Mass. startups raised nearly $5 billion last quarter, regaining lead over Texas

The startup boom in Texas that seemed to threaten Massachusetts’ standing as an innovation hub has melted faster than an ice cube on a Dallas sidewalk in July.

Startups based in Texas out-raised local startups in the first quarter, possibly for the first time ever. But in the second quarter, Massachusetts companies pulled back in the lead, raising $4.7 billion compared to just $2.3 billion for those in the Lone Star state, according to data released on Thursday by research firm PitchBook and the National Venture Capital Association.

For the first half of the year, Massachusetts pulled ahead, $10.2 billion to $8.4 billion. Local startups have now raised 30 percent more than in the same period last year. The VC market continues to recover from a sharp contraction from 2022 to 2024, when higher interest rates and some failed companies spooked investors.

Though Massachusetts invented venture capital investing after World War II, the state has fallen far behind California in terms of total funding and trailed New York for more than a decade.

Texas has been gaining on Massachusetts for the past few years, after the state successfully wooed some major California tech companies, including Tesla and Oracle, to move their headquarters there.

Last year, Texas startups raised $11.7 billion versus $16.6 billion for Massachusetts companies. The $4.9 billion margin shrank by almost half from Massachusetts’ $8 billion lead in 2024.

The Massachusetts comeback in the second quarter of this year was partly led by a recovery in life sciences investing.

Beeline Medicines, working to treat autoimmune diseases, raised $426 million and Create Medicines, developing treatments for cancer, raised $122 million in the second quarter, according to PitchBook.

That trend could continue as a growing number of local biotech companies have gone public this year, pumping money back into the coffers of VCs in the sector.

Massachusetts also showed strength in artificial intelligence in the second quarter, as AI music maker Suno raised $400 million and AI coding startup Blitzy raised $200 million.

Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.