News Column

Where Venture Capital Is Surging

July 24, 2013
orlando
Orlando skyline at night (photo: Bill Dickinson, Creative Commons)

In a dramatic turnaround, Florida vaulted into the nation's top 10 for venture-capital activity during the second quarter, with the Orlando area playing a big role in the surge, according to a new survey.

The Sunshine State drew 14 deals and $155.8 million from professional venture firms in the latest quarter, up more than 10-fold from the first quarter, according to the latest MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

As a result, Florida ranked eighth among all states in terms of dollars invested, after having plunged to 29th place in the first quarter, according to the report's figures, which are compiled by Thomson Reuters. Nationwide, venture-capital firms invested $6.7 billion during the second quarter, a 12 percent increase from the previous quarter.

Florida's second-quarter total was its biggest three-month haul since the fall of 2007 and its third-biggest since late 2001, the data show. It had been more than two years since Florida last exceeded $100 million in quarterly venture-capital investments.

In Central Florida, venture firms invested a combined $32.2 million in five companies -- more than 20 percent of Florida's dollar total and second only to South Florida, where firms attracted $85.4 million, according to the MoneyTree Report.

Florida received billions of dollars in private-equity funds last year, but Orlando-area companies received only a small fraction of it, industry officials said. Venture capital is a higher-risk, higher-reward subset of private-equity financing.

David H. Simon, an Orlando investment banker, said the resurgence of venture capital in the region was a welcome development, though he cautioned against jumping to conclusions.

"You have to be careful about reading too much into one quarter," said Simon, managing partner of Capital Strategies Group. "But it has been so dry for so long here, this is just a great sign that venture money is coming in again. It does appear to be an indicator that the rest of the world has Florida -- and Central Florida in particular -- in its sights."

All of the Central Florida companies that received capital during the quarter are technology-related businesses: Kony Solutions (mobile software), Orlando, $18.3 million; Treehouse Island Inc. (Web-design training), Orlando, $7 million; XOS Digital (sports-team video-editing software), Orlando, $5.1 million; Zentila Inc. (online convention-booking services), Winter Garden, $1.8 million; and Unikey Technologies Inc. (digital building-entrance security), Winter Park, $1.5 million.

Phil Dumas, founder and chief executive officer of Unikey, was able, in part, to attract venture capital by landing a spot last year on ABC's "Shark Tank," a network-TV reality show in which entrepreneurs pitch their ideas to well-known, wealthy financiers. When Dumas was on the show, he appeared to win a deal worth $500,000 from NBA team owner Mark Cuban and Canadian venture capitalist Kevin O'Leary.

After the show, however, Dumas couldn't come to terms with the "sharks," he said Monday. Instead, he said, Unikey eventually secured more than $1.1 million from other investors. During the second quarter, the company received another round of venture cash, bringing its total so far to $2.6 million, he said.

"We had three employees last year at this time; now we have 15," Dumas said. "So we're growing, creating jobs and doing our part. But it is tough out there to raise money.

"Going national on TV didn't hurt."

rburnett@tribune.com or 407-420-5256

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(c)2013 The Orlando Sentinel (Orlando, Fla.)

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