Investing in Pittsburgh`s Technology Sector

Accelerating Growth
Investing in Pittsburgh’s
technology sector
Trends and highlights, 2010—2014
Accelerating the growth of
Pittsburgh’s high-potential
companies
Ernst & Young LLP and Innovation Works, Inc. are pleased to present our third annual review of investment trends and
highlights for the Pittsburgh region’s technology sector. This report reviews the investment activity from 2010 to 2014 in
our region and analyzes the companies attracting capital and the funding sources that support their growth. This includes
venture capital firms (VCs), angel investors (angels), corporate/strategic investors, seed funds, accelerators, public offerings,
and other sources of funding. Highlights of this year’s report include:
• Growth in our technology sector continues to accelerate, with $437.8 million invested in Pittsburgh technology
companies across 177 deals in 2014, marking a 46% increase in dollars and a 19.6% increase in deals over 2013.
• VCs invested $332.9 million into 39 Pittsburgh deals in 2014, a 168% increase in dollars invested and a 26% increase in
the number of deals from 2013. 2014 saw the highest level of VC investment in our region since 2001.
• Our local angel investor community invested $72.9 million in 2014, a 35% increase over 2013.
• Our region continues to demonstrate deep sector diversity in terms of growth industries with software, medical devices,
energy and robotics leading the way.
• In 2014, 11 venture capital firms made their first investments in our region, joining over 100 firms from around the
country that have invested locally over the past five years.
• Pittsburgh compares favorably against the 40 largest Metropolitan Statistical Areas in the United States, ranking 11th in
investment dollars per capita and 5th in deals per million residents.
We hope this report provides you with useful insights into the state of the local technology community and venture capital
ecosystem and inspires new ways to propel our region forward.
Lynette Horrell
Pittsburgh Office Managing Partner,
Ernst & Young LLP
Rich Lunak
CEO, Innovation Works, Inc.
Investment in Pittsburgh’s technology sector | Trends and highlights
VC investment in Pittsburgh at
highest level since 2001
Nationally, venture capital firms invested $52.1 billion
in 2014, a 47% increase over the $35.5 billion invested
in 2013, representing the largest single-year total
since 2000 when VCs invested over $100 billion. Of
the $52.1 billion invested, approximately 64% was
invested in later stage companies compared to 59% in
2013. Several mature companies raising large rounds
contributed substantially to 2014’s venture capital
investment total including Uber, Airbnb, Cloudera and
Snapchat, as many companies are remaining private
longer and not accessing the public markets.
The number of US deals led by VCs declined slightly,
from 3,837 in 2013 to 3,682 in 2014. However,
the average deal size increased from $9.3 million to
$14.2 million – a 53% increase – over the same period,
driven in part by some of the large later-stage rounds
mentioned previously.
In 2014, more than
$437 million
was invested in Pittsburgh technology
companies, of which nearly
$333 million
was invested by venture capital
firms – the highest total since 2001.
Locally, VCs invested $332.9 million into 39 Pittsburgh
area deals in 2014, a 168% increase in dollars and
a 26% increase in the number of deals from 2013.
Similar to the national trend, the average deal size in
Pittsburgh increased more than
Funding for Pittsburgh Companies from Venture Capital Firms ($ millions)
twofold from $4.0 million in 2013
to $8.5 million in 2014. This trend
39
35
was driven by large financing
32
31
rounds in companies such as 360fly,
28
4moms, ALung Technologies, Avere
Systems, Aquion Energy, Complexa,
Dynamics, Duolingo, NoWait and
Resumator.
Since 2010, the Pittsburgh region
has experienced a 61.8% increase
in dollars invested by VCs and a
39.3% increase in the number of
investments, comparing favorably
to both national venture investment
trends and to benchmark regions.
$205.8
$189.3
$227.2
$124.0
$332.9
2010
2011
2012
2013
2014
Amount Invested ($ millions)
Number of Deals
Source: data provided by Dow Jones VentureSource and Innovation Works
March 2015
1
Venture investment drives growth
The $437.8 million in funding raised
by Pittsburgh companies in 2014
represents the largest total amount
in over a decade. In addition to a
strong year of investment from
venture capital firms, the amount of
funding provided by angel investors
increased 34.5% from 2013 to 2014,
from $54.2 million to $72.9 million.
Investment by corporate investors
increased 30% from $21.7 million
to $28.2 million. There were no
venture-backed IPOs in the region
in 2014.
