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VC funding in state plummets in third-quarter

Venture capital funding in Florida took a dive during the third quarter, although South Florida companies netted about a third of the total.

Venture capitalists invested $28.6 million in 10 Florida companies July through September, down 36 percent from the same quarter in 2011, according to this week's MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association (NVCA). The total landed the state in 22nd place in the U.S., down from ninth in the second quarter.

Four South Florida companies landed venture money during the quarter. They were:

Altor BioScience, a biopharmaceutical company based in Miramar, raised $5.12 million in funding led by Sanderling Ventures.

Gaseous Fuel Systems, a Davie company providing technology solutions for natural gas conversions, raised $2.15 million in funding led by Black River Asset Management.

Avisena, a Miami-based IT services firm for physicians’ practices, raised $1.32 million in funding led by WFD Ventures.

VirtualWorks, a Boca Raton- based software company providing content virtualization solutions, raised $150,000 in a follow-on investment from New World Angels.

Total venture investment in the U.S. fell 11 percent during the third quarter to $6.5 billion, according to the MoneyTree report, based on data from Thomson Reuters. The U.S. total represented 890 deals. The software industry received the highest level of funding for all industries with $2.1 billion invested into 304 deals during Q3, marking the fourth quarter in the last five in which investment in software exceeded $2 billion. Through the first nine months of 2012, new venture capital nationwide totaled $20 billion, down 10 percent from the year-earlier period.

“The third quarter numbers tell a story consistent with investment themes we have been seeing throughout 2012,”  said Mark Heesen, NVCA president, in a press release.  “Information technology investment continues to be very strong, particularly in the Internet arena while life sciences investment remains low, reflecting ongoing concerns regarding regulatory uncertainty, capital intensity and investment time horizons in the space.  We also continue to see clean tech investment shifting concentration to smaller, more capital efficient deals.”

Yet, funding for startups and other early-stage companies is falling, according to survey.

"The decline in funding for seed/early stage companies is firmly in place -- we've seen a drop in dollars and deals both quarter-over-quarter and year-over-year," said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US.  "We're seeing fewer new venture funds being raised which means less capital is available for new investments.  And, we're seeing venture capitalists be very cautious with the capital that is available due to the lack of a significant number of liquidity events.  Instead, venture capitalists are continuing to support the companies already in their portfolio."

Through the first nine months of this year, companies in the state received $160.3 million, or 42 percent less than during the same period last year.

MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org.