Baltimore startups are bringing in bigger and bigger funding rounds. Here’s why.

Published on 1/25/21 on Baltimore Business Journal

It wasn’t long ago that it was remarkable for a Baltimore startup to raise between $1 million and $5 million in a funding round. In recent years, though, those investment sums have gotten bigger and bigger.

In 2020, the largest round raised by a Baltimore-headquartered firm was the $74 million Series D brought in by cybersecurity company ZeroFox. The city’s top five largest rounds in 2020 were all above the $20 million mark, and Baltimore’s growing companies collectively raked in about 26% of the record $1.159 billion in venture capital raised across Maryland for the year, according to recent data from the PwC/CB Insights MoneyTree report.

This year is already off to an even stronger start with the $100 million Series A round raised by cancer diagnostics firm Delfi Diagnostics.

Guy Filippelli, a Baltimore startup CEO-turned-venture investor, pointed to a handful of factors he believes have contributed to the huge growth in local funding momentum. First, he noted that Baltimore’s experience is largely in line with regional and national annual VC trends, which have shown companies overall are raising fewer, but larger, rounds. These trends are validated by MoneyTree data which shows the average VC deal size for the Virginia, Maryland and Washington, D.C., region has grown from about $6 million in 2012 to about $14 million in 2020. In Maryland specifically, the average deal size has grown from about $5 million to about $16 million over the same period.

“The bigger rounds are certainly becoming more of the norm nationally,” said Filippelli, managing partner of Squadra Ventures. “That said, I absolutely believe when we can put multiple of these big rounds on the table as a city, it is a proof point that these kinds of rounds are happening outside of Silicon Valley and that investors believe big companies can be built here.”


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Filippelli said he believes the venture community at large is finally recognizing Baltimore as an investable market, with deep expertise and skilled talent pools, especially in the cybersecurity, medical and biotechnologies and finance fields.

Indeed, in addition to ZeroFox’s round, three of Baltimore’s top five rounds in 2020 were raised by biotech companies — AsclepiX Therapeutics raised a $35 million Series A, LifeSprout Inc. raised a $28.5 million Series A and Glyscend raised a $20.5 million Series A — and one was raised by a financial technology firm — Facet Wealth’s $25 million Series B.

Christy Wyskiel, who heads Johns Hopkins Technology Ventures, agreed that in some respects, Baltimore is “riding a national wave” of VC growth. Her organization has seen its own version of the trend. Maryland startups spun out of Johns Hopkins collectively raised about $40 million a year in the period from 2013 to 2016, Wyskiel said. In the 2017 to 2020 period, they raised about $160 million a year.

Beyond the trends, though, Wyskiel touted the work her organization and others have done over the past several years to create a more supportive entrepreneurial environment for startups in Baltimore. Added resources have included new spaces specifically designed to support the growth of local startups, such as rentable lab space for young biotech companies, more programming targeted at helping startups grow sustainably and even more local funders. These resources have created more “fertile ground” for startups to stay and grow in Baltimore, Wyskiel said. She hopes the success of some of these well-funded companies will create more momentum for the local tech ecosystem.

“When investors and entrepreneurs see a critical mass of companies in Maryland and in Baltimore raising significant dollar amounts, they realize this is an ecosystem where they can build, hire great talent and raise the money they want,” Wyskiel said.

George Petrocheilos, managing partner of Baltimore-based venture capital firm Catalio Capital Management, believes the biotech and life sciences sectors in particular are poised for continued major growth when it comes to venture funding. He said Baltimore has an advantage there as the home to “top medical research institutions” like Johns Hopkins and University of Maryland, Baltimore, which are full of “pioneering scientists” who are developing cutting edge drugs, therapies and medical devices, and often spinning them out into successful startup companies.

Investors across the country are taking more notice of these companies, which are growing in Baltimore and keeping close ties to Hopkins and UMB, Petrocheilos said. And in recent years, they’ve seen a growing trend of biotech co-founders launching multiple companies, becoming more experienced and successful entrepreneurs with each new venture.

For example, Delfi was founded by Dr. Victor Velculescu, an oncology professor at the Johns Hopkins School of Medicine who also co-founded another local cancer diagnostics company, Personal Genome Diagnostics (PGDx). That company is also based in Baltimore, has also gained strong traction in the cancer diagnostics space, and is also backed by more than $100 million in funding to date.

“It’s a cycle that builds on itself. It starts with a couple companies like PGDx and , then those founders build something else, like with Delfi,” Petrocheilos said. “I think the momentum is here to stay…We’re so well positioned for that growth here in Baltimore.”