Venture Capitalists Flee Florida

A recent MoneyTree report from PricewaterhouseCoopers shows venture capitalist investments were down 36% this summer as compared to last summer, which took Florida out of the Top 10 …

A recent MoneyTree report from PricewaterhouseCoopers shows venture capitalist investments were down 36% this summer as compared to last summer, which took Florida out of the Top 10 for investment and dropped it to 22nd place. Analysts say venture capitalist funds are being focused instead in Silicon Valley, or in preexisting portfolio positions that don’t exist in the state. Instead, Florida businesses are now courting international investors to make up for the shortfall, particularly from South and Central America. For more on this continue reading the following article from JDSupra.

Every quarter, PricewaterhouseCoopers and the National Venture Capital Association release their report on United States venture capital investments in what is known as the "MoneyTree report."

Using data collected by Thomson Reuters, the financial analysis lets us know about investment money coming into the State of Florida, among other things. And why should we respect what the MoneyTree report tells us? Well, according to its own website, the PricewaterhouseCoopers / National Venture Capital Association analysis is the "… only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepreneurs, government policymakers and the business press worldwide."

MoneyTree Report for Florida: Florida Fell 36% in Venture Capital Investment

Their analysis shows Florida isn’t nearly as popular with venture capitalists as it was last year: in fact, Florida dropped 36% in venture capital investment during the summer as compared to what was invested in the same time period last year (2011). Seems venture capital totalled a little less than $29 million this year during the summer months.

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How big of a drop is this? Last year Florida was in the Top 10 States for Capital Investment. From the latest MoneyTree Report, Florida dropped to 22nd Place. That’s dropping like a stone, right?

According to the MoneyTree Report, there’s just not money coming into Florida for new companies or for start-ups. Where’s that money going? A big chunk of it is going to Silicon Valley over in California.

"The decline in funding for Seed/Early stage companies is firmly in place – we’ve seen a drop in dollars and deals both quarter-over-quarter and year-over-year," remarked Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US. "We’re seeing fewer new venture funds being raised which means less capital is available for new investments. And, we’re seeing venture capitalists be very cautious with the capital that is available due to the lack of a significant number of liquidity events. Instead, venture capitalists are continuing to support the companies already in their portfolio."

Florida Looking More and More to Foreign Investment Dollars

Meanwhile, as we’ve been monitoring for awhile now, it is money coming into the State of Florida from international sources that has boosted this state’s economy in these years of economic crisis. Particularly in the Florida residential real estate marketplace, the foreign investor has literally come in like the proverbial Knight on a White Horse.

As reported last month in the South Florida Business Journal, it has been the foreign investor that has saved the residential real estate market here in South Florida – at least for the better parts of 2010 to 2012.

And it appears that the experts interviewed in the SFBJ article agree with our earlier posts: as things in Mexico, Central America, and Latin America continue to be volatile, we should expect more foreign investors to find Florida – and particularly the Miami area – a very favorable place to invest their money and their future.

So, venture capitalists may find Florida less attractive right now – but the world is a very big place and Florida has lots to offer foreign investors (and residential real estate is just a start).

This article was republished with permission from JDSupra.


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