While the holy trinity of venture funding 鈥� California, New York and Massachusetts 鈥� saw massive declines (we鈥檒l get to that tomorrow) some states actually realized significant gains last year, according to SA国际传媒 data.

鈥淚t doesn鈥檛 surprise me,鈥� said , founder of Washington, D.C.-based venture firm , which focuses on investing outside of the major hubs of Silicon Valley, New York and Boston.聽

鈥淎 lot of these areas laid the groundwork years ago and are seeing the payoff,鈥� he said.

While the big three saw big declines in venture investment between 2021 and 2022 鈥� although still more than they saw in 2020 鈥� states such as Florida and North Carolina saw substantial gains. Texas venture funding numbers remained even with 2021 levels to the state after seeing a significant increase in 2021 鈥� still impressive since most areas saw a decline last year.

Case said while there has been steady progress in making the geographical dispersal of venture capital more diverse, the COVID pandemic and the movement of talent has likely accelerated that trend.聽

Along with that, new government initiatives around sectors such as semiconductors and infrastructure and certain areas having an advantage in specific sectors tech has moved into 鈥� such as health care and foodtech 鈥� also have helped level the playing field.

The Sunshine State

No state was able to take advantage of those trends more than Florida. The Sunshine State saw the biggest percentage increase of any state in venture capital investment between 2021 and last year.

In 2021, investors spent $7.8 billion on Florida-based startups over the course of 652 deals, according to SA国际传媒. Last year, that venture number jumped 25% to $9.7 billion in 601 deals. In 2020, Florida startups only took in $3.4 billion in 470 deals.

鈥淓ven us, as Florida鈥檚 biggest cheerleaders, we could not imagine what has happened,鈥� said , partner at , an investment firm that focuses on Florida and the Southeast and has 96 portfolio companies.

Florida saw several large funding rounds last year into the likes of , and . Industries including crypto, space, gaming and cybersecurity have started to thrive in the state.

While the Florida startup scene has been bolstered by the lack of state income tax and a host of successful exits including , and in recent years, it also is likely the state received the biggest boost from COVID migration.

During the pandemic, Florida remained much more open than parts of California and New York.

鈥淧eople moved here, money moved here,鈥� said Baum, pointing out the state has the third-highest number of accredited investors behind only California and New York.

Baum also points out that many see Florida as a natural entry point to the growing Latin American market, also making it an attractive location.

With the increase in venture, Baum added he has already seen big names move into the market in the past few years. 鈥淲e see , , , etc.,鈥� he said. 鈥淲e never really saw those names until recently.鈥�

While those firms have added to the competition on deals to some extent, it also has given more opportunities to work together.

鈥淵es, it’s added competition, but also they want and need to collaborate,鈥� he added.

The Tar Heel State

Although Florida saw the biggest venture capital gains in 2022 鈥斅� a come-back-to-reality year for the industry 鈥� it was not the only state to see a significant uptick.

Just up the road, North Carolina also powered through what was a down year for most areas. The Tar Heel State saw nearly a $1 billion increase in venture capital going to the startups in its borders.

The numbers were helped out immensely by 鈥� massive $2 billion investment from and that valued the gaming company at $31.5 billion.

, founder and managing partner at in Raleigh, said he has noticed real growth in the tech and startup ecosystem in the state 鈥� and it is not just due to the effects of COVID.

鈥淐learly there has been a shift,鈥� Delgado said. 鈥淧eople moved here and you can just look at the dealflow.鈥�

Unlike some regions that are seeing a relatively young tech scene prosper, Delgado points out that North Carolina has been sustainably growing its startup scene for decades, from research and biotech out of the Research Triangle to the successes of Epic Games and open-source software giant .

North Carolina鈥檚 numbers are definitely moving in a positive direction. Startups in the state received about $3.5 billion in venture capital via 241 deals in 2020. Those numbers grew to $4 billion via 285 deals in 2021.

However, the state saw an even bigger jump 鈥� 24% 鈥� last year while most other regions posted declines. North Carolina startups, meanwhile, saw $4.9 billion roll to them in 234 deals.

Delgado said he already is seeing more out-of-state money come into the state 鈥� and just like Florida, he is seeing bigger names including , and being more active.

Tiger, for example, took part in Raleigh-based analytics firm 鈥檚 $150 million Series F in 2021.

Enterprise software, deep tech, AI and fintech all provide substantial growth areas for North Carolina, Delgado said.

鈥淚t鈥檚 very diverse,鈥� Delgado added. 鈥淛ust the diversity of focus [of startups] is incredible.鈥�

The Lone Star State

Sometimes in a year that doesn鈥檛 live up to its predecessor, it鈥檚 not just the areas that make gains that count. It鈥檚 also important to note the ones that held steady and did not give back previous massive jumps.

