Pittsburgh’s Tech Sector Attracts Hundreds of Millions in Investment

Region's local investment bucks stagnant national trend

By Rick Wills

Published January 13, 2023

Read Time: 2 mins


Bucking national trends, Pittsburgh tech companies attracted $225 million in venture capital in last year’s fourth quarter, the highest quarterly amount in more than two years.

“(Investment) remains robust and we are continuously reviewing intriguing investment opportunities both in Pittsburgh and across the country,” David Motley, a founding general partner at Black Tech Nation Ventures, a Pittsburgh-based venture capital fund, told the Pittsburgh Business Times on Thursday, the day the report was released by the National Venture Capital Association.

The good news comes amid a slump in many tech companies, particularly larger ones that drive financial markets.

“There are economic headwinds, but this is good news,” said Brian Kennedy, vice president of the Pittsburgh Technology Council. “There have been quarters in the last decade where quarterly investment did not reach $100 million.”

Today’s investment environment is more conservative than a year ago, Motley said, reflecting rising interest rates, inflation and concern about a recession.

“This is true nationally and true in Pittsburgh. Venture funds are being much more circumspect on where to invest,” he said.

The more than 10,000 tech companies in the Pittsburgh region employ more than 300,000 people, a quarter of the region’s workforce. The region’s $26.5 billion payroll for tech workers is 37 percent of the region’s wages.

The region’s companies largely rely on funding from out of town, said Kennedy.

“That makes direct flights very important for these startups and their investors,” he said.

The bigger picture

Investment in Pittsburgh tech companies contrasts with stagnant national numbers during the fourth quarter, according to the report.

The year’s investment in the region was the biggest annual dollar amount in the past three years, more than doubling the $309.9 million total for 2021 and above 2020’s $648.7 million, the Business Times reported.

By contrast, some $238.3 billion was invested in 15,852 companies nationally in 2022—down from $344.7 billion invested in 18,521 companies in 2021.

The $36.2 billion invested nationally in 2,935 tech firms in the year’s fourth quarter is the lowest dollar amount since the end of 2019 and represents the smallest number of companies to receive funding since 2018.

While more overall dollars have been invested in Pittsburgh tech, those funds are being split among fewer companies. Last year, investors put money into 93 Pittsburgh companies, down from 98 in 2021 and 108 companies in 2020.

The fourth quarter investment in the region was spread among 17 startup tech companies. They were led by RoadRunner Recycling, a waste management company, which raised $90 million while Watt Fuel Cell, a manufacturer of portable fuel generators, received $82 million.

Sreekar Gadde, co-managing partner at Pittsburgh-based BlueTree Venture Fund, told the Business Times that the quality of the companies seeking funding is better.

“The quality of companies coming to us has improved dramatically,” he said. “In view of the economy in general, companies in strong financial positions … are finding traction.”

Investment in some smaller tech companies stands in sharp contrast to the slump in Big Tech last year.

Electric car manufacturer Tesla and Meta, Facebook’s parent company, both lost more than 60 percent of their value in 2022. Each fell out of the S&P 500’s 10 largest companies.

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