Report says tech companies brought $338 million in funding to Pittsburgh region

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The flow of venture capital to fund ideas ranging from restaurant apps to medical breakthroughs being developed in the Pittsburgh region has grown over the past five years.

No one can determine exactly the total amount coming in because some private money is kept, well, private — but one report found the amount of money investing in early-stage Pittsburgh companies more than doubling over the last five years.

In 2013, 107 companies in the Pittsburgh region attracted $338 million in investments in 148 separate deals, according to a report released Thursday to investors, lawyers, accountants and businesspeople at the Pittsburgh Venture Capital Association luncheon at the Fairmont Hotel, Downtown.

The report was the second annual collaboration of Innovation Works, a state-funded initiative that invests both money and expertise in local startups, and the accounting firm of Ernst & Young.

The capital that the report tracked came from a variety of sources, such as traditional venture capital investors, private investors and strategic partnerships. The venture capital funds for Pittsburgh’s early-stage companies came from 125 different firms, 103 of them from other parts of the country.

Rich Lunak, CEO of Innovation Works, said the amount being invested in Pittsburgh grew at more than twice the national average over the last five years, with Pittsburgh seeing 112.9 percent growth in venture capital while the nation as a whole saw a 54.6 percent increase.

Over the last five years, Pittsburgh technology companies have received $1.6 billion in investments, with the largest share — 17 percent — going to medical devices. Investments in companies making electronics were right behind with 16 percent.

Nationally, the software industry was the largest recipient of venture capital with $11 billion in 2013, representing 27 percent of the total invested, according to the National Venture Capital Association. The association worked with PricewaterhouseCoopers LLP to create the MoneyTree Report using data from Thompson Reuters.

Locally, software absorbed 10 percent of the investment dollars, as did the energy sector.

One Oakland company, NoWait, which produced an iPhone app that allows users to check wait times and get on waiting lists for casual restaurants, started with the help of Innovations Works’ AlphaLab and was introduced to funders through Innovation Works.

“I've seen the Pittsburgh tech community explode over the past decade, fueled by venture capital to transition startups into high-growth companies,” said Robb Myer, the president and founder of NoWait. “Without a capital market to match each stage of a company's growth, it will not survive.”

The exact amount of money Pittsburgh early-stage companies actually raised is hard to pin down.

The $338 million reported by Innovation Works includes deals that are public, as well as private money that goes into companies working with Innovation Works but that is not publicly reported. There may also be more money out there that the initiative does not know about.

Meanwhile, other cities have similar organizations that also keep track of money going to early-stage companies, some of which is not disclosed to the public.

That makes comparing cities difficult.

Thompson Reuters keeps track of venture capital that is publicly reported. In a database known as Thompson One, Pittsburgh was reported to have received $175.3 million in venture funding in 2013.

That put the Steel City’s public financing ahead of Charlotte, N.C., which received $93.8 million; Cincinnati, which received $91.9 million; Cleveland with $148.9 million; Detroit with $105.7 million; Indianapolis with $26.4 million; Kansas City, Kan., and Kansas City, Mo., with $90.7 million; Milwaukee with $7.3 million; and St. Louis with $98.3 million.

Other cities pull in more investment money, based on the publicly reported data.

Thompson One showed Austin, Texas, with $619.3 million; Baltimore with $264.4 million; Boston with $3.3 billion; Denver with $464 million; Minneapolis-St. Paul with $319 million; New York with $3 billion; Philadelphia with $393.6; and Raleigh-Durham-Chapel Hill, N.C., with $400.8 million.

Terri Glueck, the spokeswoman for Innovation Works, said the money coming to Pittsburgh companies — mostly from outside the region — is an important measure of the future health of the region because it is being directed to early-stage companies that are still growing.

While people can see ribbon cuttings and buildings being built, they don’t tend to see investments in new companies.

“It’s a lens through which to see what is otherwise invisible in our economy,” she said.

Ann Belser: 412-263-1699 or

Ann Belser: or 412-263-1699. First Published March 20, 2014 6:54 AM

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