Texas fits that bill exactly. Venture funding to startups in the Lone Star State jumped 105% between 2020 and 2021 鈥� from $5 billion to $10.3 billion 鈥� per SA国际传媒 data. Last year, Texas startups saw about the same 鈥� actually, a little 1% uptick 鈥� which is especially notable since Texas鈥� venture economy trails only that of the big three states.

鈥淚t was an interesting year here,鈥� said , managing partner at Austin-based , which has more than $500 million under management. 鈥淚t was kind of a year of two halves. The first half was definitely a carry-over from 2021.

鈥淭he second half softened,鈥� he added.

Not surprisingly, the two biggest rounds 鈥� raising $1 billion and 鈥檚 landing $675 million 鈥� both happened in the first half of last year.

While Texas has welcomed its share of big tech companies in recent years including and , Flager said the tech ecosystem can still continue to grow in the state 鈥� although perhaps not at the same pace places like Austin have grown in recent years thanks in part to COVID and other cultural shifts.

Health care IT, fintech and enterprise software are all leading upward-trending growth, along with a significant influx of talent over the years.

鈥淚 don鈥檛 feel like we鈥檒l take a step back,鈥� he said. 鈥淭here are too many tailwinds. But it will be interesting to see what happens to the pace.

鈥淎 place like Austin cannot continue to have increases in its population like what happened in 2021,鈥� Flager added. 鈥淏ut it鈥檒l still grow.鈥�

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New investors and , along with existing investors , , , and , also participated in the financing. The round brings Pendo鈥檚 to $206 million since its inception in 2013, according to its SA国际传媒 profile.

The company, per its , aims to 鈥渦nderstand and guide the entire product journey with a single (cloud-based) platform.鈥� In other words, it wants to help companies build digital products that are easier to use with a SaaS (software as a service) model. Pendo operates under the premise that 鈥渕any product teams still lack the basic tools they need to understand what their customers want, why customers come back, or what drives them away.鈥�

鈥淲e help companies create software that users love. How often do people use software that is frustrating, confusing or can鈥檛 find what you鈥檙e looking for?鈥� CEO and co-founder asked me when we talked at the time of Pendo鈥檚 2018 raise. 鈥淥ur whole value proposition eliminates those experiences. We help people get immediate value when they log into software. We believe that software is becoming a permanent part of our lives whether we鈥檙e purchasing new cars or experiencing some other digital experience.鈥�

The company has seen impressive growth over time, noting a three-year CAGR (compounded annual growth rate) of 334 percent. It currently has more than 375 employees, up from 225 in September of 2018, across offices in Raleigh, New York City, San Francisco, London, Sheffield, United Kingdom, and Tel Aviv.

Also, Pendo says its bookings grew 108 percent in the second quarter over the same period in the prior fiscal year. The company now has over 1,200 customers, including Verizon, ADP, Cardinal Health, RE/MAX, LabCorp, Bright Horizons, Okta, OpenTable, Salesforce, Zendesk and the Michigan Supreme Court.

鈥淎 lot of companies are focused on sales or marketing but very few are focused on product,鈥� Olson told me last year. 鈥淭his fundraise is a good example of why product is so critically important today, more than ever before.鈥�

Earlier this year, Pendo completed its second acquisition with the purchase of UK-based . But according to the company, it won鈥檛 be its last.

Pendo says it will use the new capital 鈥渢o accelerate global expansion through sales and marketing investments, and [accelerate] product development through engineering investments and acquisitions.鈥�

When I interviewed Olson last year, he told me that an IPO was something the company was considering. So I asked Pendo if that was still in the works. Its answer: 鈥淵es, it is. Pendo鈥檚 goal is to build a large, successful and independent company. Their business fundamentals, recent growth, product suite and leadership team have set the company on a path not only toward IPO but to be a dominant SaaS business for years to come.鈥�

This marks the second large round raised by a North Carolina company in a matter of weeks. On Oct. 2, we covered North Carolina-based聽, which has developed a cloud-based operating system for financial institutions, raising $80 million in a round of funding led by

In October 2018, I took a look at North Carolina鈥檚 growing startup scene. At that time, we found that venture funding in NC startups was up 154 percent to $2.57 billion for the year compared to $1.01 billion in all of 2017,聽 according to SA国际传媒 data. Maybe it’s time to take another look.

Disclosure: , an investor in Pendo, is also an investor in SA国际传媒, the parent company of SA国际传媒 News. SA国际传媒鈥檚 investors are listed as part of its SA国际传媒 profile. For more about SA国际传媒 News鈥檚 editorial policies on disclosure, see the News team鈥檚 About page.