Funding for Pittsburgh Companies by Type of Investor ($ millions)
$437.8
$407.6
$3.8
$28.2
$140.6
$332.7
$317.2
$6.3
$4.5
$29.3
$20.4
$36.3
$92.3
$4.7
$300.0
$34.1
$95.4
$72.9
$66.7
$4.7
$21.7
$54.2
$205.8
$332.9
$227.2
$189.3
$124.0
2010
IPO
2011
2012
Seed Funds and Accelerators
2013
Corporate and Other
2014
Angels
VC
Source: data provided by Dow Jones VentureSource and Innovation Works
Seed funds, accelerators and angel
investors lead majority of deals
The total number of financing
rounds increased 19.6% from
2013 to 2014, representing
the largest number of deals
since at least 2007. 2014 saw
increases in deals across every
type of investor except corporate
investors. Seed funds and
accelerators were responsible for
the largest percentage of deals
in 2014, with angel investors
coming in a close second.
Number of Investment Rounds by Type of Investor
177
165
148*
1
127*
1
123
48
42
36
23
16
12
59
19
59
40
28
2010
IPO
43
62
15
61
38
32
35
2011
2012
Seed Funds and Accelerators
31
2013
Corporate and Other
39
2014
Angels
* Includes IPO
VC
Source: data provided by Dow Jones VentureSource and Innovation Works
2
Investment in Pittsburgh’s technology sector | Trends and highlights
A diverse assortment of industries
attract funding
The Pittsburgh region continues to attract capital to a diverse array of industries. In the 2010-2014 time period, 271
companies received funding totaling nearly $1.8 billion; both the number of companies and dollars increased over the
previous five-year period.
The distribution of funding across industries was similar to past five-year time periods. The largest number of companies
receiving funding came from the information technology sector (enterprise and consumer software, electronics, robotics,
telecom and IT infrastructure). The information technology sector comprised 56% of the companies funded. Life sciences
(medical devices, healthcare IT, biotechnology/drug development, and healthcare services) made up 25% of the companies
receiving funding.
Pittsburgh Companies Receiving Funding - By Tech Sector - 271 Companies
2010-2014
Enterprise Software
22.9%
Consumer Software
21.4%
Telecom
0.8%
Medical Device
10.3%
Healthcare Services
2.6%
IT Infrastructure
1.1%
Robotics
4.1%
Energy
8.5%
Consumer
Products
5.2%
Advanced
Materials
Biotechnology
Electronics 5.5%
6.6%
Healthcare 5.5%
IT
5.5%
Dollars Invested in Pittsburgh Technology Companies – By Tech Sector - $1.8 billion Total
2010-2014
Medical Device
14.8%
Enterprise
Software
9.2%
Energy
10.7%
Consumer
Software
6.3%
Biotechnology
8.3%
IT Infrastructure
3.3%
Healthcare IT
2.7%
Telecom
1.7%
Healthcare Services
1.7%
Robotics
6.6%
Electronics
18.4%
Advanced
Materials
6.3%
Consumer
Products
10.0%
Source: data provided by Dow Jones VentureSource and Innovation Works
March 2015
3
The local supply of venture capital
continues to improve
The chart below estimates the annual supply of uncommitted funds at venture capital firms in the Pittsburgh region. This
analysis considers the timing of new fund closings and assumes that a firm will commit 25% of a new fund’s capital during
each of the first four years post-closing. If a fund is managed by partners who are located outside of the Pittsburgh region,
the amount of the fund’s capital that is “located” in Pittsburgh is determined by multiplying the available funds by the
percentage of the fund’s partners who are located in the region.
Pittsburgh’s supply of indigenous venture capital decreased from 2006 to 2011. This can be attributed to several factors
including a reflection of national trends, reduced fund sizes, a decline in the number of resident venture funds and the
remaining funds broadening their geographic reach. In 2012, this trend began to reverse with several funds being launched
including Birchmere Ventures’ fourth fund and the Pittsburgh Life Sciences Greenhouse launching its accelerator fund. The
local supply of venture capital funds continued to increase in 2014. During 2014, Draper Triangle Ventures held a final
closing on its third fund, and Riverfront Ventures (affiliated with Innovation Works) held a final closing on its inaugural fund.
Additionally, iNetworks held a first closing on its new fund, and the BlueTree Venture Fund held a first closing on its inaugural
fund.
While the increase in the supply of available venture capital in our region is a positive step, it is still a fairly modest amount of
capital compared to the region’s growing supply of technology companies. Pittsburgh’s total pool of capital available in 2014
($88.2 million) would equal only 80% of the median US fund size of $110 million. Nationally, venture capital funds raised a
total of $33 billion across 332 funds in 2014, representing a $12.1 billion increase (62%) over the $20.4 billion raised across
261 funds in 2013.
