Business

Venture capital in South Florida: Total funding slips, but deals get bigger

Following a national trend, South Florida venture capital deals are getting larger. Yet, there are just not enough of them to put the state on the venture map.

Modernizing Medicine, the fast-growing Boca Raton-based electronic medical records software company, raised $38 million in the third quarter, making it the second-largest funding round so far this year for South Florida companies, behind MDLIVE’s $50 million round in the second quarter, according to quarterly venture capital data released Friday.

In total, South Florida companies raised nearly $75 million in six deals in the third quarter. That’s down from $86 million last quarter, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, based on data provided by Thomson Reuters.

Nearly half the state’s funding flowed into South Florida, led by a trio of companies from Palm Beach County. Behind Modernizing Medicine, the other top-funded companies in the third quarter were Bidtellect of Delray Beach, an IT services company, $22.4 million; Sonavation of Palm Beach Gardens, a maker of biosensors for industrial uses, $6.02 million; Rokk3r Labs of Miami Beach, which helps co-build high-potential tech companies, $5 million; Kleo (ClassWallet) of Miami, an education-technology startup, $1.9 million; and CareCloud of Miami, a provider of electronic health records software, $1.55 million, according to the report.

Plansource, an Orlando software company, was the state’s heaviest funded, raising $70 million. Florida companies in total raised $150.86 million in 12 deals, up slightly from $148.69 million in 16 deals last quarter and up sharply from the $36.8 million in seven deals a year ago.

Still, for the country’s third-largest state, that is less than 1 percent of the national venture capital pie.

Nationally, venture capitalists invested $16.3 billion in 1,070 deals in the third quarter of 2015, with $9.37 billion of that going to California companies, according to the MoneyTree Report. Total venture dollars deployed to companies for the quarter decreased 5 percent and total deal count was down 11 percent compared to the second quarter when $17.3 billion was invested in 1,202 deals. The third quarter marks the seventh consecutive quarter of more than $10 billion of venture capital invested in a single quarter, and software was once again the dominant sector. The $47.2 billion invested in the first three quarters of 2015 is higher than each of the full year totals for 17 of the last 20 years.

Wende Hutton, a venture capital partner with Canaan Partners, said that Canaan sees strong opportunities in enterprise software, financial technology, and from the healthcare side, biotechnology, she said. The global firm’s 10th fund, of $675 million, is diversified between technology and healthcare.

“Enterprise software is feeding into the next generation of storage tools and data analytics that are driving the back office of business,” Hutton said. Financial technologies is another area of excitement, she said, noting that the No. 1 deal in the third quarter was San Francisco-based Social Finance, which raised $1 billion. “They are in the peer-to-peer lending space, where the markets really see a tremendous amount of growth in reinventing the small loans segment of the banking industry and are taking it out of traditional banking and putting more into these new financial platforms. The fintech space has been a hot space and I think it will continue to be a hot space.”

The top 10 deals accounted for 19 percent of dollars invested in the third quarter, down from 24 percent of total venture capital deployed during the second quarter. Compared to the second quarter, the third quarter’s top 10 deals come from a more diverse range of industries: including media and entertainment, medical devices, IT services and industrial/energy sectors. Social Finance’s $1 billion raise was followed by Palantir, Draftkings and GitHub, all raising over $250 million.

“Though software remains dominant, the top 10 deals included rounds of funding across seven industries, illustrating continued investment appetite in new areas of innovation,” said Tom Ciccolella, US Venture Capital Market Leader at PwC.

MoneyTree Report results are available at www.nvca.org.

Nancy Dahlberg, 305-376-3595, @ndahlberg

  Comments