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Existing investor 1 also participated in the financing, which brings the Wilmington company鈥檚 since its inception in 2012 to more than $213 million, according to SA国际传媒 data. Previous backers include and .

In a issued on Wednesday morning, nCino said only it had closed on a round of funding, but did not reveal the amount. A with the U.S. Securities and Exchange Commission, however, indicates the company raised $80 million.

A team of bankers and entrepreneurs who found the commercial lending process to be 鈥渋nefficient and time-consuming鈥� formed the company seven years ago. nCino has developed a self-described 鈥渆nd-to-end鈥� SaaS solution, dubbed the nCino Bank Operating System, in an effort to help banks 鈥� increase transparency, efficiency and profitability while ensuring regulatory compliance,鈥� according to nCino鈥檚 website. nCino says it integrates with a bank’s transactional systems, 鈥渨hile replacing point solutions and manual-based processes.鈥�

One of the co-founders, , is also chairman and CEO of Live Oak Bank. The system was first implemented there and then began attracting interest from other banks. Today, over 1,100 financial institutions in multiple countries are using nCino, the company said.

According to its release, nCino plans to use the new capital 鈥渢o further scale its global workforce and accelerate investment in research and development to bring innovations such as analytics, artificial intelligence and pricing鈥� to its customers. I reached out to the company for more details and will update this story when I get them.

Earlier this year, spokeswoman Natalia Moose told that nCino continues to build upon its product, with the addition of retail banking and enterprise onboarding solutions.

鈥淲e鈥檙e well beyond our days of being just a commercial loan origination platform,鈥� she was quoted as saying at the time.

nCino currently employs more than 750 people across its offices in London, Sydney, Toronto and Salt Lake City and out of its headquarters in Wilmington.

In July, it , Salt Lake City, Utah-based , a financial analytics and compliance software company.

In October 2018, I took a look at North Carolina鈥檚 growing startup scene. At that time, we found that venture funding in NC startups was up 154 percent to $2.57 billion for the year compared to $1.01 billion in all of 2017,聽 according to SA国际传媒 data.

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Just last week, Forbes (for the third straight year) in Forbes鈥� annual list of 鈥淏est Places for Business and Careers.鈥� The publication noted the city鈥檚 鈥渟trong economy and educated workforce.鈥� It also pointed out that Raleigh鈥檚 business costs are 14 percent below the national average, per Moody鈥檚 Analytics.

In this June 2018 , , CEO of , wrote that North Carolina鈥檚 (NC鈥檚) State’s Centennial Campus, just west of downtown Raleigh, 鈥渓ooks and feels like Silicon Valley.鈥� The state has something else in common with Northern California: it鈥檚 home to a combination of beaches and mountains that attracts tourists from all over the nation.

But it鈥檚 not just skylines and beaches that make North Carolina attractive to folks in tech. Venture capitalists, large funding rounds, big acquisitions, and the possible arrival of major tech companies are helping propel the state forward.

The Numbers

So far in 2018, venture funding in NC startups is up 154 percent to $2.57 billion compared to $1.01 billion in all of 2017, 聽according to SA国际传媒 data. Compared to 2013 when NC startups raised a combined $516.5 million, funding this year thus far is up nearly 400 percent.

Just in the past week, two North Carolina companies made headlines for being involved in major deals.

On Oct. 26, Cary-based closed a $1.25 billion round. Then on Oct. 28, IBM announced plans to acquire Raleigh-based for $34 billion .

Both deals were large and significant for the picturesque southeastern state; however, other notable deals have been made. In September, Pendo raised a $50 million Series D led by and Prescient brought in $50 million in July.

Combine the number of pretty big raises by NC-based companies with the rumors that tech giant is nearing the close of, or has already closed on, the purchase of a huge chunk of land on which it could and it鈥檚 safe to say that North Carolina is quietly, and resoundingly, becoming a real competitor to Silicon Valley. (In the interest of full disclosure, my husband is an Apple employee but that鈥檚 immaterial here.)

A Region Transformed

While Charlotte, NC, has long been known for being , the Research Triangle area has historically struggled to be a formidable alternative for tech startups to call home. The sheer number of universities has been an asset for the region. (They include , , , and nearby, just to name a few) But many of the schools鈥� engineering or computer software graduates often left North Carolina after graduating, lured by the higher tech salaries and the potential to raise more venture capital in other markets.

, managing partner of Cary-based , was a serial entrepreneur who started seven business-to-business software companies and sold all for somewhere between $12 million and $100 million each. He launched Cofounders Capital to help other budding companies in the software space grow and to help keep companies from leaving the region because they couldn鈥檛 find capital in the state. About 85 to 90 percent of the firm鈥檚 deals are in companies based in the Research Triangle.