Supply of Pittsburgh-based Venture Capital
Estimate of Uncommitted Capital at Pittsburgh-based VC Firms ($ millions)
$136.6
$120.5
$87.7
$88.2
$81.1
$65.9
$48.3
$29.3
$18.0
$7.1
2005
2006
2007
2008
2009
2010
2011
2012
Source: data provided by Innovation Works and Pittsburgh VCs
4
Investment in Pittsburgh’s technology sector | Trends and highlights
2013
2014
Technology company exits
US venture capital-backed M&A deal values totaled $79.8 billion in 2014, a 93% increase over the prior year. The number
of transactions increased by 7.6% to 483, indicating a disproportionate increase in the average deal size driven by several
mega-deals including Facebook’s acquisition of WhatsApp for $19 billion.
Technology companies in the Pittsburgh region experienced 11 M&A
transactions in 2014 compared to 8 transactions in 2013. The companies
acquired spanned a variety of industry sectors including medical devices
and diagnostics, electronics, and consumer and enterprise software. The
total disclosed deal values decreased from $638 million in 2013 to less
than $100 million in 2014. However, the values of the majority of the
exits in 2014 were unavailable.
44 companies
$3+ billion
Total value
(Disclosed and undisclosed)
Representative deals
Vocollect
Vivisimo
The ExOne Company
acquired by
acquired by
IPO
2013
Intermec
IBM
2011
2012
Millennium Pharmacy
Systems
acquired by
PharMerica
2014
Tollgrade
Communications
Carnegie Learning
BodyMedia
Powered Analytics
acquired by
acquired by
acquired by
acquired by
Apollo Group
Jawbone
Target
Golden Gate Capital
2012
2013
2014
BlackLocus
BPL Global
LightSide Labs
2011
M*Modal
acquired by
acquired by
acquired by
acquired by
MedQuist Holdings
The Home Depot
Qualitrol
Turnitin
2011
2012
2013
2014
March 2015
5
Firms making recent investments in
Pittsburgh
Pittsburgh region
Adams Capital Management
AGSM
Alphalab/Alphalab Gear
Audrey’s Kitchen
Birchmere Ventures
BlueTree Allied Angels
BlueTree Venture Fund
Bradford Capital Partners
Draper Triangle Ventures
Eagle Ventures
Grouse Ridge Capital
The Hillman Company
Idea Foundry
iNetworks Advisors
Innovation Works
Meakem Becker Venture Capital
Newlin Investment Company
Pittsburgh Equity Partners
Pittsburgh Life Sciences Greenhouse
Riverfront Ventures
Smithfield Trust
Startbot
Stonewood Capital Management
Swallow Point Ventures
Woodland Partners
California and Western region
Accel Partners
A-Grade Investments
ARCH Venture Partners
Bright Capital
Camp One Ventures
Correlation Ventures
CrunchFund
El Dorado Ventures
ePlanet Capital
Floodgate
Foundation Capital
Gentry Venture Partners
Google Ventures
Harrison Metal Capital
6
Health Evolution Partners
Horizon Ventures
InCube Ventures
JAFCO Co. Ltd.
Kern Whelan Capital
Kleiner Perkins Caufield & Byers
Lightspeed Venture Partners
Longitude Capital
Lovell Minnick Partners
Menlo Ventures
Montage Ventures
Norwest Venture Partners
ONSET Ventures
Pacific Venture Group
Prelude Ventures
Prescient Capital
Qualcomm Ventures
Rincon Venture Partners
Sand Hill Angels
Silicon Valley Bank
Silverton Partners
SJF Ventures
Tech Coast Angels
Tenaya Capital
Trident Capital
TriplePoint Capital
Investment in Pittsburgh’s technology sector | Trends and highlights
New England region
Advanced Technology Ventures
Bain Capital Ventures
Castanea Partners
FourWinds Capital Management
GE Healthcare
GE Ventures
Harbor Light Capital Partners
Highland Capital Partners
Nexus Medical Partners
North Atlantic Capital Corp.
Polaris Venture Partners
Saturn Management
Spectrum Equity Investors
Summit Partners
Volition Capital
New York region
Blue Cloud Ventures
Enhanced Capital Partners
ff Venture Capital
General Atlantic
Golden Seeds
Great Oaks Venture Capital
ICV Capital Partners
Insight Venture Partners
Level Equity
Morgan Stanley
New York Angels
Northwood Ventures
Ogden Capital
Radius Ventures
Rose Tech Ventures
TechStars
The NPD Group
The Vertical Group
Union Square Ventures
Warburg Pincus
Philadelphia region
Comcast Ventures
Cross Atlantic Capital Partners
Delaware Crossing Investor Group
Edison Ventures
First Round Capital
Innovation Ventures
Mid-Atlantic Angel Group Fund
NewSpring Capital
Novitas Capital
Originate Ventures
Osage Partners
Quaker Partners
Robin Hood Ventures
Baltimore/Washington, DC region
Midwest region
Allos Ventures
Arboretum Ventures
Ascension Health Ventures
Capvest Venture Fund
Chrysalis Ventures
CID Capital Inc.
