A quarterly update from Florida Funders marked a continued downturn and a year low for venture capital, partner Saxon Baum writes.
Florida Funders is a Tampa-based venture capital and angel network investment firm. Baum uses data from PitchBook to write a quarterly trend update for investors and business owners. The third quarter saw the lowest overall deal values in six years and the lowest deal count in three years, according to the Florida Funders post.
Florida Funders has raised two funds and is deploying the second $60 million fund. It has more than 40 investments from the second fund so far, according to previous reporting by Tampa Bay Inno.
"It's just a dip that we're seeing in the valuations of deals and in overall deals getting done, in terms of a volume standpoint," Baum said. "So it's not top of the funnel, it's bottom of the funnel where we're seeing a difference."
This year is also on track to record the least amount of venture capital raised in the U.S. since 2017, when investors brought in $46.5 billion, according to PitchBook data.
To adapt, venture capitalists have lessened their investment pace in pre-seed and seed-stage companies and spend more time performing due diligence, Baum writes. And early-stage startups are dealing with operational bloat from the "growth at all costs mentality" of the past year's investment ecosystem, according to the report.
While Florida Funders is also dealing with these depressed market conditions, Baum said there's still an opportunity for strong investments. The best companies will get funding, and investors will be able to robustly grow their portfolios, Baum writes.
"But where some [venture capitalists] view these developments as a sign to slow down, Florida Funders sees an opening to tap into motivated founders and scrappy startups willing to fight against the tide to come out stronger," Baum writes.
