This is Oregon Insight, The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.
Oregon entrepreneurs netted a cash windfall last year, raising $1.6 billion in venture capital for their young companies, according to new industry data out Thursday night. That’s the most in state history by a wide margin and nearly doubles Oregon startups’ haul from 2020.
Nearly half of Oregon’s venture funding in 2021 went to just two businesses: Dutchie, a Bend company with technology to help manage marijuana businesses; and NuScale Power, a Portland company that is developing a new class of nuclear reactor based on innovations pioneered at Oregon State University.
Oregon’s investment totals mirrored a broader boom in venture funding, according to PitchBook and the National Venture Capital Association, which tallied the latest numbers. They reported that venture capitalists invested $330 billion nationwide in 2021, also roughly double the prior year’s total.
“A fair portion of the new investment records can be attributed to the record levels of capital washing through the system,” said John Gabbert, CEO of PitchBook, a Seattle-based investment research firm.
Venture capital is outperforming other investment options, Gabbert said, so he forecast another record year nationally in 2022. That doesn’t necessarily mean another big year for Oregon, since so much of Oregon’s funding was concentrated with two companies that raised unusually large amounts.
Venture investment has seldom been a major part of Oregon’s economy in the way it is in Seattle or the Bay Area, which routinely sprout big new companies out of thin air. But there are signs that Oregon may again be growing large businesses.
The state produced four new public companies during 2021, including the coffee kiosk chain Dutch Bros, whose September offering was Oregon’s first substantial IPO in 17 years. Two other companies, KinderCare and NuScale, hope to go public in 2022.
Those results could inspire other Oregon entrepreneurs, or they could prompt investors to take a fresh look at the state.
Dutchie’s investment haul last year totaled $550 million, with investors in its latest round valuing the Bend company at $3.75 billion. Founded in 2017, Dutchie is already among Oregon’s most valuable businesses.
The company says more than 5,000 marijuana shops in the U.S. and Canada use its technology to process $14 billion in annual sales. Early backers included Snoop Dogg’s investment firm, NBA All-Star Kevin Durant and former Starbucks CEO Howard Schultz.
NuScale’s investment wasn’t conventional venture capital. Texas energy firm Fluor Corp. owns a majority stake in the Oregon, which raised $192 million in outside investment last year to help finance development of its modular nuclear reactor.
The company hopes the fight against climate change — nuclear reactors don’t emit carbon — will revive interest in nuclear energy.
NuScale says its technology is safer and more efficient than conventional nuclear reactors. Its reactors can be built in smaller pieces over time, and the company says they shut down automatically if they lose power, without risking a catastrophic meltdown.
NuScale hopes to begin trading on the Nasdaq exchange this year after merging with a publicly traded investment fund known as a “special purpose acquisition company” or SPAC. The company expects to raise up to $413 million in the deal.
Still, the market for NuScale’s technology is unproven, and the company needs key regulatory approvals. Its first operational reactor is still several years away.
Oregon’s other large venture rounds were distributed among a half-dozen companies from a diverse array of industries, from staffing assistance to biopharmaceuticals to business software to clean energy.
That broad range of businesses reflects a growing diversification of Oregon entrepreneurship, away from its historical concentration in electronics and, later, software.
If the new slate of companies keeps growing, they might make the state less susceptible to boom and bust cycles that have plagued it economically because of its reliance on a small number of sectors.
— Mike Rogoway | mrogoway@oregonian.com | Twitter: @rogoway |
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