Venture capital investments in Florida companies plunged again in the third quarter, compared to a year ago, according to a new report released Friday. Still, South Florida companies led the state, and thanks to Magic Leap’s mega-raise in the first quarter, Florida is still on track for its best year since 2000.
Nearly $92.8 million flowed into Florida companies in 18 venture capital deals in the third quarter, according to the MoneyTree Report from PricewaterhouseCoopers, based on data provided by Thomson Reuters. That’s about half of the take from a year ago, when $182.1 million was invested in 13 deals. The third quarter also trailed the $101.2 million in 22 deals invested during the second quarter, according to MoneyTree.
Florida, despite being the country’s third most populous state, typically takes less than 1 percent of the venture capital pie, and that was again the case in Q3.
South Florida firms dominated the funding in the state, hauling in more than $79.5 million, or 86 percent of the state’s take. The top five deals were all from South Florida, led by a $40 million investment in Woundtech (Podicare) of Hollywood, a later-state wound-care management services company.
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Other top deals, according to MoneyTree: Altor Bioscience, a biotech company based in Miramar, $14 million; Nymbus, a financial technology software company in Miami Beach, $12 million; Zenedge, an Aventura cybersecurity company, $6.2 million; and Iatai Enterprises, a Boca Raton fin-tech company, $5 million. Vigilant Biosciences, Carson Life, OrthoSensor and Synkt Games, all of South Florida, were also funded in Q3.
The numbers over time show growth in early stage deals in Florida and that is a good sign for the future, said Darach Chapman, PwC’s leader of its deals practice in Florida.
”The startup base is generating quality ideas and opportunities,” said Chapman, who is based in Miami. “It doesn’t surprise me that we see South Florida, in particular, as a breeding ground .. because of the diversity of perspectives that come together here.”
Nationally, venture capitalists invested $10.6 billion in 891 deals in the third quarter of 2016, according to the MoneyTree Report. Total venture dollars deployed to startup companies for the quarter decreased 32 percent and total deal count was down 11 percent, compared to the second quarter when $15.6 billion was invested in 999 deals. Compared to Q3 2015, dollars and deals are down 36 and 25 percent, respectively. The third quarter also saw fewer mega-deals; Airbnb’s $555 million investment led all the deals.
Whether this is the start of a bursting VC bubble is a matter of debate, but it's clear venture capital is in a slowdown.
The headline of the report is that dollar and deal values are down over Q2 and over last year, Chapman said. But Q3s are usually seasonably softer quarters and in presidential election years they are softer still, he cautioned. “From a sector perspective, I think we’re seeing an evolution away from pure software plays. … Looking at Q3's top deals, it’s more diversified, … but we’re still seeing technology companies disrupting traditional sectors.”
As the fourth quarter gets underway, it's clear Florida will have the best year since 2000 when $3 billion in venture was raised. The strong 2016 is thanks to Magic Leap's $793.5 million raise in the first quarter, more than three quarters of the $1.05 billion raised in the state so far.
MoneyTree Report results are available at http://www.pwcmoneytree.com/.