Venture-capital investment in the U.S. improved for the first time in two years but Florida fell even further behind other states, dropping in the second quarter to 16th from 15th, according to asurvey released Monday.
In the latest MoneyTree Survey of venture capital firms, investment in the second quarter edged up to $4.3 billion from $4 billion in the previous quarter but fell from $6.1 billion in the second quarter last year.
The survey is released quarterly by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
It’s the first uptick since the high-tech bubble burst in 2001. It’s too early to call it a trend, but if it continues for the rest of 2003, it could mean venture capital firms are ready to part with more money for emerging businesses.
“It’s definitely something we need to notice,” Ravi Ugale, a partner in CrossBow Ventures in West Palm Beach, said. “The second quarter looked much healthier.”
One bright spot was the jump in investment in early stage companies to $956 million from $668 million in the first quarter. This was the first such increase in three years as venture firms had pulled back to concentrate on companies with a longer track record and a greater chance of turning a profit.
“You go back historically and what it means is that there’s an increase from recent quarters but certainly not what it used to be like three or four years ago,” said Marty Donsky of PricewaterhouseCoopers.
In Florida, entrepreneurs extracted $45.7 million from venture firms, down from $57.4 in the first quarter and $70 million in the second quarter last year. However, 14 companies received money compared with 11 in both the first quarter and the second quarter of 2002. California retained the top spot, with $1.9 billion in investment during the April-through-June quarter.
“The most significant thing I see is that VCs are still focusing in on later-stage deals. What money is coming into the state is going to existing (companies). No seed stage money is going into Florida,” Donsky said.
Companies along Interstate 4 outdid firms along Interstate 95, with seven receiving cash in Central Florida to six here. Of the six South Florida firms, two are based in West Palm Beach, with one each in Boca Raton, Boynton Beach and Stuart.
Florida-based venture firms became more active, representing 10 percent of the investment in the second quarter compared with 6.5 percent in the previous quarter. CrossBow was involved in three deals, spending $750,000 on companies already in their investment portfolio. Still Ugale sees CrossBow’s strategy changing as the venture sector looks to hook up with start-up businesses.
“We are probably going to make at least one new investment in the third quarter, and it’s likely to be in a Florida company,” Ugale said.
Cash boosts
Five of the 14 investments made in Florida during the second quarter were in companies in Palm Beach and Martin counties.
Company City Investment
Summit Brokerage Services Boca Raton $1 million
Mobile Medical Industries Boynton Beach N/A
Universal Chemical Technologies Stuart $250,000
RxStrategies West Palm Beach $7.8 million
ScriptRx West Palm Beach $250,000
Source: The MoneyTree Survey
