Wednesday, February 29, 2012

Venture capital and Florida get reacquainted after dull patch,0,4884331.story

By Richard Burnett, Orlando Sentinel

In a boost to Florida's national ranking, companies here attracted nearly $300 million in venture capital last year, an indication that investment firms are taking notice of the Sunshine State during the nation's slow economic recovery, according to a new survey.

Florida companies received $299.8 million in 2011, or nearly 58 percent more than the state's 2010 total, according to the MoneyTree Report published by PricewaterhouseCoopers and National Venture Capital Association. They received $55 million in the fourth quarter alone — a fivefold increase from the same period a year earlier.

PricewaterhouseCoopers Florida's 2011 growth rate topped the national pace and moved the state up two spots to No. 13 on last year's venture-capital rankings. Nationwide, firms and wealthy individuals invested $28.4 billion in VC deals, a 30 percent increase from 2010.

Central Florida generated deals worth a combined $45.2 million last year, a 10-fold increase from 2010. With a fourth-quarter total of $9.35 million, the region has now posted five straight quarters of VC deals after being shut out in 2009 and landing only one deal in 2010 until late in the year.

Three local companies received venture financing during 2011's fourth quarter: software developer Pentaho Corp. ($5 million) and surgical-equipment maker LensAR Inc. ($4 million), both of Orlando; and XOS Digital Inc., a sports-data technology developer in Lake Mary ($350,000).

Pentaho's millions were the latest in a series of deals. The company, which produces business-intelligence software, has received more than $20 million from venture-capital firms based in Silicon Valley and London since its founding in 2004. It now has 58 local employees, a sales office in San Francisco, and a global clientele that includes browser-developer Mozilla.

"We have a group of strong investors that believe in the company and are willing to invest into the future," said Doug Johnson, its chief operating officer. "We sell all over the world and are ramping up to expand in several regions nationwide, including the Orlando area."

More venture capitalists are extending their radar to include Florida, said John Cambier, managing partner of IDEA Fund Partners, a Durham, N.C.-based venture firm that opened an Orlando office last year.

He cited, among other things, the state's new biotech initiatives, such as Orlando's Medical City at Lake Nona, which could eventually generate "a flurry of startups and venture-backable companies."

"We think there are good ideas, good people and good opportunities to invest in Florida," Cambier said. "We just need to work together to convince the rest of the venture-capital community to spend some time there so they can see it, too."

The nation's perennial venture-capital leaders continued to lead in 2011, starting with California ($14.7 billion), Massachusetts ($3 billion), New York ($2.3 billion) and Texas ($1.5 billion), according to the MoneyTree survey, which is based on Thomson Reuters data.

Local experts welcomed the latest figures but cautiously evaluated their significance.

"There's some economic recovery in those numbers, though ever so slight," said Michael Okaty, an Orlando corporate-finance lawyer. "The problem when we look at the economy is that we have some businesses doing badly or closing, while others are flourishing. In a way, we still have two different economies, two different Americas out there."

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