It’s no secret that funding for tech startups is a lot harder to come by now than three years ago.
Higher interest rates starting in 2022 spooked many startup investors. Biotech companies large and small have been struggling with disappointing results, lower demand, and greater competition from abroad. Business uncertainty prevails across many sectors.
The latest funding figures from research firm PitchBook and the National Venture Capital Association, out on Tuesday, showed just how dire the situation has gotten, particularly in Massachusetts.
Only 158 companies here received funding in the second quarter, the lowest quarterly number in at least a decade. Startups collected a total of $2.6 billion in new money, down 37 percent from a year ago and the least in any quarter since 2017. (The drop comes after some promising signs at the beginning of this year.)
“Major headwinds for the state include federal funding cuts that have created more volatility for health care startups, and AI’s continued dominance over venture dollars,” said Emily Zheng, senior VC analyst at PitchBook.
The biggest deals in the quarter were for cancer imaging startup Lumicell in Newton, which raised almost $200 million; biotech drug developer Antares Therapeutics in Boston, which raised $177 million; and AI drug discovery company InSilico Medicine in Cambridge, which raised $123 million.
The drop for Massachusetts came despite growing VC funding for startups in some other states.
California-based startups, fueled largely by the ongoing AI boom, raised $42.6 billion, a 71 percent increase from last year’s second quarter.
Arizona posted a nearly 10-fold gain to $3.1 billion, mostly for space exploration company World View. Startups in Washington state, led by nuclear power company TerraPower, tripled their fundraising from last year to $2 billion. And Pennsylvania startups more than doubled their haul to $1.4 billion, with funding for AI and automation companies in the Pittsburgh area such as Skild AI and Gecko Robotics.
The fund-raising picture for local VC investment firms was equally grim. Just six Massachusetts-based venture capital firms raised a total of $1.1 billion in the first half of 2025, PitchBook said.
That’s on pace for the lowest total in over a decade. Last year, 32 venture funds raised a total of $6.3 billion.
Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.