Crimson Hill
Drive Capital
Hopewell Ventures
Mutual Capital Partners
River Cities Capital Funds
Salix Ventures
Seneca Partners
Silicon Pastures
West Capital Partners
ABS Capital Partners
Active Angel Investors
Columbia Capital LLC
Horizon Technology Finance
New Atlantic Ventures
New Enterprise Associates
March 2015
New Markets Venture Partners
Oxford Finance Corporation
Square1 Bank
Virginia Active Angel Network
Vital Venture Capital
7
Pittsburgh performs well against
largest US cities
In a comparison of venture investments in the 40 largest Metropolitan Statistical Areas in the United States in 2014,
Pittsburgh performs extremely well. Pittsburgh, which ranked 22nd in population in 2014, ranked 11th in venture capital
investment dollars per capita, ahead of all of the traditional mid-western benchmark regions and 5th in deals per million
residents, behind only notable tech hubs Silicon Valley (San Jose and San Francisco), Austin and Boston. Additionally,
Pittsburgh was the 8th fastest-growing region over the past 10 years in terms of dollars invested.
Venture Investment Dollars per Capita - 2014
San Jose, CA
$3,736.7
$3,675.5
San Francisco-Oakland-Hayward, CA
Boston, MA-NH
Austin-San Marcos, TX
Seattle-Tacoma-Bellevue, WA
San Diego, CA
New York-Newark-Jersey City, NY-NJ-PA
Denver, CO
Los Angeles-Long Beach, CA
Washington, DC-MD-VA-WV
Pittsburgh, PA
Miami-Fort Lauderdale-West Palm Beach, FL
Chicago, IL
Minneapolis-St. Paul, MN-WI
Atlanta, GA
Providence-Fall River-Warwick, RI-MA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Portland-Vancouver, OR-WA
Cincinnati, OH-KY-IN
Houston, TX
Nashville, TN
Baltimore, MD
Dallas-Fort Worth-Arlington, TX
San Antonio, TX
Kansas City, MO-KS
Orlando, FL
St. Louis, MO-IL
Phoenix, AZ
Cleveland-Lorain-Elyria, OH
Detroit, MI
Sacramento, CA
Indianapolis, IN
Las Vegas, NV-AZ
Tampa-St. Petersburg-Clearwater, FL
Columbus, OH
Norfolk-Virginia Beach-Newport News, VA-NC
Charlotte-Gastonia-Rock Hill, NC-SC
Milwaukee-Waukesha, WI
Riverside-San Bernardino, CA
Jacksonville, FL
$932.6
$326.3
$312.3
$249.1
$215.6
$169.7
$154.2
$143.6
$143.0
$119.6
$110.8
$101.2
$86.5
$73.0
$71.5
$70.2
$63.7
$62.1
$61.5
$59.1
$49.7
$48.1
$44.5
$44.5
$43.6
$43.5
$34.6
$24.7
$24.2
$20.9
$18.6
$8.3
$7.8
$7.4
$5.9
$4.7
$0.4
$0.0
$0.0
$500.0
$1,000.0 $1,500.0 $2,000.0 $2,500.0 $3,000.0 $3,500.0 $4,000.0
Source: data provided by Thomson Reuters ThomsonOne Database and US Census
8
Investment in Pittsburgh’s technology sector | Trends and highlights
Number of Venture Rounds per Million Residents - 2014
San Jose, CA
San Francisco-Oakland-Hayward, CA
Boston, MA-NH
Austin-San Marcos, TX
Pittsburgh, PA
San Diego, CA
Seattle-Tacoma-Bellevue, WA
Nashville, TN
New York-Newark-Jersey City, NY-NJ-PA
Washington, DC-MD-VA-WV
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Cincinnati, OH-KY-IN
Baltimore, MD
Denver, CO
St. Louis, MO-IL
Los Angeles-Long Beach, CA
Portland-Vancouver, OR-WA
Atlanta, GA
Minneapolis-St. Paul, MN-WI
Chicago, IL
Providence-Fall River-Warwick, RI-MA
Cleveland-Lorain-Elyria, OH
Indianapolis, IN
Phoenix, AZ
Kansas City, MO-KS
Columbus, OH
Dallas-Fort Worth-Arlington, TX
Orlando, FL
Detroit, MI
San Antonio, TX
Miami-Fort Lauderdale-West Palm Beach, FL
Houston, TX
Charlotte-Gastonia-Rock Hill, NC-SC
Las Vegas, NV-AZ
Sacramento, CA
Tampa-St. Petersburg-Clearwater, FL
Milwaukee-Waukesha, WI
Norfolk-Virginia Beach-Newport News, VA-NC
Riverside-San Bernardino, CA
Jacksonville, FL
235
211
78
60
33
31
30
27
21
20
18
17
17
16
15
13
11
11
10
10
9
9
8
6
6
6
6
5
4
4
4
4
3
2
2
2
1
1
0
0
0
50
100
150
200
250
Source: data provided by Thomson Reuters ThomsonOne Database and US Census
March 2015
9
Pittsburgh’s universities are a
strong source for deal flow
Combined Research Budgets of Pittsburgh
Research Universities
Research Budgets ($ millions)
$984.3
2010
$1,068.0
2011
$1,067.4
2012
$1,049.2
$974.3
2013
Pittsburgh’s major research universities, including
Carnegie Mellon University, the University of
Pittsburgh and Duquesne University continue to
