Let’s Bring it Local; Q2 2020 Venture Capital Trends in the Southeast US

Throughout this week we have been analyzing Pitchbook’s Q2 Venture Monitor, looking at the overall investment activity across the United States and how these trends differentiate between female and male founders. Today we bring things into a local context, looking at the VC trends seen across the Southeast and Florida during this second quarter of 2020. 

Now that there has been a clear picture painted of the status of VC activity across the United States, let’s deep dive into the Southeast USA Region that includes Florida, Tennessee, North Carolina, Mississippi, Alabama, and Georgia. Deal count in the region makes up 8.3% of the total deals made Q2 2020 (2.3% higher than Q2 2019); deal value in the southeast makes up 2.9% of the total deal value Q2 2020 (1.8% lower than Q2 2019). Meaning overall there has been a higher number of deals transacted but at lower values. The order in terms of VC activity representation most to least based on deal count % and deal value % is as follows: (1) West Coast, (2) Mid-Atlantic, (3) New-England, (4) Great Lakes – Southeast – Mountain, (5) South, (6) Mid-west. The Southeast, Great lakes and Mountain have a similar range in their deal value amount of total ranging between 2-5% and all have decreased in deal value by ~1.0%. The regions also have similar deal count range between 6.5%-8.5% and have seen a similar increase between 0.5-2% from Q2 2019. These states are emerging entrepreneurial ecosystems in the USA and why Endeavor has offices in all of those territories (Detroit, Miami, Atlanta, Louisville).

In Q2 2020 Florida saw $607.3 invested from 58 deals; most of the quarter’s deal value, however, comes from Magic Leaps $350M mega-round. YTD 2020 Florida has brought in $916.2M, this makes up 1.33% of the total US deal value (decrease of 0.4%); the state has seen this deal value across 135 transactions, 2.67% of the total number experienced by the country (0.2% increase from 2019).

According to Refresh Miami’s Article (LINK/CITATION) during this quarter the Miami-Fort Lauderdale region accounted for 86% of the state’s deal value total and more than half the state’s deals; these two metropolitan areas also ranked 10th highest in the most dollars invested in the nation. Just like the rest of the country, the top deals in South Florida were helped by later-stage investments as detailed by Nancy Dalghberg in RefreshMiami’s article.

Biotech and software companies have held stronger during the pandemic:

  • 16 out of the top 25 largest early-stage VC deals in Q2 were in the biotech & pharma sector, 6 more than in Q2 2019.

Endeavor Insights Miami’s Competitive Advantages in Entrepreneurship Report states Miami’s six competitive industries to be:

  • Transportation
  • Financial Intermediary Businesses
  • Consulting Firms
  • Pharmaceuticals and Medical Device Companies
  • Software and software-enabled Companies
  • Advertising Firms.

The Pitchbook report showcases Pharma, Medical Devices, and software companies have been experiencing positive trends amidst the pandemic, a fact that puts South Florida in a strong position amongst the crisis and positive assumptions for future VC trends in the region.

On the other side, funds have exhibited strength in Q2 2020 having closed 148 funds across the country with more than $42.7 billion, already surpassing the previous 2 years. However, the value was dispersed among a lower number of funds, continuing the already strong trend of VC mega-funds ($500M+).

What does this mean for areas in the country where mega-funds are not present? Will it be harder for smaller funds to raise money from LPs? Pitchbook states “This is an extension of the trend around LPs consolidating manager relationships and investing in top-quartile managers to truly get “venture-like” returns.” Not surprising then the percentage of micro funds (sub $50M) raised has dipped 40% for the first time since 2008. Not yet clear on this data but it can be safe to assume most of Florida funds range between micro funds to medium funds, which if this trend continues will impact the investment into the region.

Endeavor Miami continues to see a positive ecosystem sentiment with founders striving to scale and organizations still helping them achieve that scale. As our founder, Linda Rottenberg says: “when economies turn down, entrepreneurs turn up.”

What to learn more about Endeavor Miami and our DataHub? Reach out to us by email at miami@endeavor.org & follow us on social media!

The information presented throughout this series has been taken from the following sources:

  • Pitchbook-NVCA Venture Monitor Report Q2 2020 (link)
  • Refresh Miami’s Article: All things Considered, Q2 was a very good quarter for South Florida Venture Capital (link)
  • Tampa Bay Inno Article: Tampa Bay startups raised over $30M in Q2 (link)
  • Miami’s Competitive Advantage Report by Endeavor Insights (link)

 

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