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Robert Trigaux

Latest numbers show puny venture capital investing remains Florida's Achilles heel





Vice presidential candidate Paul Ryan visited the University of South Florida in Tampa Friday to talk about USF's Center for Entrepreneurship. Everybody loves to embrace the idea of encouraging business start-ups. But Florida still suffers from a serious lack of venture capital support. Is this a chicken and egg problem? If we had more and better start-ups, would Florida get mopre VC backing? Or are the best start-ups in Florida leaving the state in search of more investment money, especially in California where venture capital tends to invest heavily? (Photo: Melissa Lyttle, Tampa Bay Times)

Wake up and good morning. Did venture capital decide to take a siesta in Florida? New data MoneyTree data show that in the entire country venture capitalists invested $6.5 billion in 890 deals in the third quarter that ended Sept. 30. That's a decline of 11 percent in dollars and 5 percent in the number of deals compared to the second quarter of 2012, according to data gatherers PricewaterhouseCoopers and the National Venture Capital Association. Read more here. And here's the AP story.

So how did perennially VC-lean Florida fare in the latest quarter? Only 10 deals happened for a total amount of just $28.6 million. So where does that put the Florida economy on the venture capital/business entrepreneur scale?

It means that in the third quarter of 2012, Florida generated just over 1 percent of the deals nationwide involving less than 0.5 percent of the actual dollars. In other words, Florida was barely a blip on the U.S. venture capital radar in the just finished quarter.

Here's how Florida's been doing in VC deals and dollars:

Third quarter 2012: 10 deals for $28.6 million.

Second quarter 2012: 12 deals for $95.6 million.

First quarter 2012: 4 deals for $36 million.

Fourth quarter 2011: 13 deals for $62.9 million.

Third quarter 2011: 12 deals for $44.6 million.

Second quarter 2011: 13 deals for $101.6 million.

First quarter 2011: 16 deals for $129.2 million.

So the latest quarter produced the lowest amount of VC money in nearly two years and the second lowest number of deals. Is this a blip or start of a more serious, sustained slowdown? Nationally, technology and IT investing remains reasonably strong but investing in biotech and medical devices is way down. That's a concern.

Puny venture capital investing remains an Achilles heel for Florida. Can't generate an "entrepreneurial ecosystem" if there's little money being invested to help start-up companies. Consider that in the third quarter California saw 347 deals totaling $3.3 billion. No wonder every motivated start-up in Tampa Bay seems to talk about heading west for more attention and money.

Here's one bright spot in the Sunshine State. Gainesville, where the University of Florida is aggressively supporting start-up activity, is seeing some venture capital deals in recent weeks. Read more here.

--  Robert Trigaux, Business Columnist, Tampa Bay Times

[Last modified: Monday, October 22, 2012 7:24am]


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