serve as strong sources of funding for research and
technology development. In 2014, the University
of Pittsburgh ranked 5th among US universities
in terms of National Institutes of Health funding
received. The latest U.S. News and World Report
rankings rated Carnegie Mellon University as the
top Computer Science graduate school.
2014
Source: data provided by Carnegie Mellon University, Duquesne University and
the University of Pittsburgh
Patent Generation and Licenses from
Pittsburgh Research Universities
128
96
79
82
197
244
280
322
2010
2011
2012
2013
61
Technology development and commercialization in
Pittsburgh’s research universities saw another year
of growth, with a 33.3% increase in the number
of patents issued from 2013 to 2014 and a 3.4%
increase in the number of licenses. The universities
have generated 88 spinout companies in the last
five years through direct licensing activity.
Licenses, Options and Other Agreements
333
2014
Patents Issued
Source: data provided by Carnegie Mellon University, Duquesne University and
the University of Pittsburgh
Additionally, Pittsburgh’s local universities have created numerous resources to promote company formation,
including entrepreneurship curricula, incubators, business plan competitions, funding programs and a variety of other
commercialization services.
10
Investment in Pittsburgh’s technology sector | Trends and highlights
The Pittsburgh startup story is
one of success – with an even brighter
future ahead. During our Rise of
the Rest tour through the city, the
Revolution team saw world-class
universities, global companies, and
talented entrepreneurs working
together to make Pittsburgh a
desirable ecosystem to start and
scale new businesses churning out
innovative products and services.
Leveraging its strengths in
engineering and robotics, “Steel
Town” is fast becoming “startup
town” and we’re enthusiastic
about its future.
“When we first came to
the region, we were unsure
what types of companies we
would find. We’ve been really
impressed by the entrepreneurs
in PiƩsburgh and their ambiƟons
to build global companies. It
would be really challenging for
these founders to build great
companies on their own, but
PiƩsburgh does a great job
surrounding them with highquality accelerators, talent from
top-notch universiƟes like CMU
and PiƩ, and capital from firms
like our partner Birchmere.”
Steve Case
Chairman and CEO, Revolution
Co-Founder, America Online
Chris Olsen
Partner, Drive Capital
“The energy and vibe in the Pittsburgh startup community reminds
me of Silicon Valley and Route 128 around Boston when I first
worked those markets in the mid 1980’s. There is a palpable sense
of opportunity here that is being realized.”
Joel Adams
General Partner, Adams Capital Management
“Since the 11 years that BlueTree Allied Angels has been investing, we have seen terrific growth
in the ‘quality’ as well as the ‘quantity’ of investment opportunities. Entrepreneurs are getting the
support they need from many regional sources to become fundable investment opportunities.
Many of our portfolio companies have attracted funding from our colleagues in North Carolina,
California, and New York. These companies can go head-to-head with deals in California, and
that alone speaks volumes about the quality of the startup companies in Pittsburgh.”
Catherine Mott
Founder, BlueTree Allied Angels and BlueTree Venture Fund I
March 2015
11
“We see a number of
great things going for
Pittsburgh startups:
• Carnegie Mellon
University and
University of
Pittsburgh are
true technology
innovation centers.
Their capable
graduates fill
many Pittsburgh
companies.
• Early-stage Pittsburgh
companies get
seed funding and
highly valuable
coaching from an
established network
of experts that help
the companies
win their critical,
initial customers
and maximize their
chances for success.
These are the reasons
why we at Vital Venture
Capital are frequently in
Pittsburgh looking for our
next startup investment
opportunity.”
