By Nancy Dahlberg
Magic Leap released its first product in 2018, but it also sprinkled plenty of magic dust on South Florida’s venture capital numbers in 2018, according to a pair of venture capital reports this week.
South Florida startups led the state by a high margin in VC, luring three quarters of the venture capital flowing to companies in the state in 2018, according to Pitchbook’s venture capital report released today. In all, South Florida companies lured in $1.38 billion in 2018, helped greatly by Magic Leap’s first quarter investment of $461 million from Saudi investors. Statewide, the total was $1.73 billion.
By deal count, South Florida again reeled in the majority, too. In 2018, South Florida startups snagged 128 deal; statewide, the deal count was 234, according to the Pitchbook NVCA Venture Monitor report.
Because of the Magic Leap effect, South Florida drew about twice the capital as in 2017 and came in just over 2016’s total of $1.281 billion, when the Magic Leap mega-investment round was even mightier.
For the fourth quarter, however, South Florida’s numbers looked downright anemic. South Florida startups attracted just $66.9 million, according to Pitchbook data. That's about a third of the $206.5 million statewide. Biggest South Florida deals in the quarter, according to Pitchbook’s data: OrthoSensor ($14.5 million), ShipMonk ($10 million), Transparent Health Marketplace ($6.07 million), DermaSensor ($5.81 million), iraLogix ($5 million), Springbig ($4.94 million), Dvendo ($3.25 million), Blanket ($2.71 million), Papa ($2.4 million) and SMArtX ($2 million).
PwC and CB Insights also released their venture capital report this week, called MoneyTree. Each of the reports counts deals differently. Among the differences: Pitchbook includes angel rounds but not private equity investments; MoneyTree counts solely institutional rounds and includes private equity. The trends, however, were similar.
According to MoneyTree’s numbers, Magic Leap’s investment alone nearly doubled the capital that flowed to all the state’s startups in 2018.
According to the MoneyTree report, four of the state’s 10 highest deals were from South Florida: Magic Leap ($461 million and no. 1), MDLive ($50 million), Oncology Analytics ($21 million) and YellowPepper ($12.5 million). For the quarter, landing in the state's top 10 from South Florida were Oncology Analytics (21 million); Shipmonk and Springbig.
Neither report included the announced Softbank investment (amount undisclosed) in Miami-based ParkJockey.
It’s important to note that although South Florida shined in the state, it’s just a sliver of the pie. Overall, just 1 percent of the total U.S. venture capital pie went to Florida’s startups, according to both reports. According to Pitchbook, Florida ranked 9th for VC despite its size. South Florida ranked 12th among major metros.
Nationally, U.S. funding jumped to $99.5 billion, the highest yearly funding level since 2000, according to MoneyTree. Yet, the number of deals was down, signaling a continuing trend of mega-deals ($100 million-plus) like Magic Leap driving the numbers higher. In 2018, 184 mega-deals and increased funding to late-stage companies made their mark, while the number of seed stage deals fell for the third consecutive year.
“There certainly continues to be a healthy availability of funds and appetite for investment, while the trend of fewer, bigger deals persists,” said Tom Ciccolella, partner and U.S. Ventures Leader at PwC.
In South Florida, 2019 is off to a quick start with four South Florida companies announcing funding at the start of this year, including CarePredict drawing a $9.5 million investment. Other investments included Streann Media, Tippy and SmartHop. Read about all the deals on Refreshmiami.com.
Market watchers will be keeping an eye on the effect the government shutdown could have on the IPO market and will be looking for any other signs of a VC slowdown. New government regulations on foreign investment – the Foreign Investment Risk Review Modernization Act or FIRRMA – could also have a chilling effect on VC investment in 2019.
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