There is a normal lag in investment deal reporting, so we have to wait to see what 2015 will look like, but based on deals reported from January through mid-November 2015 (with comparisons to the same period in 2014) by VentureDeal, we know the headlines will be about check sizes climbing, and number of deals declining.
The Biotechnology, Pharmaceutical and Medical Devices category illustrates the story. In Massachusetts, $5,097,126,973 was pumped in, a 41% increase from 2014. 76% of the increase is due to large checks written by corporate investors. However, deal activity declined 16%.
Overall, Massachusetts banked $8,753,232,959, a 28% increase over 2014. Yet, there is a more interesting story: Massachusetts investment activity only declined 5% compared to 11% in California and 13% in New York.
What kept Massachusetts humming in 2015? The Venture Development Center (VDC) had representatives in each strong category: SQZ in Biotech; doDOC in Software; MorphLab in Electronics; FirstLine in Healthcare; and REsurety in CleanTech.
One of our other company’s stellar growth numbers tells the real story. LaunchSource feeds hundreds of entry-level business development reps into venture-backed Internet, Digital Media, eCommerce and Software companies.
LaunchSource had year over year revenue growth of 775%; and client acquisition growth of 1066%!
In 2015, this category accounted for 43% of all deals, and it only declined 2% in Massachusetts compared to 15% in California and 18% in New York.
|Industry||Money||+/- 2014||Deals||+/- 2014|
|Biotechnology • Pharmaceutical • Medical Devices||$5,097,126,973||41%||140||-16%|
|Internet • Digital Media • eCommerce • Software||$2,204,759,596||3%||164||-2%|
|Telecom • Wireless • Mobile • Communications||$337,474,517||0%||38||-19%|
|Healthcare • Healthcare Services||$200,647,961||277%||14||75%|
|Alternative Energy • Clean Tech • Energy • Environmental||$198,435,183||140%||12||20%|
For these software companies, it seems that the only real limitation to their growth is the speed at which they can hire business development reps. Without them, quarterly targets are missed. However, hiring them has become a difficult task. Also, the high turnover rate is problematic for a startup company.
At LaunchSouce, fast-growing tech companies find a solution to filling sales jobs. They can see how candidates work through real-life scenarios and gain concrete insights into how the candidates would handle the position; a noted shift from the status quo of meeting with people who may just be good in the interview.
Check out this article from from ThinkingPhones’ Tom Murdock (former Head of Worldwide Inside Sales at Acquia), a sales hiring innovator. He explains how IPO-bound Acquia set out to fix the entry-level sales position interview process and remove the problem of bad fits at the top of the funnel by relying on LaunchSource.
Mega deals enriched life science companies, but it was software companies like Acquia that kept Massachusetts strong. What’s your take on the story behind the numbers in 2015?