A. Craig Asher
Principal, Vital Venture Capital
“The level of activity in the Pittsburgh
startup community over the past year
is unprecedented. Commercialization of
technology from professors, researchers and
students at CMU and Pitt is at levels never seen
before. The region’s business accelerators and
incubators are more vibrant than ever and are
producing exciting startups. This is a great time
to be investing in Pittsburgh and we expect
the high level of investment in the region to
continue.”
Mike Stubler
Managing Director, Draper Triangle Ventures
“It’s morning in Pittsburgh! Having
been investing in seed stage tech
companies in Pittsburgh for 20 years,
Birchmere is more excited
than ever about startups in
Pittsburgh.”
Ned Renzi
Co-Founder, Birchmere Ventures
“Pittsburgh has proven to be a fantastic city in
which to build great venture-backed companies.
Bain Capital Ventures has had the good fortune to be involved in a
number of Pittsburgh based tech startups including, most recently,
4moms. 4moms has taken full advantage of their Carnegie Mellon and
broader Pittsburgh roots to build design and engineering teams of a
caliber truly unprecedented in the juvenile consumer products arena.”
Scott Friend
Managing Director, Bain Capital Ventures
12
Investment in Pittsburgh’s technology sector | Trends and highlights
2014 Pittsburgh investment highlights
The following were among the Pittsburgh companies completing funding rounds in 2014:
360fly
Aquion Energy
Cognition Therapeutics
360fly, creates unique, 360° digital products
that inspire users to capture, share and
experience life’s greatest moments. 360fly has
redfined video capture because they believe life
is too rich to capture just part of it.
Aquion Energy manufactures Aqueous Hybrid
Ion batteries and energy storage systems.
Cognition Therapeutics Inc. (CogRx) has pioneered
the discovery and development of new candidate
drugs designed to halt disease progression and
improve symptoms in Alzheimer’s disease and
other neurodegenerative disorders.
www.360fly.com
Investors: Advanced Technology Ventures,
Bright Capital, Constellation Technology
Ventures, Foundation Capital, Bill Gates, Kleiner
Perkins Caufield & Byers, Prelude Ventures,
Shell Technology Ventures, Total Energy
Ventures, Yung’s Enterprise
www.cogrx.com
4moms
ATRP Solutions
Cohera Medical
4moms is an innovative baby gear company that
has redefined the juvenile industry through the
use of advanced robotics.
ATRP Solutions is a world leader in specialty
polymers, improving the energy sector with
advanced materials.
www.4moms.com
www.atrpsolutions.com
CEO: Rob Daley
CEO: Patrick McCarthy
Cohera Medical is working to improve patient care
by fulfilling the clinical need for strong, safe tissue
adhesives and sealants. Their products are based
on a unique chemical design that generates a very
strong bond and is biocompatible for internal use.
Investors: Bain Capital Ventures, BlueTree Allied
Angels, Castanea Partners, Innovation Works,
Newell Rubbermaid, private investors
Investors: Birchmere Ventures, Innovation
Works, private investors
ALung Technologies, Inc.
Avere Systems
Complexa
ALung Technologies is committed to enhancing
the quality of life, improving the health and
reducing the cost of care for respiratory failure
patients and their families by developing
revolutionary respiratory assist products and
services.
Avere gives organizations the ability to put an
end to the rising cost and complexity of data
storage, the freedom to store files anywhere - in
the cloud or on premises - all without sacrificing
the performance, availability or security of their
data.
Complexa is a biopharmaceutical company
that develops therapies for the treatment of
inflammatory and fibrosis-related diseases.
www.alung.com
www.averesystems.com
CEO: Pete DeComo
CEO: Ron Bianchini
Investors: Allos Ventures, Audrey’s Kitchen,
Birchmere Ventures, BlueTree Allied Angels,
BlueTree Venture Fund, Fifth Third Bank,
Innovation Works, Pittsburgh Life Sciences
Greenhouse, Riverfront Ventures, West Capital
Advisors
Investors: Lightspeed Ventures, Menlo Ventures,
Norwest Venture Partners, Tenaya Capital,
Western Digital Corporation
Investors: BlueTree Allied Angels, Innovation
Works, JAFCO, Mid-Atlantic Angels Group,
Pittsburgh Life Sciences Greenhouse, Riverfront
Ventures, Scientific Health Development,
Upstart, private investors
CEO: Tim O’Neil
Investors: Catterton Partners, Qualcomm
Ventures, Voxx International
www.aquion-energy.com
CEO: Scott Pearson
CEO: Hank Safferstein
Investors: Ariel Southeast Angel Partners, Blue
Tree Allied Angels, Cowtown Angels, Golden
Seeds, Innovation Works, Maine Angels, New
York Angels, Ogden CAP Associates LLC, Palm
Beach Investment Research Group, Pittsburgh Life
Sciences Greenhouse, PLSG Accelerator Fund,
Tech Coast Angels, TMC Corporation
www.coheramed.com
CEO: Patrick Daly
Investors: Bradford Capital Partners, Eagle
Ventures, Innovation Works, Kern Medical LLC,
Pittsburgh Life Sciences Greenhouse, private
investors
March 2015
www.complexarx.com
CEO: Josh Tarnoff
13
2014 Pittsburgh investment highlights
Duolingo
Foundation Radiology
kWantera
Duolingo is the world’s largest online language
learning platform, and the most downloaded
education app in the world in both Android and
iOS devices.
