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Venture

Robert Trigaux

Why does California (still) attract more venture capital in a few days than Florida does all year?

22

January

Venturebloglogo Wake up and good morning. We already know Florida is downright anemic when it comes to attracting big-buck venture capital (VC) for young companies here. But last year, the entire United States suffered a sharp decrease in VC funding. So says this morning's release of the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association. Here's the link to the MoneyTree report and related data.

The report found that venture capitalists invested $17.7 billion in 2,795 deals in 2009, marking the lowest level of dollar investment since 1997. Venture investments in 2009 represented a 37 percent decrease in dollars and a 30 percent decrease in deal volume from 2008. Here's the New York Times take on the report.

It was the second consecutive year of annual deal and dollar declines. Investments in the fourth quarter of 2009 totaled $5.0 billion in 794 deals, a 2 percent decline in dollars but a 15 percent increase in deals from the third quarter of 2009 when $5.1 billion went into 689 deals.

Lots of numbers, I know. So how, precisely, did Florida fare in venture capital deals in 2009? Here's the breakdown for Florida, by quarter, in '09:

* First quarter: 7 deals, $55,500,900 in VC funding.
* Second quarter: 7 deals, $9,123,900 in VC funding.
* Third quarter: 7 deals, $131,236,000 in VC funding (why such an increase? See below.).
* Fourth quarter: 9 deals, $39,200,500 in VC funding.

Here's a surprise. One Florida deal made the Top Ten nationwide for 2009. That was the third quarter, $100-million investment by Roark Capital Group in Waste Pro USA, Inc. of Longwood, Fla. The company operates as a non-hazardous solid waste management company. Here are details of that September deal.

I'll toss California's 2009 quarterly numbers on VC funding just for some humbling perspective:

* First quarter: 265 deals, $1.6 billion in VC funding.
* Second quarter: 266 deals, $1.8 billion in VC funding.
* Third quarter: 293 deals, $2.9 billion in VC funding.
* Fourth quarter: 323 deals, $2.5 billion

So crudely speaking, California does more deals and gets more venture capital funding in less than a week than Florida does all year. Now multiply that astounding imbalance over the decades. Houston (I should say Tallahassee), we have a problem. 

This is not breaking news. People familiar with the dearth of venture capital in the Sunshine State know the problem. But we do not have a good answer yet on how to convince venture capitalists that all the nation's brains and innovation do not reside in Silicon Valley, the Boston Beltway or the Washington, D.C. suburbs.

The next significant venture capital event in Florida is the Florida Venture Forum event next month in which 19 Florida companies (here are the three from Tampa Bay) will make pitches for funding. Later in February, the Southeast Venture Conference will feature additional Florida-based companies (details here and here) seeking funding. Not one of them is from the Tampa Bay area.

So, all you smart readers out there, how does a state the size of Florida climb out of the venture capital hole and start attracting more bucks here?

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:27pm]

    

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