鈥淲e鈥檝e done a great job of building a startup community,鈥� he told SA国际传媒 News. 鈥淚t鈥檚 cool to be an entrepreneur now. As evidence of that, entrepreneurship is the fastest-growing degree at local universities. But kids don鈥檛 want to be a cog in someone else鈥檚 machine. Right now the, the best and brightest want do their own thing.鈥�

Cofounders Capital raised $12 million in its first fund and has raised about $25 million of the $50 million it is targeting for its second fund. Its accelerator arm, Cofounders Lab, offers companies free office space, internet, and supplies. Most of the fund鈥檚 LPs are serial entrepreneurs and local CEOs, Gardner said.

鈥淓ven though it鈥檚 a traditional venture fund, I run it like an angel group,鈥� he said.

So far, his firm has invested in 18 companies. It likes to be the 鈥渇irst money in a deal,鈥� according to Gardner, and is more than ok with putting capital into companies that don鈥檛 yet have revenue.

鈥淲e鈥檙e the only guys in town that will write a pre-revenue term sheet,鈥� he said.

Besides the local universities and growing number of tech companies opening offices in the region, Gardner points to another asset that North Carolina has: a culture that鈥檚 rooted in southern hospitality.

He relates the story of a young woman with a sugar-free candy business who was trying to tape up some candy under every seat at the competition where she was presenting. (The winner would get a $100,000 prize.)

鈥淎 number of her competitors got up to help her tape the candy under the seats,鈥� Gardner recalled. 鈥淚 remember thinking to myself, 鈥楾hat probably wouldn鈥檛 happen in NYC.鈥欌��

In general, he believes the region just has 鈥渟omething special.鈥�

鈥淚 believe we鈥檙e the best kept secret in VC,鈥� he told SA国际传媒 News. 鈥淚 don鈥檛 have to leave even the area to find deals. But I don鈥檛 think the country has caught up yet with what a hotbed this place is.鈥�

And although Gardner wants there to be more funds in the region, he acknowledges that he鈥檚 鈥渕aking out a like a bandit鈥� because they鈥檙e not.

鈥淚鈥檓 paying one-fourth in valuations compared to what they pay in the Valley,鈥� Gardner said. 鈥淎nd when you have such a large deal flow, you have a much better opportunity of picking the best companies. I鈥檓 a big fish in a pretty small pond.鈥�

founder and CEO agrees the region has seen 鈥渁 tremendous increase in the number of new startups, as well as new venture firms and incubators.

Overall, he also noted that the downtowns of both Raleigh and Durham have evolved dramatically. Their transformation into lively centers with high-rises and new restaurants is creating an 鈥渁ttractive enough environment to keep some of the young people here,鈥� Olson told SA国际传媒 News.

Many people who had left the region to other more expensive urban areas are finding their way back, he said.

鈥淥nce they鈥檙e ready to settle down and start a family, Raleigh looks very attractive,鈥� 聽he said. 鈥淚t鈥檚 a place that we鈥檙e seeing people want to come back to.鈥�

It also doesn鈥檛 hurt a couple giants in tech may soon reside in the state.

Impending Giants

This year, it鈥檚 been reported that both and Apple big parcels of land for second headquarter campuses in North Carolina. If both companies did establish campuses in Raleigh, that could mean a $6.5 billion investment and 60,000 new jobs, according to reports. Plus, Apple is no stranger to North Carolina. The company in recent years began work that generates 17.5 megawatts of power for the company鈥檚 large data center in Maiden, North Carolina.

A source told me that the Amazon campus deal was a no-go but that the Apple plans were more likely and would probably involve incentives from the state. A NC economic development official told me she could only comment 鈥渙nce鈥� Apple made its own announcement. (You can interpret that any way you like.) But since the iPhone maker is notoriously secretive, most people are refusing to comment when asked about the possibility. But we should point out that CEO is , along with a number of other top-ranking executives in the company.

For Gardner, the arrival of a large new campus for either Amazon or Apple would be what he describes as a 鈥渕ixed blessing.鈥�

鈥淚f either of them were to locate here, it would be great to have the jobs, tax bases, and credibility in the area,鈥� he said. 鈥淎t the same time, one of the great things about this area is the low crime, great schools and healthcare, low pollution and low traffic. As you get these mega companies starting to come here, you start to compromise some of those things.鈥�

Since I grew up and went to undergrad in North Carolina, I have to say I feel a certain sense of pride at how the state has made a name for itself in the tech and startup community. And from the way things look and what I hear from people on the ground in the state, this could be just the beginning of a whole new chapter for North Carolina.

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