By Nancy Dahlberg
It could have been a lot worse.
Venture capital slowed up but did not stop flowing into South Florida companies in the third quarter.
While we won’t be replicating last year’s record-setting pace, it appears likely that venture investing could end up on par with other recent years, or nearly so. This comes even as the coronavirus crisis continues to pound the South Florida region.
South Florida tech companies reeled in $197.62 million across 30 deals in the third quarter, according to the the Q3 Venture Monitor report produced by the National Venture Capital Association and PitchBook and released Tuesday. That trails Q2’s nearly $540 million across 34 deals, including the Magic Leap mega-round. But that’s more than many quarters before 2019, which saw a record $2.39 billion invested in the tri-county region’s startups.
What’s more, the state’s only exit in the third quarter was by a South Florida healthcare company. And South Florida has another unicorn – this time in the healthcare space.
MDLIVE raised a $50 million equity round and $25 million debt round, valuing the company at $1 billion, according to Pitchbook. This also raised speculation that a rumored 2021 IPO is in the plans.
While VC dollars were all flying south in Florida in Q2 – the Miami-Fort Lauderdale metro grabbled 86% of the state’s total -- the flows were more distributed in Q3. Also, the Central Florida region reported a megaround; autonomous transportation technology startup Luminar raised $170 million. In Q3, the Miami-Fort Lauderdale region accounted for 34% of the state’s deal value total and 38% of the state’s deals.
Statewide, VC investment totalled $578.50 across 72 deals, about on par with Q2, according to the Venture Monitor based on Pitchbook data.
In the first half of the year, and the Miami-Fort Lauderdale metro area ranked 11th highest in the nation by dollars invested, but that ranking tumbled in Q3. Later-stage investments and healthcare-related deals dominated the first half, in addition to the Magic Leap mega-round. That domination by late stage and healthcare continued in Q3.
Through the first three quarters, South Florida companies have raised $878.1 million, according to Pitchbook’s data
Here are the South Florida startups that raised the most funding in Q3:
- MDLIVE – later stage, telehealth, Miramar: $50 million (plus $25 million in debt financing raised at the same time).
- PayCargo – later stage, logistics technology, Miami: $35 million
- Marco Financial – early stage, fin-tech, Miami: $26 million (equity and credit)
- Papa – later stage, elder-tech, Miami: $18 million
- Springbig – later stage, cannabis SaaS, Boca Raton: $11,5 million
- Health Advocates Network – angel, HR services, Boca Raton: $7 million
- SmartHop – seed, logistics tech, Miami: $4.5 million
- Stimwave – later stage, therapeutic device, Pompano Beach: $3 million
- Fraud Protection Network – angel, cybersecurity software, Hallandale: $2 million
- Sympast – angel, health-tech, Plantation: $2 million
There was one exit in Florida tracked by Pitchbook in Q3. That would be Ascyrus Medical of Boca Raton, a therapeutics device company that was acquired by Atlanta-based public company CryoLife in a $200 million deal.
Q4 is already off to a good start in South Florida, with healthcare technology company Neocis announcing a $72 million Series D raise last week. Neocis created Yomi, the first and only robot-assisted surgery system in the dental industry. “This latest round of funding will allow us to expand the reach of our robotic-assisted surgical system and fuel further development of Yomi’s technology platform to deliver increased value to every dental office in the country,” Neocis' co-founder and CEO Alon Mozes said.
Nationally, VC dealmaking has remained resilient throughout the pandemic with $37.8 billion invested across 2,288 deals in the third quarter. While the seed market continued its sluggish pace in Q3, angel investments have remained resilient, bringing the number of deals at the angel and seed stage so far in 2020 to be roughly in line with the same time frame in 2019. Amid uncertainty this year, investors have consolidated capital in their portfolio companies at the late stage, resulting in the trend driving deal sizes higher. That has also been true in South Florida this year.
“The consolidation of capital continues toward larger, later stage companies and established VC funds. While both of these trends are potential signs of concern for the long-term health of the VC lifecycle, overall the ecosystem has shown strong resiliency in the past six months,” said Bobby Franklin, President & CEO of NVCA.
Exits were the story nationally. Following a tepid first half of the year for exit activity, the third quarter saw a massive uptick with $103.9 billion raised across 185 exits, representing a quarter-on-quarter increase of 292.5% and 7.6%, respectively. Several large IPOs (Snowflake, Palantir, Asana and Unity) closed during Q3 and pushed exit value to its second-highest quarterly total behind only Q2 2019 (the quarter Lyft and Uber debuted for context), which seemed impossible six months ago when the COVID-19 pandemic first emerged. Special purpose acquisition companies (SPACs) continue to hold the attention of many private market participants with steady issuance of new SPACs and newly announced SPAC acquisitions.
“Despite continued uncertainty throughout the year, the rebound in public markets has given investors confidence. LPs are recommitting with proven GPs raising raising successor VC funds,” said John Gabbert, founder and CEO of PitchBook. “As investors seek growth opportunities in a low-rate environment, the growth potential of the venture strategy continues to entice both traditional LPs and nontraditional investors. Additionally, we saw the return of large IPOs during the third quarter and expect more in the coming months as VC-backed companies look to capitalize while the IPO window remains open.”