Venture capital activity nationwide didn't bounce back in early 2024.
For several reasons, startups still aren't raising the same amount of capital as previous highs, and the number of venture capital deals in the first quarter of the year dipped to the lowest level since 2017. The cold market has continued into 2024 for venture capital nationally — the same might be said for Florida.
"You have a market that is starting to open up in terms of net new investments, but it's still lagging," Saxon Baum, a partner at Florida Funders, said.
Venture activity will stir as the year continues, but venture deal volume won't pick up until the end of the year, Baum said. First, initial public offerings must ramp up as IPOs reap returns for venture capital firms. The market for initial public offerings has been closed off under elevated interest rates, yet companies like Redditt — which went public in March — have started to open the market for 2024.
"We're definitely seeing that the state of Florida, from a technology standpoint, is starting to cool off a little bit," Baum said. "It's by no means anywhere near where it was pre-pandemic; the levels are much higher than they were then, but it's definitely starting to cool down from the highs of the market [in 2021 and 2022]."
Florida Funders' busy quarter
Florida Funders has been dubbed one of the most active venture capital firms in the Southeast. The Tampa-based office has raised three funds and invested millions into startups across the state. Even with the downturn in venture capital, it has seen a busy first quarter for 2024.
Florida Funders participated in Tampa-based automation platform Rewst's $31 million Series B funding round in January. The company's Series B is the largest of the year by a Tampa company and one of the only institutional capital investments for Tampa startups. Immertec, a health tech VR startup, also raised a $4 million extension of its Series A round from a syndicate of investors in February.
Besides these two fundings, there have been several small investments or pre-series raises in Tampa. Altogether, the quarter has been quiet compared to last year's first fiscal quarter, which saw a $180 million Series C for cybersecurity firm Deepwatch in February or Tampa fintech Mad Mobile landing a $20 million investment in January.
"What we're seeing is, the best companies are extremely effective and raising money right now because investors are only doing the A-plus deals," Baum said.
Florida Funders has invested in several Miami-based startup companies this quarter. It participated in a $25 million Series B round with Miami medtech firm HealthSnap, an extension round for influencer Jake Paul's sports betting app Betr and Miami fintech platform Marco Financial's $12 million raise.
Besides participation, its portfolio companies have raised capital, like San Francisco-based fintech Mesh or AI-entrepreneur Lucy Guo's startup Passes, raising a $40 million Series A in February.
A reason for this is that Tampa holds a different equilibrium than Miami, Baum said. Miami is the booming finance metropolitan hub, while Tampa has a different pace of growth.
"These deals are doing well; it's not a function of being in Miami or being in Tampa," Baum said. "It's a function of we were just able to get ahold of some really great deals and work with some great founders."
But the lowered quarter is cause for optimism from Florida Funders regarding the state and firm.
"Overall, everything across the country has slowed, inherently Florida is going to slow, but it hasn't slowed as much as other states," Baum said.
