Writer: Dylan Bruton
3 min read March 2024 –– Pittsburgh continues to cement its current place as an important tech hub in the United States, setting new records despite fundraising on a national level declining by about 30% in 2023. According to a new report released by Ernst Young LLP and Innovation Works, Steel City experienced its second-highest year for tech investments.
Pittsburgh saw $3.12 billion in aggregate funding last year, rising by 203.3% from 2022. Overall funding in tech has been down the past two years, including by more than 50% since 2021.
More than 130 Pittsburgh area businesses were beneficiaries of investments, with deals averaging $27.1 million – a 300% year-over-year increase driven by increased interest in robotics and self-driving vehicle technology.
Ven Raju, president and CEO of Innovation Works, noted in the report, “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.”
Raju added, “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.”
Pittsburgh has been on an upward trajectory within the tech world since 2021 after a nation-leading, banner year with $3.59 billion invested.
Autonomous vehicle startups Aurora and Stack AV played an outsized role in Pittsburgh’s investment bump, and more broadly hardware and robotics have taken a massive jump in popularity, accounting for 68% of the total investments. In 2022 that figure was 39%.
Pittsburgh has been ranked among the Top 10 cities for deals within the AI and autonomous vehicle industries, fueling increased development as a tech hub. The market is now attracting growing interest from overseas as last year 57 new investors made their first investment into the region.
However, local investors have shown less enthusiasm as of late.
“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,” Darrell Smalley, managing partner of EY US Pittsburgh Office pointed out in the report. “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.”
