Medical device and health technology companies raised the most capital in Minnesota through the first six months of 2023, though overall deal value is down 63%.
Minnesota companies raised $437 million in the first two quarters of the year, compared with $1.2 billion in the same period in 2022, according to investment tracker PitchBook and the National Venture Capital Association.
Deal value in Minnesota has cooled since record numbers seen in 2021 and 2022, when high valuations of young companies drove deals upward. Numbers have since leveled to pre-pandemic numbers, experts said.
Through the first half of 2019, Minnesota companies raised $445.9 million from venture investors.
Across the U.S., companies raised $85.6 billion in venture capital through the first half of the year. For perspective, in 2022, companies raised a total of $246.5 billion, and in 2021, a record $347.5 billion.
Federal interest rate hikes by the Federal Reserve, and the closure of banks that back venture-based companies, like Silicon Valley Bank, impacted the venture capital landscape in the U.S. through the first six months of 2023, experts from PitchBook and NVCA report. Meanwhile, investors are seeking better returns on their investments, instead of continuously pumping additional rescue capital into companies that should have already gone public offering or found a buyer.
Minnesota venture fund managers predicted earlier this year companies would see less cash coming their way this year, with investors becoming more selective, as well as less capital being available amid speculations of a recession.
Still, several Minnesota companies were able to raise capital from venture capital firms.
Minneapolis-based Flywheel in June closed on $54.3 million in a Series D financing round, valuing the company at $254 million, according to investment tracker Pitchbook and the National Venture Capital Association. Investors included Microsoft. Flywheel developed a cloud-based research platform used by clinical researchers and pharmaceutical companies.
Edina-based Relievant Medsystems, the maker of a system used to treat chronic low back pain, raised $50 million in a Series G round of funding in April, signaling the company's eighth capital raise since its formation in 2006 and valuing the company at $350 million, per PitchBook.
Other companies that raised large rounds of capital include Edina-based software firm Parallax, which closed on $12 million to further develop its software that predicts workload.