Foundation Radiology Group is revolutionizing
the practice of radiology in community
healthcare settings.
kWantera understands electricity pricing at a
variety of levels and uses that knowledge to
deliver maximal savings to their customers.
www.foundationradiologygroup.com
www.kwantera.com
CEO: Richard Vance
CEO: Mark DeSantis
Investors: Chrysalis Ventures, Health Evolution
Partners
Investors: AGSM, GE Ventures, Innovation
Works, private investors
Dynamics
Intelomed
NoWait
Dynamics designs and manufactures intelligent
battery-powered payment devices and advanced
payment platforms.
NoWait is the first mobile network for casualdining restaurants.
www.dynamicsinc.com
Intelomed’s solution, CVInsight™, non-invasively
and pre-symptomatically assesses changes
in cardiovascular stress, enabling delivery of
improved quality and reduced cost of care.
CEO: Jeff Mullen
www.intelomed.com
Investors: Adams Capital Management,
Bain Capital, MasterCard
CEO: Frank Amoruso
Forever, Inc.
Knopp Biosciences
Ottomatika, Inc.
Forever is a permanent, secure, trustworthy
place in the cloud where people and families
can save and share all of their memories for
generations.
Knopp Biosciences seeks to discover, develop and
deliver breakthrough medicines for urgent unmet
medical needs in neurology and immunology.
Their goal is to accelerate drug development,
change the course of devastating diseases and
improve the lives of patients and families.
Ottomatika is a global leader and pioneer in selfdriving vehicle technology.
www.duolingo.com
CEO: Luis von Ahn
Investors: Kleiner Perkins Caufield & Byers,
New Enterprise Associates, Union Square
Ventures
www.forever.com
CEO: Glen Meakem
Investors: Clearwater Capital Management,
Great Oaks Venture Capital, JEMS Venture
Capital, Meakem Becker Venture Capital, Tribeca
Venture Partners, private investors
14
Investors: The Idea Foundry, Pittsburgh Life
Sciences Greenhouse, private investors
www.nowaitapp.com
CEO: Ware Sykes
Investors: AlphaLab, Birchmere Ventures, Drive
Capital, Innovation Works, Novel TMT, Riverfront
Ventures, Sand Hill Angels, private investors
www.ottomatika.com
CEO: Raj Rajkumar
Investors: Delphi Automotive, Innovation Works
www.knoppbio.com
CEO: Michael Bozik
Investors: Innovation Works, Kramer Capital,
LaunchCyte, Saturn Management
Investment in Pittsburgh’s technology sector | Trends and highlights
®
security technologies
RE2
The Efficiency Network
Wombat
RE2 Robotics is developing the next generation
of mobile robotics technologies that enable your
robot to better interact with the world. RE2’s
research efforts focus on creating interoperable
manipulation systems with human-like
performance, intuitive human robot interfaces
and advanced autonomy software for mobile
robotics.
TEN is a next-generation energy efficiency
firm. TEN’s team represents $500m in project
experience and offers budget-neutral energy
and water efficiency projects to large and small
building owners, in the public and private sectors,
through a variety of contracting models.
Wombat Security Technologies provides
information security awareness and training
software to help organizations teach their
employees secure behavior.
www.resquared.com
CEO: Jorgen Pederson
www.10saves.com
CEO: Troy Geanopulos
Investors: Adams Capital Management,
Innovation Works, private investors
www.wombatsecurity.com
CEO: Joe Ferrara
Investors: BlueTree Allied Angels, Idea Foundry,
Innovation Works, Level Equity, Pittsburgh Equity
Partners, Riverfront Ventures, private investors
Investors: Draper Triangle Ventures, Innovation
Works, Riverfront Ventures, Startbot
Rhiza
The Resumator
Wright Therapy Products
Rhiza is an emerging leader in the field of
marketing analytics, offering online tools that
make Big Data actionable for marketers and
salespeople.
