Venture capital investment rises sharply in Florida

Although in 2013 Florida was just 1.4 percent for the country’s fourth most populous state, the venture capital investment in Florida doubled in 2013. The opportunity for growth is evident and the entrepreneurs are here in areas such as Infusion Technology Center. Matt Rice, a venture capitalist, believes these factors will continue to attract more capital to the state.

BY NANCY DAHLBERG

Venture capitalists invested $421 million in 37 Florida companies in 2013 -- that is double 2012’s total and the best year since 2004, according to data released Friday. South Florida companies attracted the lion's share of that total — $284 million, or more than two-thirds of the total invested in the state.

Statewide, software investments clearly led the pack, with $194 million going into that industry, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association. Half of that total went into a fourth-quarter investment in OpenPeak, a Boca Raton mobile enterprise software company. The $93 million investment was led by Castletop Capital and GMG Capital Partners. Miami-based Open English’s $65 million raise earlier in the year was the second biggest investment in 2013; while CareCloud’s $29.3 million was the third largest.

Life sciences was another strong category for Florida venture capital, with $107 million, or a quarter of the total, heading into that industry, which includes biotechnology and medical device companies.

That doesn’t surprise Matt Rice, a venture capitalist with Ballast Point Ventures in St. Petersburg, which invests in healthcare and technology companies in the Southeast but has a heavy emphasis on Florida. Ballast invests in a number of healthcare and life science investments, including TissueTech, SleepMed and MolecularMD in South Florida.

Even though life sciences may have fallen out of favor during the recession, “I do see the sector as rebounding — 2013 was a very successful year for life science IPOs,” said Rice.

Nationally, venture capitalists invested $29.4 billion in 3,995 deals in 2013, an increase of 7 percent in dollars and a 4 percent increase in deals over the prior year, according to the MoneyTree Report, based on data from Thomson Reuters. Early-stage companies attracted a third of the dollars and half the deals in 2013, an increase over 2012 and a trend that also held true in Florida.

Software was also the big driver nationally, with steady quarter-over-quarter growth throughout 2013. Annual investments into the software industry reached the highest level since 2000 with $11 billion flowing into 1,523 deals in 2013. Those dollars account for 37 percent of total venture capital invested in 2013.

Nationally, biotechnology investment dollars rose 8 percent while volume decreased 2 percent in 2013 to $4.5 billion going into 470 deals, placing it as the second largest investment sector for the year in terms of deals and dollars invested. The Life Sciences sector, which also includes medical devices, accounted for 23 percent of all venture capital dollars invested in 2013.

Mark McCaffrey, global software leader and technology partner at PwC, said in a conference call that overall, average deal sizes are the highest since the first quarter of 2007. “There is a lot of energy around internet-specific companies and stronger interest in biotechnology. We are hearing that this optimism is being fueled by a strong exit market, an improved economy, and as always, innovative entrepreneurs. VC investment is also being bolstered by the continued involvement of corporations in VC deals,” added Bobby Franklin, president and CEO of NVCA.

Looking ahead, Rice believes that in addition to healthcare, which will see “quick and massive change,” companies in technology-enabled business services will also see continued investor interest. He sees software-as-a-service platforms becoming much more specialized and industry specific.

To be sure, Florida’s take is still a tiny slice of the total venture capital pie — in 2013 it was just 1.4 percent for the country’s fourth most populous state.

But that old VC adage still applies — money follows opportunities. “The entrepreneurs are here, the opportunities are here, compared to California it’s a much more business friendly state, colleges are providing the talent,” said Rice. “This combination over time will attract more capital to the state.”

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Nick Banks

Nick created Front Street Commercial Real Estate Group in 2002 and spent the first eight years developing and acquiring office and retail projects in South Florida as well as North Central Florida. In 2010 the focus of the firm was shifted to primarily serve third party clients and perform brokerage, property management and mortgage banking functions. Nick has personally developed and acquired nearly 200,000 square feet of office and retail properties in markets throughout Florida. Prior to founding Front Street, Nick was the Director of Finance and Dispositions for Stiles Corporation in Fort Lauderdale where he financed and sold over $500 million in commercial real estate. Before joining Stiles, Nick was an Associate Director at GE Capital Real Estate where he sourced over $200 million in financing throughout Florida. Nick is a graduate of the University of Florida with a degree in Finance and a concentration in Real Estate. He serves as a board member and current vice-chair for the United Way of North Central Florida where he also chairs the Development Committee. Nick is actively involved with the Gainesville Area Chamber of Commerce where he serves as a board member and committee member for the Council for Economic Outreach. He is also a recent graduate of Leadership Gainesville which is a year long leadership program hosted by the Chamber. He is a member of Grace United Methodist Church where he has served as finance chair and as a member of the leadership council. Nick serves as an advisory board member of the University of Florida Bergstrom Center for Real Estate Studies. Nick was recently named chair of the Gainesville committee for the North Florida chapter of Urban Land Institute (ULI). He is a licensed real estate broker in the State of Florida and is a long time member of the International Council of Shopping Centers.

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