By Nancy Dahlberg
After a record-setting year in 2019, venture capital investing into South Florida companies held up well in the second quarter of 2020, thanks largely to a $350 million mega-round by Magic Leap. However, it’s unlikely the pace can be sustained as the coronavirus crisis continues to hit startups, the venture capital industry and the economy hard.
Still, South Florida companies reeled in $522.77 million across 31 deals in the second quarter, according to the Q2 Venture Monitor report produced by the National Venture Capital Association and PitchBook and released Tuesday. That's more than most quarters before 2019, which saw a record $2.39 billion invested in the tri-county region’s startups.
And in the second quarter at least, the VC dollars were all flying south in Florida. In Q2, the Miami-Fort Lauderdale region accounted for 86% of the state’s deal value total and more than half the state’s deals. It's also worth noting that even with stripping out the outsized Magic Leap investment, South Florida companies reeled in slightly more in Q2 than in Q1 (Q1 was $167.48 million, according to Pitchbook's revised calculation) – and more than the rest of the state combined.
Statewide, VC investment totalled $607.3 million across 58 deals, according to the Venture Monitor based on Pitchbook data.
In the second quarter, South Florida startups lured in the most dollars in the Southeast, and the Miami-Fort Lauderdale metro area ranked 10th highest in the nation by dollars invested. Later-stage investments dominated the top 10 Q2 deals in South Florida.
Here are the South Florida startups that raised the most funding in Q2, according to Pitchbook:
- Magic Leap – later stage, spatial computing, Plantation: $350 million
- Orthosensor – later stage, surgical devices, Dania Beach: $42 million
- Tabit – later stage, business services software, Miami: $35 million
- Nymbus – later stage, financial technology, Miami: $12 million
- DermaSensor – early stage, health-tech, Miami: $12 million
- Bidtellect - later stage, ad-tech, Delray Beach: $10 million
- Cast AI – early stage, business services software, Sunny Isles Beach: $8 million
- Adfone - seed stage, commercial services, Fort Lauderdale: $8 million
- Aegle Therapeutics – later stage, life sciences, Miami: $5 million
- Kaydee - angel round, health-tech, Davie: $5 million
There were no exits tracked by Pitchbook in South Florida in Q2.
For the first half of 2020, South Florida companies reeled in ^690,2 million across 75 deals. In Florida, the running total is $916.2 million across 135 deals.
Nationally, companies raised $34.3 billion across 2,197 deals in Q2 2020. In Q2, deal value was held up by later-stage deals, as it was in South Florida. However on the national front, first time financing fell to multi-year lows as a proportion of overall VC activity, the report said. Exits also fell sharply in the second quarter.
Yet, valuations did not drop as much as expected, and the ample dry power in the industry allowed VCs to continue investing – even making some very large bets – during the 2nd quarter, the report said.
“The strength of VC exits over the past few years has provided LPs with capital to commit to new funds. As a result of strong fundraising, GPs have built up a large stockpile of dry powder, which should allow them to weather the economic downturn due to COVID-19,” said John Gabbert, founder and CEO of PitchBook. “However, the short-term aspect of this disruption is crucial, as an extended economic decline would change some longer-term behaviors around commitments to VC. This is even more important now that funds are taking longer to liquidate and are retaining higher proportions of unrealized value than we saw in past downturns.”
Some sectors, particularly software and biotech, have fared relatively well during the COVID-19 crisis.
“Despite several positive trends in the latter half of Q2, uncertainty will persist the next few quarters. There are still dark clouds looming on the horizon; whether they fade away or collect into a new storm could determine how the rest of 2020 unfurls for the entrepreneurial ecosystem,” the report read.
Download the Q1 Pitchbook-NVCA Venture Monitor report here.
Miss the 2019 eMerge Americas Insights report analyzing the Miami metro area’s record year for venture capital investment? Download it here.
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