2021 was a record cash haul for NC startups. Here’s who raised the most money.
Startups in North Carolina continued their torrid hot streak in 2021, bringing in a record amount of funding in a year marked by mega-rounds from some of the state’s most valuable startups, including video game powerhouse Epic Games.
Companies in North Carolina raised $4.6 billion from investors last year, according to an analysis of funding by The News & Observer and PitchBook, a firm that tracks the venture capital industry.
That dwarfed the $3.6 billion startups raised in 2020, which had been the most the state had seen since the dot-com bubble of the late 1990s, The N&O previously reported.
Overall, the entire startup ecosystem in the U.S. seemed to be on fire last year, with PitchBook reporting that investors poured $329.9 billion into more than 17,000 separate deals, a record for both.
“By all metrics, 2021 was a banner year for the U.S. VC ecosystem,” John Gabbert, founder and CEO of PitchBook, said in a statement. “A fair portion of the new investment records can be attributed to the record levels of capital washing through the system. ... With VC returns outpacing every other private capital asset class, we expect LPs to continue to allocate capital toward venture at unprecedented rates in the coming year.”
California-based startups once again topped the lists for funding, bringing in $156 billion, and according to PitchBook, the Bay Area took up one-third of all deal value.
Among states, North Carolina startups brought in the 11th most money. (The N&O included a funding round for Raleigh-based insightsoftware that was not included by PitchBook, which pushed North Carolina up the list.)
Inside of North Carolina, startups from the Triangle dominated the state’s funding totals for 2021, taking in more than three quarters of all funding in the state.
Here are the largest deals that gave North Carolina a record-breaking 2021:
14. Phononic ($50 million)
In July, Phononic, a Durham-based cooling technology startup, was on the receiving end of a $50 million investment from a Goldman Sachs investment fund.
Phononic, founded in 2009, makes semiconductor chips that power thermoelectric heat pumps for cooling. The chips are smaller and more efficient than traditional cooling methods that use air compressors, the company says.
The potential of its technology to provide cleaner cooling caught the eye of Goldman’s new Environmental, Social and Governance (ESG) fund. ESG funds have exploded in recent years, taking advantage of investors’ growing desire to invest in more sustainably run companies in the face of climate change pressures.
Phononic, which says it is now valued at more than $500 million, plans to use the money to expand its sales and marketing team and improve its ability to do high-volume manufacturing. The money could also help it make the leap to going public.
“We aspire to be a publicly traded company,” Phononic CEO Tonny Atti said in July, “and all we can say is the amount of capital that we raised, the investors at the table, and the growth metrics we’ve demonstrated give us that path.”
Phononic says it now sports a valuation north of $500 million.
13. Xilis ($70 million)
Xilis, a biotech startup founded by Duke University professors, raised $70 million in July to fund experimental cancer treatment technology.
The company, founded in 2019 by Drs. Xiling Shen, David Hsu, and Hans Clevers, is creating what it calls MicroOrganoSphere technology, or MOS, which takes tissue samples from cancer patients and turns them into thousands of micro replicas of a patient’s cancer tumors.
The replicas — made up of a patient’s own cells and simulating their own immune response — are tested with a variety of treatment options to determine which one might be most effective. The goal is to remove some of the trial-and-error elements of traditional cancer treatments, as it can sometimes take months to determine how a drug is working.
Xilis’ funding came from the Abu Dhabi sovereign-wealth fund Mubadala Capital, GV (formerly Google ventures), the Duke Angel Network and several other investment funds.
The biotech company has a valuation of $220 million, according to PitchBook.
12. Well Dot Inc. ($70 million)
Chapel Hill’s Well Dot Inc., the creator of an artificially intelligent platform that acts like an on-demand health care expert for a company’s employees, raised $70 million from investors in December.
The company, founded by former Aetna executives, said it is on the verge of landing a large-sized corporate partner in 2022.
Well Dot has said previously it plans to hire around 400 employees in Chapel Hill in the next four years. In 2019, the company received a $4.4 million incentive package from the state to expand in Chapel Hill.
The company has a valuation of $170 million, according to PitchBook.
10. StrideBio ($82 million)
In May, StrideBio became the latest Triangle gene therapy startup to receive a big cash infusion from investors.
The biotech company, founded on UNC-Chapel Hill technology, uses adeno-associated viral (AAV) vectors to treat rare diseases. The company’s $82 million investment round was led by Northpond Ventures, Novo Holdings and Durham-based Hatteras Venture Partners.
Diseases the company is focused on include Angelman syndrome, Friedreich’s ataxia and Rett syndrome.
PitchBook pegs StrideBio’s valuation at $182 million.
9. ServiceTrade ($85 million)
In December, ServiceTrade, a Durham maker of automation software for commercial services businesses like electricians, plumbers and inspectors, raised $85 million from investors JMI Equity, Bull City Venture Partners and the Charlotte growth-equity firm Frontier Growth.
Founded in 2012 by Billy Marshall and Brian Smithwick, ServiceTrade has around 800 customers across the U.S. and Canada, mainly in the HVAC, electrical and fire protection trades.
ServiceTrade’s cloud-based platform helps companies schedule and dispatch technicians efficiently, produce online quotes, and track historical data. The company also offers features to automate accounting and help technicians manage their parts inventory. The startup currently employs around 120 people.
“I think (we have) a chance to be one of the flagship software companies in the area,” Smithwick told The N&O last month.
8. Pairwise ($90 million)
Last February, Pairwise, a 4-year-old Durham startup that uses gene-editing technology to improve crops, raised $90 million from investors.
