TLDR:
- Venture capital (VC) funding in Massachusetts decreased for the second consecutive year in 2023, with startups raising $16 billion, 26% less than in 2022.
- Biotech and climate tech startups were the bright spots in the downturn, attracting significant funding.
Despite the overall decline in VC funding, some promising technologies still managed to secure big funding rounds in Massachusetts. Biotech and climate tech startups were the standouts in the downturn, with battery-tech firm Ascend Elements ranking first with its $542 million deal in September. Biotech accelerator Curie.Bio followed closely behind, raising $520 million in February.
Last year also saw a surge in funding for generative AI startups in Massachusetts. Twenty-two local companies working on generative AI raised $635 million in 2023, almost 10 times the amount raised in 2022. Although the largest generative AI companies are based elsewhere, Boston AI startups are focusing on leveraging the region’s strengths in healthcare, finance, and corporate software.
Two large deals accounted for most of the generative AI funding in 2023. Generate Biomedicines, a startup using gen AI for drug discovery, raised $273 million in September. Quantum software startup Zapata AI announced its merger with a blank-check company in a deal valued at $200 million. Additionally, MIT spinout Liquid AI raised $37.5 million in December to develop smaller, more efficient AI software models.
Overall, while VC funding contracted for the second year in a row in Massachusetts, the success of biotech startups and the emergence of generative AI show promise for the future of innovation in the region.
