Money Tree recently published its fourth-quarter 2017 report showing a continuing trend of venture capital increasingly flowing to more mature companies. Conversely, initial “seed deals” — the most frequent type of investment in Maine — have declined to an eight-quarter low.
In 2017, U.S venture firms made $71.9 billion in investments, up 17 percent from the previous year. Overall, there is an increasing amount of capital available, which is great on a broad scale. But the portion of money going to seed companies has dropped to 27 percent of total VC funding, a five-year low.
This is an ominous trend for Maine, since seed-stage deals represent the lion’s share of venture capital activity in the Pine Tree State. With more money being funneled through the largest funds into the largest companies, Maine needs to continue to deeply invest in building and supporting its own startup ecosystem.
There are a number of programs already in place in Maine that are geared for supporting and educating startups, as well as offering partial funding for entrepreneurs at the very early stage of development. Perfect examples are UpStart and ScratchPad. Top Gun, another program that helps businesses accelerate growth, offers a $25,000 cash prize at the end of the program. The Maine Technology Institute provides education and advocacy for startups, as well as invests a significant amount each year into Maine companies through its many grant and loan programs.
It is also imperative that Maine maintains and grows professionally managed funds, such as MVF and Coastal Ventures, and active angel groups such as the Maine Angels and the Bangor Angel Fund. In 2017, MVF invested over $1 million in seed capital into Maine-based companies, leveraging over $7.5 million in capital from private investors. By growing and supporting our entrepreneurial ecosystem from within we will only make Maine companies more attractive to investors no matter where they are.
This newsletter comes on the heels of the recent and sudden closing of Venture Hall. However, as stated on the organizations website: “We are confident that our ecosystem is deep and robust enough that another organization will emerge to continue this important work with a clear vision and a new brand.”
For a list of Maine-based funds, and educational programs, click the link.