Miami metro area reeled in $2.8B in VC in first half, ahead of 2021’s record pace. We’ve got the top deals.

That’s the good news, but challenges heighten for venture capital in the second half

By Nancy Dahlberg

 Facing new economic headwinds, US Venture capital activity slowed in Q2 but the Miami-Fort Lauderdale metro area held up, according to venture capital reports released this week and my research. For the first half,  the Miami metro area made a respectable showing in both VC investments and exit activity, although the outlook for the rest of the year may not be so bright.

According to preliminary data, in Q2, Miami-Fort Lauderdale metro area companies pulled in $1.4 billion  in venture capital across 93 deals, equal to first quarter in which the total was also eclipsed $1.4 billion but across 98 deals, according to Pitchbook’s data and my research. So far, at least, this compares favorably to the pace of the record-setting 2021, in which $5.33 billion in VC flowed to South Florida companies in 285 deals, according to my research for eMerge Americas.

Among the South Florida deals in Q2 were homegrown companies with dozens of employees in South Florida, such as OnChain Studios, SmartHop and NovoPayment, as well as a number of newer-to-Miami startups, including MoonPay and KEO World. And after Q1, helped largely to a mega-round by Yuga Labs, Q2 came in with mega-rounds from Material Bank, Pay Cargo and others. Crypto and blockchain companies continue to be a force in Miami venture capital despite the crypto winter. We saw crypto, blockchain and web3 funding rounds take off in the second half of 2021, vaulting to the third largest sector in 2021, after fintech and healthtech.

Notably, the Miami metro remains in the top 10 among US metros – currently at No. 10 — for venture capital dollars in the first half of the year.  

Here are top deals in South Florida in Q2, according to the VC data trackers and Refresh Miami’s reporting:

• Recurrent Ventures:  Miami, a platform to acquire and transform digital media brands, $300M
• OppZo: Miami, a platform connecting businesses to public and private funding opportunities, $260M (debt and equity)
• Material Bank: Boca Raton, a marketplace for architectural and interior design materials, $175M
• PayCargo: Coral Gables, a finance platform for the shipping industry, $130M
• MoonPay: Miami, a platform for buying cryptocurrencies and NFTs, $87M
• Arteza: Miami, a marketplace for art supplies, $35M
• SmartX: West Palm Beach, asset management technology and platform, $30M
• SmartHop:  Miami, provider of smart trucking solutions, $30M
• Meow: Miami, corporate financial software for DeFi, $28M
• OnChain Studios: Miami, creator of NFT-focused Cryptoys, $23M
• Nue Life: Miami, a mental wellness startup focused initially on ketamine therapies, $23M
• KEO World: Miami, a buy now, pay later fintech platform, $20M

Pitchbook logged 4 exits in Q2 and 8 in Q1, for a value of $4.4 billion, That’s already exceeding last year’s activity of $3.2 billion across 26 transactions in South Florida. For Q2, the big exit in tech was Springbig.

Statewide, Florida companies drew $1.57 billion across 138 deals in Q2, falling nearly 14% in both dollars and deals and from $1.83 billion across160 deals in Q1, according to Pitchbook. In the first half, South Florida’s slice accounted for 82% of the dollar value and 64% of the deals in the Sunshine State.

*This is a preliminary midyear snapshot, subject to updates and further research. Venture data traditionally lags so databases are updated often, and the VC data trackers can’t keep up with the #MovetoMiami movement. Stay tuned for my comprehensive midyear report for eMerge Americas coming out in eMerge Magazine in October.

THE NATIONAL PICTURE

Nationally, Venture capital activity in the first half of 2022 remained relatively strong despite the economy slowdown and worries ahead, according to the latest quarterly report released today by PitchBook-NVCA Venture Monitor.

While deal count remained strong, when compared with the highs of 2021, deal value declined significantly across all stages. The mega-deals that defined 2021 slowed in the first half of 2022 as investors took a more cautious approach. With more than $230 billion in dry powder, and nearly 3,000 funds closed since the beginning of 2019, the VC industry is likely to see the trends of steady deal count but readjusted pricing continue until certainty returns to the market, Pitchbook’s report said.

“The second quarter of 2022 brought an expected continuation of market tightening in some parts of the U.S. venture ecosystem,” NVCA Chief Executive Officer Bobby Franklin said in a statement. “However, the industry’s record dry powder continues to fuel critical innovation that is addressing the country’s important needs. The venture industry’s long-term view of investing, even during uncertain fiscal times, is further proof it is a reliable economic engine with an eye toward funding the next generation of great American companies.”

Some highlights from the CB Insights State of Venture report: US funding was down 25% quarter over quarter, but reached $123 billion in the first half of 2022 across 6,079 deals. Compare that to $309 billion across 12,374 deals for all of 2021. CB Insights’ report includes breakouts on 14 metro areas, and notably, Miami’s performance stands out. All but five of the metros saw drops in funding in Q2; New York’s Q2 funding dropped to the lowest level since 2020. Other findings: In 1H 2022, early-stage venture made up 53% of the deals. IPOs, SPACS and exits dropped in Q2, and for the first half of the year, were half the pace of 1H 2021.

“Over the last quarter, the pace of fundraising has slowed sharply and valuations – mostly in the later stages – are beginning to correct. We expect valuations will come down across all investment stages as this cycle plays out – and in our view, this is a healthy resetting of the bar. But if the next few months are as quiet as we anticipate, founders will need to make some tough choices to preserve runway. Meanwhile, with IPO markets currently unavailable, a consolidation wave could be just around the corner,” said Pamela Aldsworth, who heads Venture Capital Coverage at J.P. Morgan Commercial.

Download the Pitchbook-NVCA Venture Monitor report here.

Download the CB Insights State of Venture report here.

Find my 2021 report here.

Follow Nancy Dahlberg on Twitter and email her at ndahlbergbiz@gmail.com