Anyone who was embedded in the Tampa Bay tech and startup world in 2019 knows it was a good funding year for the region.
And for those on the outside, 2019 was the year the rest of the world began to pay attention.
According to Pitchbook, the Tampa Bay MSA — made up of Tampa, St. Petersburg and Clearwater — raised $150.24 million across 45 deals. In comparison, the state as a whole raised $2.8 billion across 261 deals.
"Generally, anyone who is paying attention to technology or innovation-based investing and pays attention to the early stage, seed to B round, is well aware of what's happening and encouraged by it," Marc Blumenthal, a partner at Florida Funders, said. "We're seeing the investments we made in 2016 and 2017 doing $20 to $40 million rounds now. We’re seeing the trends: it's more granular. We’ve never been more excited and never seen better deal flow in our history and continues to get better every day."
However, he pointed out reports such as Pitchbook, CB Insights and the like are not a catch all. For example, Pitchbook's end-of-year recap does not include private equity deals, which were some of the lion share's in the Tampa Bay region. There was ConnectWise's acquisition by Thoma Bravo in February, and KnowBe4's $300 million investment from KKR in June, which put them into the billion dollar unicorn territory.
But, the numbers still speak for themselves. 2019 marked the best funding year in at least the last five years, save for a massive $193 million in 2017.
2014
Total deals: 45
Total capital invested: $128.73
2015
Total deals: 35
Total capital invested: $65.07
2016
Total deals: 46
Total capital invested: $86.67
2017
Total deals: 43
Total capital invested: $193.32
2018
Total deals: 39
Total capital invested: $111.2
"It's tough to say the tide has shifted, but its heading in the right direction," Sean Barkman, principal at Ballast Point Ventures, said. "As a real estate market, Florida has done really well in the last decade and you get people thinking, 'How do I diversify?' The high growth, high-tech market is a big beneficiary of that and that's probably across the board (in the nation)."
Also across the nation is the common gripe of not having enough talent. While Barkman and Blumenthal both believe the region will eventually be alleviated of that woe, they point to different sources that could solve the problem.
"The region is doing a better job of retaining the talent we have here," Barkman said. "You're seeing more tech business pop up because it's easier to do that than it used to be, and that's across the U.S. For places like the southeast, which is where we invest, this a great benefit. You don't have to live in the coastal cities to grow a great tech company; it's way more cost effective to grow a company here."
And the low cost of growing a business in the region, along with the warm weather to add to the quality of life, is why Blumenthal believes we can also recruit companies in the coming year — along with subsequent talent and funding.
"I'm not a prognosticator for the economy, but all the trends are toward business friendly states," he said. "And places where you can scale your company and your team members can make a life for themselves, which is what we have in Florida. I don't think that trend will stop any time soon."
In addition to strong migration patterns, funding is more fluid itself: the aforementioned ConnectWise and KnowBe4 deals, the largest of 2019, both came from outside investment.
While the funding may have seen an uptick in recent years, Barkman cautioned founders to keep in mind the capital would not continue at this flow forever.
"Focus on building capital-efficient business models," he said. "Capital is not going to be loose forever. So, be mindful to build a steady and lasting business and not one that needs the next round of capital. That's what we look for, (for the company) to get to a certain level without us and thinking, 'Where can they go with us?' And I think, given where we’re at in the cycle, it's making sure you don't have to raise capital to survive."
