In Q3 2009, private company data platform, CB Insights, tracked $2.3B going to 65 young companies from various governmental or government-affiliated entities. These government programs and government sponsored public private partnerships offer funding via loans, grants and equity investments into promising young companies and technologies.
In Q3 2009, the average deal was $36.2M but this aggregate number is misleading because of several large fundings by the Department of Energy which distort the number. The great majority of investments are under $5M with the median across the 65 deals standing at $1.1M.
Relative to the venture capital asset class for which we tracked $6.1B in venture capital investment over 680 deals in the third quarter, government funding remains small. But for a high growth private companies, these governmental funding sources have become another credible alternative to other investment types.
Now let’s take a closer look at government funding to startups in Q3 2009.
More highlights of government funding in Q3 2009 are below. To search and analyze the fundings of various state and federal governmental departments, existing customers should logon to CB Insights. You can also subscribe as part of our limited Early Access Program.
- Government funding to private companies was spread across 12 sectors with 7 sectors accounting for over 80% of deals
- The Energy and Healthcare sectors led amongst sectors accounting for almost 50% of funding events
- Government funding was spread across private companies in 21 different states. California and Massachusetts saw a large number of government funding deals representing 13% and 11% of such fundings (based on number of deals), respectively. Interestingly, however, Ohio took the top spot with 14% of deals. Rounding out the top five were Texas and South Carolina.
- Almost 70% of the government financings were in the form of grants to private companies meaning entrepreneurs did not give up equity in exchange for this funding. For investors looking at these companies, their cap tables are not impacted by government funding typically.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
- Patent Analytics to see where innovation is happening next
- Company Mosaic Scores to evaluate startup health, based on our National Science Foundation-backed algorithm
- Business Relationships to quickly see a company’s competitors, partners, and more
- Market Sizing Tools to visualize market growth and spot the next big opportunity