Venture Capital Firms Invested in Ohio at Record Levels in 2018

Ohio leads the Midwest in attracting growth capital

Some of the best-known early companies, such as IBM, Genentech, Apple and Intel, were backed by venture capital (VC). What has changed since then? In a word: everything.

As an industry, VC firms have gone from providing a few million dollars in funding per year in the 1960s, to funding over 8,900 deals worth more than $130 billion in 2018, according to Pitchbook/National Venture Capital Association data. VC firms still invest the largest share of their funds in technology and biotech firms. However, the funding shift within technology is dramatic – from mostly hardware in the 1960s and 1970s to mostly software in 2018. Software was by far the largest sector beneficiary of all VC funding in 2018, accounting for about 36 percent of the total. The second largest recipient sector, pharmaceuticals and biotech, accounted for about 18 percent.

Another significant shift has occurred in the geography of firms receiving VC funding. In the early days of VC, West Coast firms received the vast majority of deals. Since the early 2000s, the West Coast has slowly seen its deal share decline, while Midwest states have experienced significant increases in share of deals.

Ohio led the trend toward more Midwest VC investment in 2018, breaking the $1 billion mark.  In 2018, Ohio firms secured a 150 percent increase over 2017 funding, and more than a 100 percent increase over the prior three-year and five-year averages. This breakthrough placed Ohio as the No. 1 growth story in the Midwest from 2017 to 2018, in both percentage and absolute terms, and the eighth best nationally.

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