The company uses CRISPR technology to make certain crops and plants more shelf stable and consistent as well as boosting their availability throughout the year. Its gene-editing platform is built off technology licensed by the Massachusetts Institute of Technology and Harvard University, which has been a leader in gene editing.
Tom Adams, Pairwise’s CEO, said the new funding will be used to build out its research and development team and launch its first product, a new variety of leafy greens, in 2022.
Pairwise employs around 100 people in Durham.
7. AgBiome ($116 million)
AgBiome, a Research Triangle Park-based startup developing natural fungicides and microbes to control pests, said in September it had raised $116 million from investors, the most of any agtech company in North Carolina last year.
The company said it will use the money to increase the reach of its first commercial product — a fungicide called Howler — and shepherd more of its products through Environmental Protection Agency approvals.
AgBiome uses microbes rather than chemicals to create its products, employing proteins, bacteria and fungi that can fight off pests and weeds. The result is a spray that has a “softer environmental footprint,” and less chemical residue on the produce, Eric Ward, the company’s co-CEO said.
“Growers really are looking for alternatives to the kind of standard synthetic chemical pesticides they’ve been using for so long,” Ward said. “In a lot of cases, it’s because they’re not working as well. Everything eventually evolves resistance, so the chemicals just don’t have the same kind of efficacy as they did.”
AgBiome employs around 100 people.
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6. Printful ($130 million)
Printful became one of the state’s few startups valued at $1 billion earlier this year, when it landed a $130 million investment from growth-equity investor Bregal Sagemount.
Founded in Latvia in 2013, Printful is an on-demand print and fulfillment company. Its website allows customers to print custom designs on T-shirts, home decorations and other items.
It moved its headquarters to Charlotte in 2019, and brought in more than $200 million in revenue in 2020, The Wall Street Journal reported.
5. CData ($140 million)
Chapel Hill software maker CData, which helps companies connect their data across a variety of cloud networks, raised $140 million from Updata Partners in December.
Founded in 2014, CData is led by Amit Sharma. The company employs around 200 people across its offices in Chapel Hill, Europe and Asia. About half of the team is located in the Triangle.
It plans to use its money to hire another 100 employees and increase its sales and marketing reach.
4. Pendo ($150 million)
Pendo, one of Raleigh’s most prominent startups over the past decade, saw its valuation increase to $2.6 billion in 2021, after raising an additional $150 million from investors in July.
It is also likely to be the company’s last round of funding from investors, as it could attempt to go public sometime later this year, CEO Todd Olson said last summer.
“We do think we’ll need a round of capital pre-IPO, (and) we felt like now is a good time to kind of get this money in the bank,” Olson told The N&O last year. “That will free us up to be a little more aggressive and spend more aggressively and help get us to that IPO event.”
Pendo, which makes software that helps companies collect data on how customers actually use their products and websites, has raised $356 million since it was founded at HQ Raleigh (now Raleigh Founded) in 2013.
The company recently moved into a new office at the Raleigh Crossing building in downtown Raleigh, and it is one of the few local startups to see its logo now adorn the Raleigh skyline. The company has around 675 employees worldwide.
3. Prescient ($190 million)
Prescient, a North Carolina-based startup that makes architectural software, said in May that it had raised $190 million from investors.
The company employs around 100 people in North Carolina, and it has its corporate headquarters in Charlotte and a manufacturing facility in Mebane.
The company recently had an incentive agreement with the state canceled after it failed to meet hiring milestones at its manufacturing facility in Mebane.
In 2017, Prescient said it would hire 200 people at the plant. But, the company now says labor shortages have prevented it from hiring enough employees.
2. insightsoftware ($1 billion)
Raleigh’s insightsoftware had one of the more jaw-dropping fundraises of 2021, when it received a $1 billion investment from the private-equity firm HG.
The investment gave insightsoftware a $4 billion valuation, making it the second most valuable startup in the state.
Based in an office off Six Forks Road in North Raleigh, insightsoftware was formed out of the 2018 combination of Raleigh-based Global Software and Hubble Software, which had been bought by TA Associates and ST6, a consulting firm started by software executives.
Insightsoftware makes financial reporting and budgeting software, as well as other products targeted toward chief financial officers and accountants. Over the past three years, it has grown aggressively through acquisitions, buying 20 other software firms. Just this year, the company has bought firms such as Izenda, Logi Analytics and Certent.
The startup employs around 350 people in Raleigh.
1. Epic Games ($1 billion)
Epic Games, despite being locked in an uphill monopoly lawsuit with Apple, had another monster year in 2021.
The video game developer’s flagship game Fortnite remains uber popular, and it continues to bring in huge sums of cash.
In April, it raised $1 billion in fresh capital from investors, and reached a valuation of $29 billion, making it one of the most valuable startups in the country.
The video game company continues to hire hundreds of employees in the Triangle, and it is developing the old Cary Towne Center mall into a headquarters with enough room for thousands of employees in coming years.
Tim Sweeney, the company’s CEO, said it hopes to use the money from its $1 billion fundraise to build the so-called metaverse.
The metaverse refers to virtual worlds where people can interact with each other via online avatars. People already do this in a limited fashion in Fortnite, but companies are investing hundreds of millions of dollars to create virtual ecosystems where people can interact for a variety of reasons, whether it’s work, commerce or entertainment.
Epic’s most recent investors included: Sony (which contributed $200 million to the round); Appaloosa Management, the hedge fund run by Carolina Panthers owner David Tepper; Fidelity; Baillie Gifford and others.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published January 14, 2022 at 7:30 AM with the headline "2021 was a record cash haul for NC startups. Here’s who raised the most money.."
