccolella said he expects the venture capital market to remain soft this year, as 2015 was an unusually active year.

NOTE: Information from CEI Ventures on the breakdown of its investment has been added to the story.

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