A Dallas startup scored the largest venture capital deal in the state in the third quarter, raising $52.4 million from six investment firms.
Peloton Therapeutics Inc., a biotechnology company that develops small molecular cancer therapies, raised more than double any other company in the quarter, according to the latest PwC MoneyTree report based on data from Thomson Reuters. The deal accounted for nearly 90 percent of third-quarter venture capital money raised in the North Texas. Investors in the round were Nextech Invest AG, Column Group, Remeditex Ventures LLC, Topspin Partners LP, Foresite Capital Management LLC, and an undisclosed firm
“When you do have a big a deal like that, it tends to skew the results,” Caroline Gagliardi, partner at PwC, said about the third quarter. “So it’s important when you look at the dollars and deals to understand the specifics so you can really comprehend.”
Total investment in the region was $60 million across five deals, down from $73.5 million across nine deals in the same quarter last year as it stands. Meanwhile, Austin companies raised $120.4 million across 24 deals, and Houston startups raised $27.7 million in four deals. San Antonio was home to one deal totaling $3 million.
The MoneyTree report collects data from a quarterly survey of venture capital practitioners, as well as from other public and private sources. But if a deal is not disclosed to the public or Thomson Reuters, it won’t be counted in the MoneyTree report. PwC and Thomson Reuters also regularly update the data based on new information received, which could drastically change the results as they did in the second quarter, changing North Texas’ total dollars raised from $72.6 million to $8.1 million.
Third quarter results for North Texas show that two of the North Texas companies that raised money were early stage startups and three were later stage businesses. In addition to Peloton, venture capitalists invested in software company Alkami Technology Inc., which raised $2.75 million. A $3 million investment went to Jackpot Rising. Snack food company Hail Merry LLC raised $1 million, and Biscotti Inc., a high-definition camera company, raised $850,000.
The third quarter represents a 640 percent increase in total venture capital dollars invested in the region from the previous quarter, according to the report.
In the second quarter, the MoneyTree report initially released figures that showed North Texas had raised $72.6 million across 10 deals, which would’ve represented the largest second quarter since 2008. Since then, the number has been updated to $8.1 million, the lowest second quarter in the report’s recordable history, which dates back to 1995. Most of the confusion stemmed from US HealthVest. The company was once based in Fort Worth, but moved to New York sometime during the summer, according to Thomson Reuters. Initially, Thomson Reuters allocated that raise to North Texas, assuming the monies were raised before the company departed. It has since removed and reallocated to New York, the company’s current home base.
Similarly, OpsGenie, a former North Texas company, also relocated in summer, taking its headquarters to Virginia. The startup raised $10 million, which was reallocated to their new home base. Thomson Reuters then added PediaQ’s $4.5 million raise, which wasn’t in the original report, bringing the total investment dollar amount to $8.1 million for the region in the second quarter.
“Results are of course updated periodically, but ultimately what we do is update the company record as soon as we discover the company has moved,” an emailed statement from Thomson Reuters read. “Sometimes a move is apparent immediately, other times it is minimally publicized. So sometimes we don’t find out about a move right away and count a company in its old address longer than we’d like to.”
Looking ahead, if North Texas’ fourth quarter is similar to last year’s, when startups raised $22.9 million, the region’s total venture capital investments for the year will be down by about $10 million from 2015. In 2015, North Texas companies raised $205.6 million in venture capital.