Venture capital fundraising and deal flow in Tampa Bay is still weak but showing signs of life as the investor ecosystem adjusts to a generational market shift.
Valuation multiples have not rebounded, exit opportunities remain few and far between, and higher-for-longer interest rates have curbed limited partners' appetite to throw money in a new fund, according to Pitchbook and the National Venture Capital Association’s latest quarterly VC report.
In Tampa Bay, just $86.9 million has been invested during the first two quarters of this year, versus $161.8 million during the same period in 2023 and $395 million at its peak in 2022, according to the report. Last quarter, deal count fell to the lowest point since the onset of the pandemic during the second quarter of 2020.
Read more: Venture capital activity in Tampa Bay decreased throughout 2023, looks more like 2020
Local fundraising so far this year is virtually nonexistent, too, the report shows. Last year, VC funds raised a fraction of the capital they raised in 2022. Venture capital funding in Florida in 2023 plummeted by 65%, down to $2.9 billion across 598 deals from record highs of $8.5 billion in 2022.
The flood of investment into new technologies and startups during the peak of the pandemic has abated, and investors have turned their focus—and funds—to the most promising companies in their portfolios, according to NVCA President and CEO Bobby Franklin.
He said there have been more continuation funding rounds during what has shaped up to be a historically challenging exit environment and unprecedented scrutiny of valuations.
The market has had to adjust to a “major shock,” he said, but overall, “the direction of the market appears to give modest cause for optimism,” Franklin said.
