That’s the good news, but in the second half the challenges for venture capital increase
By Nancy Dahlberg
US venture capital activity slowed in Q2 amid new economic headwinds, but the Miami-Fort Lauderdale metro area held up, according to venture capital reports released this week and my research. In the first half of the year, the Miami metro area put in a respectable performance in both VC investing and exit activity, although the outlook for the rest of the year may not be so rosy.
According to preliminary data, companies from the Miami-Fort Lauderdale metro area raised $1.4 billion in venture capital across 93 deals in the second quarter, consistent with the first quarter, when the total also surpassed $1.4 billion, but over 98 deals, according to Pitchbooks and my data research. So far, at least, that compares favorably to a record-breaking 2021, which saw $5.33 billion in VC flowing to South Florida companies in 285 deals, according to my research for eMerge Americas.
South Florida deals in the second quarter included homegrown companies with dozens of South Florida employees, such as OnChain Studios, SmartHop and NovoPayment, as well as a number of new startups in Miami, including MoonPay and KEO World. And after Q1, which mostly contributed to a mega round from Yuga Labs, Q2 came in with mega rounds from Material Bank, Pay Cargo and others. Crypto and blockchain companies continue to be a force in Miami venture capital despite the crypto winter. We have seen crypto, blockchain and web3 funding rounds take off in the second half of 2021 and rise to become the third largest sector in 2021 after fintech and healthtech.
Notably, the Miami Metro remains in the top 10 US metros – currently ranked 10th – for venture capital dollars in the first half of the year.
Here are the top deals in South Florida for the second quarter, according to VC data trackers and Refresh Miami coverage:
- Recurring ventures: Miami, a platform for acquiring and transforming digital media brands, $300M
- OppZo: Miami, a platform that connects companies with public and private financing opportunities, $260 million (debt and equity)
- material bank: Boca Raton, a marketplace for architectural and interior design materials, $175 million
- PayCargo: Coral Gables, a financial platform for the shipping industry, $130 million
- MoonPay: Miami, a platform for buying cryptocurrencies and NFTs, $87 million
- Arteza: Miami, an art supplies marketplace, $35 million
- SmartX: West Palm Beach, wealth management technology and platform, $30m
- SmartHop: Miami, provider of intelligent trucking solutions, $30 million
- OnChain Studios: Miami, creators of NFT-focused Cryptoys, 23 million dollars
- Nue Life: Miami, a mental wellness startup originally focused on ketamine therapies, $23 million
Pitchbook recorded 4 exits in Q2 and 8 in Q1 valued at $4.4 billion. That already tops last year’s activity of $3.2 billion across 26 transactions in South Florida. For the second quarter, Springbig was the big exit in the technology space.
According to Pitchbook, companies across the state of Florida made $1.57 billion from 138 deals in the second quarter, down nearly 14% in both dollars and deals and from $1.83 billion from 160 deals in the first quarter corresponds. In the first half, South Florida’s share accounted for 82% of dollar value and 64% of business in the Sunshine State.
*This is a preliminary mid-year snapshot, subject to updates and further research. Venture data has traditionally lagged behind, so databases are updated frequently, and the VC data trackers can’t keep up with the #MovetoMiami movement. Stay tuned for my comprehensive mid-year report for eMerge Americas, appearing in eMerge Magazine in October.
THE NATIONAL IMAGE
According to the latest quarterly report released today by PitchBook-NVCA Venture Monitor, venture capital activity remained relatively strong across the country in the first half of 2022 despite the economic slowdown and concerns ahead.
While the number of deals remained high compared to the 2021 highs, the deal value fell significantly at all stages. The mega deals that defined 2021 slowed in the first half of 2022 as investors took a more cautious stance. With more than $230 billion in dry powder and nearly 3,000 closed funds as of early 2019, the VC industry is likely to see the trend of a steady flow of deals but adjusted pricing until certainty returns to the market, states in the Pitchbook report.
“The second quarter of 2022 brought an expected continuation of market tightening in some parts of the U.S. venture ecosystem,” NVCA chief executive officer Bobby Franklin said in a statement. “However, the industry’s record-breaking dry powder continues to drive important innovations that address the important needs of the country. The venture industry’s long-term investment stance, even during uncertain fiscal times, is further evidence that it is a reliable economic engine looking to fund the next generation of great American companies.”
Some highlights from the CB Insights State of Venture report: US funding was down 25% quarter-on-quarter but hit $123 billion on 6,079 deals in H1 2022. Compare that to $309 billion across 12,374 deals for all of 2021. The CB Insights report includes breakouts in 14 metro areas, and Miami’s performance in particular stands out. All but five subways saw funding declines in the second quarter; New York’s Q2 funding fell to its lowest level since 2020. Other Findings: In H1 2022, early-stage ventures accounted for 53% of deals. IPOs, SPACS and exits declined in the second quarter and were only half as fast in the first half of the year as in the first half of 2021.
“Over the course of the last quarter, the pace of fundraising has slowed sharply and valuations – mainly in the later stages – are beginning to correct. We expect valuations to fall at all investment stages throughout this cycle – and we believe this is a healthy reset of the bar. But if the next few months are as quiet as we’re expecting, the founders will have to make some tough decisions to preserve the runway. With the IPO markets unavailable right now, a wave of consolidation could be right around the corner,” said Pamela Aldsworth, head of venture capital coverage at JP Morgan Commercial.
Download the Pitchbook NVCA Venture Monitor report here.
Download the CB Insights State of Venture report here.
You can find my 2021 report here.
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