Boston VC Continues Surge in Q1; Here are the Top 10 Deals

Venture capital continued to flow to Boston-area companies at a prolific rate during the first quarter of 2018, as investors picked up where they left off last year.

In the first three months of the year, venture capitalists pumped more than $2.7 billion into companies located in the Boston metropolitan area, according to data from the quarterly Venture Monitor report produced by Seattle-based PitchBook and the National Venture Capital Association (NVCA). That was the second-highest quarterly dollar amount VCs have invested locally since the beginning of 2013, according to Venture Monitor data shared with Xconomy. It trailed only the fourth quarter of 2017, when PitchBook and the NVCA tracked nearly $2.9 billion in local VC investments.

Zooming out a little, the state of Massachusetts saw its highest quarterly VC total since 2000, according to a separate analysis of first-quarter data by PricewaterhouseCoopers and CB Insights. Their MoneyTree Report found VCs invested more than $2.6 billion in Massachusetts companies in the quarter. Notice the state total is lower than the Boston-area total from the Venture Monitor report, even though Boston-area deals are included in the MoneyTree Report’s statewide figure.

There are often discrepancies between the two quarterly reports, in part because they use different methodologies. They also break out local and regional data in different ways, so it’s not always an exact comparison. But whichever way you slice it, Bay State venture dollars are swelling.

The caveat is that the capital is going to a relatively small number of companies. The first quarter saw $2.7 billion invested in just 131 Boston-area deals—the lowest quarterly deal count in five years—according to Venture Monitor data. Conversely, the MoneyTree Report tracked 110 deals statewide in the first quarter, which is the highest quarterly deal total since there were 119 in the first quarter last year. But recent statewide deal counts are still down from the levels seen in 2014 and 2015, when Massachusetts quarterly deal totals were often between 121 and 136, according to MoneyTree data.

The local VC trend is a microcosm of what’s happening nationwide, as investors continue to pump more money into fewer, later-stage companies. The surge in Boston-area VC dollars in the first quarter was driven by six deals of $100 million or more, mostly in biotech, according to Venture Monitor data. (See list of top-10 local deals below.)

It’s worth asking whether this is sustainable, given that the number of venture-backed exits remains sluggish. Nevertheless, venture firms—particularly well-known ones with a good track record—continue to raise gobs of money to back companies. Norwest Venture Partners, General Catalyst Partners, and Battery Ventures each raised more than $1 billion in the first quarter, for example.

A bigger question is whether the emphasis on larger, later-stage deals, combined with the continued decline in the number of early-stage investments, is a harmful recipe for the startup industry.

Here are the 10 largest VC deals in the Boston area from the first quarter, per Venture Monitor data:

1. Moderna Therapeutics, $500 million
2. TCR2 Therapeutics, $125 million
3. Rubius Therapeutics, $101.2 million
4. Generation Bio, $100.4 million
5. Scout Exchange, $100 million
6. XebiaLabs, $100 million
7. Evelo Biosciences, $81.5 million
8. Centrexion Therapeutics, $69.6 million
9. Desktop Metal, $65 million
10. Ionic Materials, $65 million

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