Pittsburgh Records Second-Highest Year for Tech Investments, New Report Finds

Despite a national fundraising decline of nearly 30% year over year in 2023, Pittsburgh saw the second-highest year on record for investment in its tech economy, according to a new report released by Ernst & Young LLP (EY US) and Innovation Works.

The 12th annual report found nearly every indicator related to local fundraising increased in Pittsburgh in 2023, resulting in $3.12 billion in aggregate funding, a 203.3% jump over 2022. Nationally, fundraising decreased 29.6% from 2022 and 50.9% from record-breaking 2021.

While total investment value increased, Pittsburgh's deal count in 2023 dipped by 5.7%, far less than the national decrease of 22.6%. More than 130 Pittsburgh companies attracted investments, with an average disclosed deal of $27.1 million, a 300% year-over-year increase driven largely by activity in the robotics and autonomous vehicle spaces.

"The strength and resiliency of the regional tech ecosystem was reaffirmed in 2023, despite macro headwinds and significant contraction in venture funding nationally. Almost every indicator related to the local fundraising environment saw a material uptick," said Ven Raju, President and CEO at Innovation Works. "While we saw some outsized investments in robotics and autonomous vehicle companies in 2023, the three-year rolling averages suggest sustained and broad-based growth for the region. The 2023 data also suggests emerging trends in automation and AI, key regional clusters, are helping to catapult investment in Pittsburgh to Tier 1 levels."

2023's total investment of $3.12 billion in Pittsburgh is second only to 2021's $3.59 billion, which was a banner year nationwide. Last year's activity was driven by a near-800% increase in corporate investments, due in large part to private investments in Stack AV and Aurora.

The report showed an emerging trend in increased investments for hardware and robotics ? the segment accounted for 68% of total investments in 2023, compared to just 39% in 2022. Pittsburgh also ranks in the top 10 for deals in the artificial intelligence (AI) and autonomous vehicles industries.

The emergence of Pittsburgh as a tech hub has attracted satellite offices of global technology companies. Last year, 57 new investors from around the world made their first investments in the region. Local investors, however, have been harder to come by. The low supply of local venture capital (VC) funding highlights an opportunity for Pittsburgh to take greater ownership of its tech ecosystem.

"By addressing the gap of local investment in Pittsburgh's tech economy, we can unlock new avenues for development, creating an environment where local investors can play a larger role in fostering our community's growth," said Darrell Smalley, EY US Pittsburgh Office Managing Partner. "With a healthy pipeline of local funding sources, the region can retain more of the financial rewards that come with the innovation Pittsburgh is increasingly known for."

Read the report for complete findings on Pittsburgh's technology investment landscape.

About Innovation Works

Innovation Works (IW) is one of the most active early-stage investors in the country and the most active early-stage investor in the State of Pennsylvania. To date, IW has invested in over 700 companies that have gone on to raise $3.3 billion in follow-on funding. IW portfolio companies have generated and retained over 20,000 jobs in the State of Pennsylvania. IW is part of the Ben Franklin Technology Partner Network (BFTP). Over the last 30 years, the BFTP has catalyzed economic growth by providing access to capital and networks that help to foster innovation and technology-based economic development in Pennsylvania.

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Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US.