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Powered by Open English, VC funding soars in Florida in Q2

Venture capital funding in Florida soared in the second quarter, largely thanks to two large investments in Miami companies.

According to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association that was released today, investment in the state totaled $155.8 million, up from just $11.29 million in the first quarter and the highest amount recorded in the survey since the third quarter of 2007.

Florida’s total was powered by the $65 million Series D funding round in Open English – the 7th largest investment in the country -- and the $20 million round in CareCloud.

Nationally, venture capitalists invested $6.7 billion in 913 deals in the second quarter of 2013, according to the report, based on data provided by Thomson Reuters.  Quarterly venture capital investment activity rose 12 percent in terms of dollars and 2 percent in the number of deals compared to the first quarter of 2013.

The Internet-specific and biotechnology sectors both saw increases in both dollars and number of deals in the second quarter.  Additionally, companies receiving VC funding for the first time as well as those companies in the early stage of development experienced jumps in dollars invested in Q2 2013. “"As the exit window continues to open, we’ll continue to see VCs shifting their focus back to companies in the earlier stages of development.  In particular, startups that are able to drive innovation by developing disruptive technologies that are easy to deploy and deliver ongoing value to the user will be of great interest to venture capitalists,” said Mark McCaffrey, global technology partner and software leader at PwC US, in the news release. 

 A few second-quarter investment trends from the survey:

 * The software industry received the most funding, despite dropping 7 percent from the prior quarter to $2.1 billion, marking the fifth consecutive quarter of more than $2 billion invested in the sector.

 * Biotechnology was the second largest sector for dollars invested with $1.3 billion going into 103 deals, rising 41 percent in dollars and 4 percent in deals from the prior quarter. Of the deals, 71 were in medical devices, an area of strength in South Florida.

 * Early-stage investments rose to their highest level in six quarters, rising 63 percent in dollars and 18 percent in deals to $2.5 billion going into 480 deals.  The average early-stage deal was $5.2 million in Q2, up significantly from $3.7 million in the prior quarter. 

 * First-time venture capital increased 24 percent to $1.1 billion going into 302 companies in Q2, a 10 percent increase in the number of deals from the prior quarter.  First-time financings accounted for 17 percent of all dollars and 33 percent of all deals in the second quarter. Software companies accounted for 40 percent of the dollars and 42 percent of the deals for first-time funding.

 “In many ways it feels like the late 1990s with information technology driving venture investment and significantly outpacing other sectors when it comes to level of activity and momentum,” said Mark Heesen, president of the NVCA. “The difference, however, is where we go from here.  There will be no tech bubble.  IT investing will continue to be the bedrock of the venture industry – but at sustainable levels.  Life sciences investment is poised for a slow and steady recovery, provided we can continue to see progress on the regulatory front.  And as clean energy continues to evolve from a capital intensive to a capital efficient model, it is clear that the venture industry is responding to the market forces at work.”

 According to the survey, 14 Florida companies received venture capital in the second quarter, up from six in the first quarter and the highest number in two years.  The three South Florida companies receiving funding were:

 *Open English, an online school offering live English language classes across Latin America and with plans for global expansion: $65 million. Funders were Exeter Venture Management Co., Insight Venter Partners, Kaszek Ventures, Redpoint Ventures and Technology Crossover Ventures.

 * CareCloud, which provides products and services for medical practice management and electronic health records: $20 million. Funders wereIntel Capital, Norwest Venture Partners, and Tenaya Capital.

 * Contactus.com, which prodies a suite of customer aquistion and lead management products for small business: $400,000. Funder was PeopleFund.

 Other Florida companies that were funded were Kony Solutions, Tower Cloud, Applied Genetics Technologies, Informed Medical Decision, Treehouse Island, XOS Digital, Zentila, SiteWit, Health Integrated, Fracture and Unikey Technologies.

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