Resumator helps companies attract, engage and
hire the right person with powerful Softwareas-a-Service tools that simplify the recruitment
process.
Wright Therapy Products is the leading provider
of compression therapy solutions.
www.rhiza.com
www.theresumator.com
CEO: Josh Knauer
CEO: Don Charlton
Investors: Arthur Ventures, Camp One Ventures,
Draper Triangle Ventures
Investors: AlphaLab, Birchmere Ventures,
Blue Cloud Ventures, Innovation Works,
Rincon Venture Partners, Riverfront Ventures,
Salesforce, Volition Capital, Paige Craig,
Christopher Muenchhoff
www.wrighttherapy.com
CEO: Mike Hinson
Investors: BlueTree Allied Angels, Eagle
Ventures, Pittsburgh Equity Partners, Pittsburgh
Life Sciences Greenhouse, private investors
Rinovum Women’s Health
Rinovum Women’s Health is a privately held
women’s health company dedicated to bringing
products into the market that will enhance
women’s lives and empower them to take charge
of their health.
www.rinovum.com
CEO: Steve Bollinger
Investors: BlueTree Allied Angels, Cardio LLC,
Innovation Works, Pittsburgh Life Sciences
Greenhouse, Thirteen Ventures
March 2015
15
Methodology
The data in this report comes from a combination of the Dow Jones VentureSource and ThomsonOne databases; private
company data collected by Innovation Works, Inc.; and information reported by Carnegie Mellon University, Duquesne
University and the University of Pittsburgh. The investment rounds tracked in these datasets were completed by companies
in the Pittsburgh region from January 1, 2010 to December 31, 2014. Note that changes may occur in this report from
year-to-year due to updates in third-party databases from year-to-year and adjustments made to best reflect the timing
of investment for rounds that have “rolling closes.” For the purpose of this report, equity investments, convertible note
investments and initial public offerings were counted as “venture” investment. The geographic boundary of the Pittsburgh
region used in this report corresponds to the Pittsburgh Metropolitan Statistical Area, as utilized by the U.S. Census Bureau.
Throughout this report, the terms “deal” and “round” are used interchangeably, and refer to a single reported round of
funding. Companies may complete more than one fundraising round in a single year, in which case each round is counted as
a separate “deal.”
About EY
EY is a leader in helping to take companies public
worldwide. With decades of experience, our global
network is dedicated to serving market leaders and
helping businesses evaluate the pros and cons of an
IPO. We demystify the process by offering IPO readiness
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and execution services, all of which help prepare you
for life in the public spotlight. Our Global IPO Center of
Excellence is a virtual hub which provides access to our
IPO knowledge, tools, thought leadership and contacts
from around the world in one easy-to-use source.
www.ey.com/ipocenter (http://www.ey.com/ipocenter)
EY’s worldwide Strategic Growth Markets Network is
dedicated to serving the changing needs of high-growth
companies. For more than 31 years, we’ve helped many
of the world’s most dynamic and ambitious companies
grow into market leaders. Whether working with
international mid-cap companies or early-stage
venture-backed businesses, our professionals draw upon
their extensive experience, insight and global resources
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www.ey.com/sgm (http://www.ey.com/sgm)
16
About Innovation
Works
Innovation Works, Inc. (IW) invests capital, business
expertise and other resources into high-potential
companies with the greatest likelihood for economic
impact in the Pittsburgh region. IW is the single largest
investor in seed-stage companies in this region and
is one of the most active seed-stage investors in the
United States. Nearly three-quarters of all recent
venture-funded companies in the Pittsburgh region
had previously received funding from IW. In addition
to the seed fund, Innovation Works, Inc. has two
nationally-ranked accelerators: Alphalab and Alphalab
Gear. Innovation Works, Inc. is an initiative of the PA
Department of Community and Economic Development
and is partially funded by the Ben Franklin Technology
Development Authority.
For more information, please visit:
www.innovationworks.org
Investment in Pittsburgh’s technology sector | Trends and highlights
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About EY
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develop outstanding leaders who team to deliver on
our promises to all of our stakeholders. In so doing,
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© 2015 Ernst & Young LLP, Innovation Works, Inc.
All Rights Reserved.
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informational purposes only and is not intended to be
relied upon as accounting, tax, or other professional
advice. Please refer to your advisors for specific
advice.
Neither Innovation Works, Inc., Ernst & Young LLP
nor any other member of the global Ernst & Young
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action as a result of any material in this publication.
On any specific matter, reference should be made to
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© 2015 Ernst & Young LLP, Innovation Works, Inc.
All Rights Reserved.