How is the Florida venture capital industry faring?
South Florida Business Journal
The latest MoneyTree Report published by PricewaterhouseCoopers and the National Venture Capital Association elicited much local response to the news that in 2012 Florida dropped nationally to 18th from 13th for venture capital (VC) dollars invested in 2012.
Investment in Florida companies dropped $141 million, or 42 percent, from 2011. While the topic of VC in Florida is hotter than July, sometimes the numbers don’t tell the whole story. Review the following statements and test your knowledge of VC activity in Florida.
VC investing was up elsewhere in the country.
False. According to the MoneyTree report, venture investment nationwide slipped 3 percent to $6.4 billion in the fourth quarter and 10 percent to $26.5 billion for the year. Nationally, seed stage investments were at the lowest level since 2003.
VC investment levels were down in all states and sectors.
False. Nationally, venture funding in life sciences (biotech and medical device combined) decreased 13 percent. In Florida, VC funding of life science companies increased 19 percent to $103.5 million with an associated growth in deals from 15 in 2011 to 19. Dollars allocated to the medical device sector actually rose 36 percent to $62.7 million, according to the University of Florida Sid Martin Biotechnology Incubator’s Florida BioDatabase for 2013.
Florida companies can raise venture capital, remain in Florida and succeed.
True. Several VC-backed companies in Florida have been acquired or gone public, with total funding topping billions of dollars. Some examples include Andrx, Citrix Systems (NASDAQ:CTXS), Cordis Corp., Coulter, Ivax Corp., Mako Surgical (NASDAQ: MAKO), Pasteuria BioScience, METI, Novamin, Regeneration Technologies, Sportsline and VAX Design.
Prominent VCs from other states won’t open offices in Florida.
False. Two major life sciences VCs have opened and staffed offices in Gainesville, a Menlo Park VC has plans to locate a partner here and discussions are well underway with other firms seeking great investment opportunities in Florida.
It is common for corporations, individuals, governments and foundations to invest in VC funds and support their fundraising efforts.
True. Several states are courting VC funds in this manner, the idea being that if we don’t invest in ourselves, why would anyone else?
It is important to distinguish between seed, early stage and growth capital.
True. Seed stage capital is where we have the greatest gap, and that is arguably the most important stage where business concepts are proven, prototypes are built, and plans and strategies for future growth are developed.
Angel investment activity is increasing in Florida.
True. A number of groups, formal and informal, are emerging to meet the demand for seed stage capital, uncovering great investment opportunities and helping to build Florida’s entrepreneurial ecosystem.