Central Florida dominated the state's dwindling pool of venture capital
investment in late 2012 even as the Sunshine State fell to one of its lowest
rankings nationwide in recent years, according to a new consultant's survey.
Boosted by a trio of deals, Central Florida received $37 million from professional venture capital firms in the fourth quarter, about 90 percent of the state's $41 million total, according to the latest MoneyTree Report, published by PricewaterhouseCoopers and the National Venture Capital Association.
Local winners included Pentaho Corp. ($23 million), developer of business-intelligence and marketing software; LensAR Inc. ($5 million), maker of eye-surgery lasers; and Row Sham Bow Inc. ($3 million), developer of online interactive gaming software.
But Central Florida got the biggest piece of a shrinking pie: Venture dollars statewide fell 35 percent from the same period last year, dropping Florida into 20th place among all states -- its third worst showing in the past decade. For the year, Florida companies received $203 million, No. 18 among all states and down 42 percent from 2011.
It was yet another blow to the Sunshine State's hopes to attract more venture capitalists -- wealthy, high-risk, high-return investors most prominently associated with California's Silicon Valley. While it has never approached California's venture wealth, Florida used to routinely rank in the top 10 -- a rarity in recent years.
"Florida's share of total venture investment used to be 3 percent or higher; now it is less than 1 percent," said Richard Fox, a venture partner with the Orlando-based Florida IDEA Fund. "This latest survey is more of the same; only now we see that other states are taking aggressive action to go after venture capital."
According to the survey -- based on Thomson Reuters data -- states such as Ohio, Maryland and Michigan have now pulled ahead of Florida in the venture capital race. They ranked 12th, 14th and 15th, respectively, for the full year of 2012.
They are also among the states that have set up programs offering hundreds of millions of dollars to lure venture investors, Fox said.
California still sat comfortably atop the venture capital rankings last year, boosted by $3.3 billion in the fourth quarter and $15 billion for the full year. Massachusetts was second with $748 million in the quarter and $3 billion in 2012; followed by New York ($575 million, $1.9 billion); Washington ($273 million, $931 million); and Texas, $195 million, $924 million).
But venture investment nationwide slipped 3 percent to $6.4 billion in the fourth quarter and 10 percent to $26.5 billion in 2012.
"General economic uncertainty continues to hinder capital investments; and venture capitalists are no different," said Tracy T. Lefteroff, global managing partner of PricewaterhouseCoopers' venture-capital practice.
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