Region beats the big guys in venture-funding rate

The Baltimore-Washington region, along with a handful of other ‘‘unexpected regions,” is ‘‘making venture capitalists stand up and take notice,” Heesen said.

Silicon Valley and New England still lead the nation in total VC investments. But smaller pockets of nontraditional venture capital regions, such as New Mexico and Pittsburgh — first and second on the company growth list — have recently shown notable signs of growth.

Larger metropolitan areas such as Seattle (third), Los Angeles (fourth) and Baltimore-Washington, have been ‘‘quietly growing their venture bases,” the study showed.

In total investment dollars, the three metro regions are not in the top five for total investments, but ‘‘that could only be a matter of time,” Heesen said in a statement. However, the Baltimore-Washington region ranks eighth in growth percentage of total investments since 1997, at 130 percent.

‘‘Once a critical mass of companies is founded in a certain region, a new ecosystem will develop,” Heesen said. ‘‘It is very magnetic in the sense that startups breed innovative thinkers and entrepreneurs, who, in turn attract venture capitalists.”

Investors were attracted in this region most by its strong business bases in software, life sciences and telecommunications. The main investors were Novak Biddle Venture Partners, Columbia Capital, Grotech, New Enterprise Associates and Valhalla. The largest investments were in health insurance company Bravo Health, online payment company BillMeLater and energy management company Gridpoint. In the region, 37 percent of the companies funded in 2007 were seed to early-stage.

Roger Novak, founding partner at Novak Biddle Venture Partners, said of the study, ‘‘Much of the D.C. region’s entrepreneurial culture is uniquely rooted in government-based activity. First, the entrepreneurs bred by federal laboratories and agencies create opportunities for VCs who understand the nuances of building companies around talent and innovations spun out of a government lab. Second, VCs are increasingly drawn to local companies’ ability to sell sophisticated technologies that address some of the government’s and industries’ toughest challenges.”

This report originally appeared in The Business Gazette.