VC slowdown rocked South Florida in Q3, but see which 10 deals bucked the trend

By Nancy Dahlberg

Once again It wasn’t pretty, but the South Florida venture capital results for the third quarter trended very similar to Q1 and Q2, according to the Q3 Pitchbook-NVCA Venture Monitor report released today. For the year, venture capital flows are down significantly in the Miami-Fort Lauderdale metro area, showing that South Florida startups couldn’t overcome what continues to be a down market.

The South Florida picture

For Q3 2023, Pitchbook reported that the Miami-Fort Lauderdale metro pulled in $413.7 million, up slightly from $392 million in Q2 but down considerably from the $1.4 billion logged in Q3 2022, according to Pitchbook’s data. Year to date, the Miami metro area has logged over $1.2 billion. Deal count held up well in Q1 and Q2 compared to other metro areas, but Q3 was down – just 68 deals from a revised 90 deals in Q2 and 109 in Q1, mirroring national trends, according to underlying data provided to Refresh Miami.

One bright spot: While the deal count was down, the deals got a little bigger in Q3.  

Given the recessionary economy and inflation trends, the FTX fallout and the SVB collapse, the downturn this year was expected, but still shocking, after the region pulled in record totals in 2021 and 2022. By my reporting, the metro area pulled in $5.8 billion in 2022, ranking 7th in the nation. This year the Miami-Fort Lauderdale metro area fell out of the top 10.

But some South Florida startups bucked the trends, showing strength amid the down market. According to Pitchbook’s data, here were the top deals by companies headquartered in the Miami metro area in Q3:

  • Flex: The Miami-based fintech building a one-stop-shop for SMBs raised a debt and equity round of $120 million ($20 million was Series A equity).
  • Lula: The Miami-based insurtech on a mission to eliminate the pain points and inefficiencies that have long plagued the insurance industry, raised a $35.5 million Series B round.
  • Lumu: The Doral-based cybersecurity startup raised a $30 million Series B round to optimize enterprise cybersecurity operations.
  • Cosmic Wire: The Miami-based cross-chain web3 startup raised a $30 million seed round.
  • CarePredict: The Plantation-based healthtech company that helps seniors stay well in living facilities or aging at home, raised $29 million in Series A-3 funding.
  • Renco: The Miami construction-tech company which has introduced an innovative new building material for the development industry, raised an $18 million seed round.
  • Lera Investment Technologies: The Miami-based IT consulting and outsourcing company raised $13.2 million in early-stage funding.
  • ADvantage Therapeutics: The Miami-based life sciences startup raised a $10.2 million seed round.
  • Erudit: The Miami-based software startup raised a $10 million Series A to further its mission of building better workplaces for all using data.
  • Beeyond Media: The Miami adtech startup born in Latin America raised a $10 million seed round that will be used to scale the Beeyond business in the United States.

There were four exits for South Florida companies in Q3, but only one with a deal value. That would be the $54 million exit for Playmaker,  which was acquired by a Denmark sports media company, according to Pitchbook.

Venture reporting lags and all of these figures will be revised over the months, but this  provides a snapshot of how South Florida stands now. According to my preliminary research, there are already a  handful of deals Pitchbook did not include – including the $95 million round for South Florida scaleup ClassWallet – so my results will likely be higher. If the current pace holds for the rest of the year, the Miami metro area will be on track for results closer to 2020 – about $2 billion – according to my analysis.

Take note: In our region’s record-smashing 2021 and 2022, the region logged 10 and 12 equity megarounds respectlively, including eye-popping raises by Yuga Labs, Moonpay and Flow. Those rounds alone made up the majority of funding those years. So far this year there have been no mega-rounds.  

Funds have been raising, bucking the national trend: Fundraising by South Florida-based VC firms so far this year exceeds 2022’s full-year total. In the first three quarters, funds raised $3.2 billion, while last year they raised $2.2 billion. Nationally, as you will read below, fundraising by venture capital firms is running far below last year’s tally.

The Florida picture

Statewide, according to Pitchbook’s report, Florida companies drew $596.4 million across 118 deals in Q3 2023. That was down slightly from a revised $790.96 in Q2. South Florida companies drew more than two-thirds of the state’s venture dollars in Q3 and more than half of the deal count.

Year-to-date, companies in Florida pulled in just over $2 billion across 417 deals.

Top deals around the state in Q3 included: Kincell Bio, a biotech based in Gainesfill, raising $36 million; SKUx, a St Petersburg-based SaaS company, raising $22.6 million; and  Catalyst Ortho Science, a Naples-based therapeutic device maker, raising $15.4 million.  

Statewide there were 8 exits, but only two with values. In addition to Miami-based Playmaker’s $54 million exit, Tomahawk Robotics of Melbourne reported a $120 million exit.

The national picture

After several quarters of slow growth in the number of deals completed, the market continued to show a decline in total deal count during Q3. The most significant declines came at the later stages of VC where the poor exit market has continued to pressure dealmaking, said Pitchbook analyst Kyle Stanford. Deal sizes and valuations through the first three quarters of 2023 have also showed significant declines from last year, especially at the late-stage and venture growth-stage, he said.

Nationally, the third quarter marked the nation’s lowest overall venture deal value in six years and lowest deal count in about three years, according to the Venture Monitor report, which is compiled by PitchBook and the National Venture Capital Association.

Startups nationwide raised $36.7 billion across 2,716 deals in the third quarter, compared to $46.4 billion in the third quarter of 2022. During the first three quarters of 2023, total deal value was $125.8 billion, down 38.6% from $204.8 billion during the same span last year.

“More companies are taking bridge, continuation or down rounds; inside rounds are at multiyear highs; and there are fewer rounds with a new lead investor obtaining a board seat than at any time in at least a decade,” the report noted.

A decline in initial public offerings during the past 18 months, along with a cautious approach by institutional investors, is leading to an overall liquidity crunch and sluggish venture fundraising, the report said.

Venture capital firms nationwide raised $42.7 billion during the first three quarters of this year, nearly a quarter of the $172.5 billion raised in 2022. This year is on pace for the lowest amount of venture capital raised in the U.S. since $46.5 billion in 2017, according to Pitchbook. Still, South Florida’s slice of that pie was significant: South Florida VC firms attracted $3.2 billion of that, or 7% of the total.

Seed funding value was $3.2 billion across 1,214 deals in the third quarter, falling to pre-pandemic levels in line with 2018. Early-stage funding for startups reached $8.5 billion across 1,341 deals in the third quarter — the lowest quarterly deal value since the third quarter of 2017.

Despite slower deal activity, the report said the venture capital ecosystem remains well-capitalized and additional sources of liquidity from the Inflation Reduction Act and the CHIPS Act are becoming available. In addition, further investment in research-heavy sectors could unlock significant value.

“The last 18 months have seen a level of tumult in the economy that would have been unimaginable just a few years earlier, but amid stormy seas, VC remains well positioned to ride the waves,” Pitchbook wrote.

Download the full report here.

READ MORE IN REFRESH MIAMI: eMerge Americas releases 1H 2023 VC report: We have the story behind the numbers

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Nancy Dahlberg