VENTURE CAPITAL HIGHLIGHTS
Table of Contents
Venture Capital Highlights is the first-ever report detailing Florida venture capital investment activity at the local level. The report includes a snapshot of deal and investment activity by industry sector and stage of development for the five years ended December 2013 and first quarter 2014.
The purpose of this report is to establish performance metrics that consistently compare current venture capital activity to prior periods and to peer regions and States. It is a tool to stimulate dialogue to better understand our innovation ecosystem, its impact on the competitiveness of industries, and opportunities to leverage innovation to stimulate job creation and economic growth.
The data source for this report is the PwC/NVCA MoneyTree Report; data by Thomson Reuters.
- 1.4 percent of U.S. venture capital investments, the best since 2009
- $425 million invested in 49 deals, the best year since 2007
- Florida compared to other States:
- 11th based on total venture capital investment, best ranking since 2009
- 26th based on per capita investment, best ranking since 2009
- Software sector captured 46 percent of total investment
- 61% of investments were in later stage companies
- Average investment per deal was $9 million, compared to five year average of $7.1 million
- South Florida businesses received $285 million or 67 percent of total Florida investment
Benchmarking is a process to measure performance using key performance indicators as a metric to compare current performance to prior periods and to peers. Benchmarking with peers not only allows for a better understanding of a State or regions competitive position, it also provides insight about opportunities and challenges to improve performance.
Key performance indicators used to measure venture capital investment activity at Florida businesses include the following metrics:
- Percentage share of U.S. venture capital investment
- Total venture capital investment
- Per capita venture capital investment
Florida's share of U.S. venture capital investments peaked in 2007 at 1.9 percent, declining to .7 percent in 2012. Florida's share increased to 1.4 percent in 2013, the State's best annual performance since 2009. During 2013 Florida's share of deals was 1.2 percent.
Florida Venture Capital Deals and Dollars
Venture capitalists invested $72 million in 12 companies during 1Q 2014, compared to $132 million and 11 transactions during 4Q 2013. While Florida venture capital investments declined by $50 million, a $93 million transaction in 4Q 2013 gives the appearance of significant decline in investment activity. While one might prefer to have a $93 million transaction on a routine basis, of 135 Florida deals during the three years ending December 2013, only two exceeded $40 million.
During 2013 venture capitalists completed 49 deals with Florida companies valued at $425 million. While transaction volume was in line with prior years, 2013 was the best overall funding year since 2007. During 2013 Florida's total venture capital investment ranked 11th compared to other States, Florida's best ranking since 2009. California, Massachusetts, New York, Texas, and Washington businesses received the most venture capital investments. California continues as the most active market, with businesses receiving $14.8 billion or 50 percent of all U.S. venture capital investments.
On a per capita basis, Florida ranked twenty-sixth during 2013, its best ranking since 2009. Massachusetts had the best per capita investment, followed by the District of Columbia, California, New York, and Washington.
Investments in the software industry increased significantly in 1Q2014 at the national level and in Florida. During 2013 Florida's software industry accounted for 46 percent of investments, compared to 38 percent on a nationwide basis. During the five years ending December 2013, 33 percent of Florida investments were with businesses in the software industry. Over the same five year period the software, industrial/energy, media & entertainment, and medical devices & equipment sectors captured 77 percent of venture capital investments in Florida businesses.
Stage of Development
During the five year period ending December 2013 startup/seed stage businesses captured 2 percent of Florida and 3 percent of national venture capital investments. Expansion and later stage businesses captured 84 percent of Florida and 63 percent nationwide venture capital investments.
Investment Per Deal and Stage
Venture capital deal size on a national basis over the five year period ending December 2013 was similar to Florida deal size. U.S. average deal size during 1Q2014, 2013, and the five year period ending December 2013 were $10 million, $7.3 million, and $6.9 million respectively.
To learn more about where businesses are being funded, venture capital activity was broken down by the eight Enterprise Florida regions. The eight regions are depicted on the following map.
In the 1Q2014 seven South Florida businesses received venture capital investments of $48 million, representing 66 percent of Florida investments. Businesses located in the East Central, Tampa Bay, and North Central regions received $14 million, $8.2 million, and $2 million respectively.
During 2013 twenty-three South Florida businesses received venture capital investments of $285 million or 67 percent of total Florida investments. Businesses located in the East Central, Tampa Bay, North Central, and Northeast Regions received $75 million, $35 million, $21 million, and $6 million respectively.
During the five years ending December 2013 South Florida businesses completed 84 deals valued at $622 million. During the same period Florida businesses closed 220 deals valued at $1.5 billion. Businesses located the East Central, Tampa Bay, Northeast, North Central, and Southwest regions received $449 million, $303 million, $69 million, $57 million, and $27 million respectively.
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