ENTREPRENEURSHIP

Venture capital investments up sharply, but not in South Florida

 

Uber’s $1.2 billion raised leads a second quarter that was the most robust in a decade.

ndahlberg@MiamiHerald.com

A jaw-dropping $1.2 billion fueled Uber, the ride-sharing company, in the second quarter, driving venture capital investment sharply higher nationwide. Yet in South Florida, VC investment slowed.

Venture capitalists invested $112.2 million in 13 Florida companies in the second quarter of 2014, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association. To put that number into perspective, the state drew less than 1 percent of the national venture capital total in the quarter. As was the trend nationally, software companies in Florida grabbed most of action, with $62million flowing into them, according to the report released Friday and based on Thomson Reuters data .

To be sure, quarterly venture capital investment activity in Florida rose sharply from the $71.9 million invested in 13 deals in the first quarter. But in a change from previous quarters, South Florida companies did not receive the lion’s share of the state’s second-quarter funding. That would be Orlando, which received more than $61.4 million of the state’s total, dominated by a $50 million investment in Kony Solutions, a mobile software company.

About $22.8 million flowed into South Florida companies, led by a $15 million investment in Tyrogenex, a West Palm Beach biotech company. Other local late-stage and early-stage companies receiving funding were: Aeropost, AdMobilize, AviseNA, Mobile Help and Redcap. The total is down sharply from the nearly $48 million total for the first quarter of 2014.

Nationally, venture capitalists invested $13 billion in 1,114 deals in the second quarter, according to the MoneyTree Report. That was up 34 percent in terms of dollars and 13 percent in the number of deals, compared to the first quarter when $9.7 billion was invested in 985 deals. The total dollars invested in the second quarter marks the largest quarterly investment total since $13.1 billion was invested in the first quarter of 2001. VC investments for the first half of 2014 reached $22.7 billion, the highest first half total since 2001.

Dollars invested in the software industry experienced another significant increase, reaching $6.1 billion, which marks only the fourth time since 1995 that investments in software companies have exceeded $6 billion in a single quarter. Half of the 10 largest deals of the quarter were in the software industry, including San Francisco-based Uber’s $1.2 billion deal, the largest single quarterly deal reported by the MoneyTree Report in the history of the report, which began in 1995. Arch-rival Lyft, also based in San Francisco, attracted the second-largest investment nationally: $250 million.

“Not since the early 2000s have we witnessed this level of quarterly investment activity. Despite being over $15 billion below the peak, you can’t ignore the historical significance of venture investment during the second quarter,” said Bobby Franklin, president and CEO of NVCA. “Before alarmists declare a repeat of the dot-com bubble, it’s important to keep in mind that a lot of this activity was driven by a handful of eye-popping investment rounds, including a record-setting funding round of $1.2 billion. Additionally, we hear anectdotally from members about the emergence of new investors in the innovation economy, including the rise of hedge funds, mutual funds and other non-traditional investors making direct investments into presumably pre-IPO companies.”

MoneyTree Report results are available at www.pwcmoneytree.com and www.nvca.org.

Follow @ndahlberg on Twitter.

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