The Tampa Bay area's venture capital scene lost momentum in 2023 after seeing record deals and fundraising during the pandemic.
PitchBook's annual report, the 2023 PitchBook-NVCA Venture Monitor, released Thursday reveals the performance of the fourth fiscal quarter and paints the first complete picture of venture capital activity in 2023. With some gains, the year saw a two-year record slump in deal flow and exits — matching venture capital conditions nationwide.
"[The fourth quarter] of 2023 had few surprises for the U.S. venture capital market," Bobby Franklin, the president and CEO of NVCA, writes in the report, referring to the all-around down quarter and fitful year.
In the fourth quarter, Tampa Bay's dealmaking dropped lower than the previous quarter — which was a record low. With a declining count of 14 reported deals total, the fourth quarter marked the fewest deals of any quarter in 2023. It is now just above the second quarter of 2020's 11 recorded deals.
Overall, there was a nearly 20% decrease in deals between 2022 and 2023. In comparison, Tampa Bay had 72 recorded deals for the year, bringing in 303 fewer than Miami.
Beyond deals, venture capital investment jumped in the final quarter of the year to $95 million total, thanks to Funnel Leasing's $32 million series B2 fundraising, which is one of the largest of the year in the region, and Rewst's $31 million Series B raise, according to the PitchBook data.
But even with the elevated quarter, the total deal value in 2023 was 50% less than what was invested in 2022.
"It's a dip that we're seeing in the valuations of deals and in overall deals getting done, in terms of a volume standpoint," Baum told Tampa Bay Inno in November about the ecosystem. "It's not top of the funnel; it's bottom of the funnel where we're seeing a difference."
PitchBook also recognized Tampa Bay as closing one of the largest venture funds in Florida in 2023. The region landed at the fourth spot on the list with TampaBay.Venture's fund closure in March at $27 million. The largest Florida-raised venture fund in 2023 came from Miami-based Atomic Labs, according to the report.
Tampa Bay didn't escape the IPO freeze icing startups nationwide. The number of exits fell to a nearly six-year low for the region, with only two exits for the entire year, according to PitchBook. It has reported, at minimum, four exits each year since 2017.
The Tampa Bay region isn't the only one that experienced a slump last year. Overall, 2023 deal values were $175 billion lower than 2021, and deal value fell to its lowest figure since 2019, according to the PitchBook-NVCA report.
Franklin of NVCA writes the brunt of the VC industry's 2023 slowdown comes from "dramatically increased political risk, particularly abroad," such as the Russian invasion of Ukraine, Chinese macroeconomic developments and the Israeli-Hamas war reignited in the Middle East.
"However, the industry is extremely well-capitalized, and advances in artificial intelligence, life sciences and clean tech are all attracting significant levels of public and private investment," Franklin writes.
