The big thing you should know about economic recovery in the Minneapolis Saint Paul region for the week of January 25th.
This is the Recovery Hub Weekly Take, a new resource giving you the latest insights on regional economic recovery in the Minneapolis Saint Paul region.
This Week’s Big Thing: a much-deserved shout-out to MSP’s startups. New cases of COVID-19 continue to trend lower with last week’s average daily case count of 754, representing the third consecutive week of dropping case volume. We’re thrilled with the trend and will take the opportunity to catch our breath and review how recovery is looking for some aspects of the regional economy that haven’t necessarily been directly affected by state restrictions to control the spread of the virus. This week we’re highlighting an exciting finding from the MSP Regional Recovery Hub and that’s the startup funding metric.
Startup Funding is a metric tracked on the Regional Recovery Hub in the Business Vitality category, specifically the number of venture capital deals that announce by month. We track venture capital deal activity by month using PitchBook, a database tracking private capital markets. We included this metric in the Recovery Hub because it gives us an indication if COVID-19 has impacted access to venture funding to MSP-based startups, and at what pace we are seeing recovery in deal activity. There were concerns in the early days and weeks of the COVID-19 pandemic that uncertainty and market volatility would increase investor scrutiny and lesson the number of venture capital deals. As you can see in the trend line below, the number of monthly deals dropped swiftly in April 2020 as an immediate response to uncertainty, but volume of deals steadily increased month over month throughout the year.
The most recent data shows that there were 21 venture capital deals in December 2020, a striking 200% increase from the 7 deals that closed in November and a 91% increase in deals from one year prior. This is the first month since the COVID-19 pandemic began that the number of deals rose above pre-COVID-19 (2019) levels. What’s more, MSP’s uptick in deal activity in December was the highest in our peer groupset.
So what’s driving the uptick in late-year deals? We think it in some way has to do with investors' desire to close out deals by end of the calendar year. That explains the uptick from November to December. How to explain the faster pace of deal activity against our peer regions? We think that the MSP region’s concentration of deals in the healthcare technology space explains that. In fact, half of the funding deals closed in December in MSP were in healthcare technology companies. Of the $123 million in funding secured, 77% ($95 million) was funding into healthcare technology companies. As an example, the biggest deal in December was $47 million Series B funding in MIVI Neuroscience located in Eden Prairie, a medical device company focused on improving clinical outcomes for ischemic stroke patients.
December was definitely a big month for startup funding in MSP, particularly for our healthcare technology companies. If you want to check out more about what’s going on in the startup community please check out the great resources and connectivity opportunities through the Forge North Initiative. And to keep up with all the amazing innovation happening in Medical Alley, the Global Epicenter of Health Innovation and Care™ check out the Medical Alley Association.
Want to see the latest data and insights on economic recovery in MSP? Check out the MSP Regional Recovery Hub. The Hub is in beta, which means we are actively working to enhance the functionality to make sure it works for you. If you have any questions or feedback on the Recovery Hub, or would like to learn more about getting involved contact Amanda Taylor, Vice President of Research & Intelligence.