Venture funds flow to state, but not region
BYLINE: Richard Burnett, Sentinel Staff Writer
Venture capitalists poured nearly $147 million into Florida companies during the first quarter, propelling the state into the nation's top 10 ranking for the first time this decade, according to a new survey.
Twelve businesses, from biotechnology and air travel to the blogosphere, landed venture capital during the quarter, generating Florida's biggest dollar total in five years and a seventh-place ranking among U.S. states, according to the latest MoneyTree poll by PricewaterhouseCoopers and the National Venture Capital Association.
The survey, released earlier this week, queried professional money-management firms that specialize in venture capital, a typically higher-risk investment with higher-return potential. Industry experts consider it an important gauge of a region's entrepreneurial climate and level of technological innovation.
Despite the state's good fortune, Central Florida was shut out of the latest venture-capital tally. Melbourne-based AuthenTec Inc. made the original list but was removed after researchers determined that its financing was, in fact, a bridge loan, which doesn't qualify as venture capital.
It was the first time in recent memory that the quarterly survey has failed to turn up a VC deal in the region. During the previous two quarters, by comparison, Central Florida companies attracted 13 deals totaling nearly $68 million.
According to local business-development experts, emerging Central Florida companies still draw a lot of interest from private, non-institutional investors, many of whom are not included in the MoneyTree survey. But they also acknowledged it remains a challenge to attract big firms, which tend to focus on venture-capital hotspots such as California and Texas.
"The good news is that we've seen a lot more action in the past year or so on the part of individual, `angel' investors and funds that are willing to consider funding startup companies," said Carol Ann Dykes, director of the University of Central Florida's Technology Business Incubator. "But when it comes to the big firms in the venture-capital world, this area is still like a desert."
California captured $3.4 billion, or nearly 48 percent, of the nation's venture investment in the first quarter, according to MoneyTree. It was followed by Massachusetts, Washington state, Texas, New York, Pennsylvania and Florida.
Overall, venture capitalists invested $7.1 billion in 778 deals nationwide -- the highest quarterly dollar amount since late 2001, the survey noted.
"We're seeing solid levels of investing in traditional industries being complemented by renewed interest in promising, fast-growing niches," said Tracy Lefteroff, a senior venture-capital executive with PricewaterhouseCoopers. "Entrepreneurs in any area can look forward to a more receptive -- though no less demanding -- market for their ideas."
CONTACT: Richard Burnett can be reached at 407-420-5256 or rburnett@orlandosentinel.com.