VC investment passes $2B in Ohio for the first time – and 66% is in Columbus

COLUMBUS, Ohio (COLUMBUS BUSINESS FIRST)–Ohio’s startups and high-growth technology companies for the first time have topped $2 billion in venture capital investment in 2021, with three months yet to go in the year.

The Columbus region represents two-thirds of that.

Central Ohio tech companies landed $1.3 billion in investment through the first nine months – more than the statewide full-year record of $1.1 billion in 2020, according to Columbus Business First‘s analysis of quarterly data compiled by PitchBook and the National Venture Capital Association.

The Columbus-area total was goosed by five mega-rounds of $100 million or more, including the $400 million round valuing Olive AI Inc. at $4 billion announced July 1.

The quarterly Venture Monitor report, released Thursday, added that deal to the second quarter, when it closed. Central Ohio startups raised another $311 million in the July-September quarter, it said, for 80% of the state total.

The deals have attracted firms from Silicon Valley, New York City, Atlanta and around the country that never looked Ohio’s way before.

Just this week, the growth equity investing arm of Goldman Sachs made its first investment in the state by leading a $60 million round in Columbus data analysis and cybersecurity startup Aware. (That figure is not included in the third-quarter report.)

And yet, because VC is shattering records nationwide, Ohio still hasn’t budged from less than 1% of the total, according to the report.

“The pace of activity across all facets of the U.S. VC ecosystem in 2021 has been astounding,” PitchBook CEO John Gabbert said in a news release.

Tech companies nationwide have already doubled the record 2020, raising a combined $239 billion so far, including another record of 104 mega-deals, according to the report – which liberally uses language like “phenomenal cadence,” “smashes,” “historic,” and “skyrocketed to dizzying heights.”

California still attracts half of all dollars raised. Just the San Francisco Bay Area’s venture-backed companies raised more than $30 billion in the third quarter – more than the next four highest-raising metro areas combined, sister publication Silicon Valley Business Journal reports.

As eye-popping as Columbus’ numbers seem, other metro areas around the country also have already broken their annual investment records with results through nine months, according to the report, including Miami ($2.4 billion raised), Atlanta ($3 billion), Denver ($3.5 billion), Austin ($3.8 billion), Philadelphia ($5.2 billion) and Chicago ($5.5 billion).

Deals like Aware’s are examples of what the report calls the main driver of skyrocketing investment amounts and company valuations: Huge well-capitalized institutions like Goldman are venturing into venture. These include private equity giants like Tiger Global Management, which invested in several Columbus deals in recent years, investment banks and corporations.

Columbus-based Nationwide grew its in-house VC fund to $350 million this year and has been investing in fintech startups around the country.

These large institutions, which the report dubs “nontraditional” to contrast with risk-embracing VC firms, have participated in 33% of deals so far this year, including 88% of the mega-rounds.

They’re attracted by higher returns: This year so far also has brought a record number of IPOs, which along with acquisitions and SPACS have generated more than $500 billion in exit value through nine months for the first time.

“The sustainability of the increased capital flow from (limited partners) or nontraditional investors into venture is something we plan to monitor because LP allocations to VC are likely elevated and will probably trend back toward realistic limits,” the report said.

For the full report and data bundles from this and past quarters, check the Venture Monitor website here.

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