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Venture capital? Not in this state

Although private venture deals went up slightly nationwide, and by a lot in California, they were down in Florida.

By KRIS HUNDLEY
Published July 26, 2005

Venture investments in Florida startups dropped to their lowest level in a decade during the second quarter, with just nine deals completed for a total of $29.4-million.

Nationwide, meanwhile, private venture deals ticked up slightly over the first quarter to a total of $5.8-billion for the three months ending June 30. California led by a wide margin, accounting for more than 300 deals worth $2.8-billion or nearly half the national total. Florida ranked No. 20 in deal value.

Details of cash-for-equity investments by professional venture capital funds are provided quarterly in the MoneyTree survey compiled by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

Marty Donsky, marketing manager with PWC in McLean, Va., said venture investing nationwide is slowly rebounding from the dot-com bust in 2001. Investors pumped record amounts of money into tech startups in 2000, when deal flow totaled nearly $105-billion nationwide and $2.6-billion in Florida.

"These things run in cycles, and we're not talking one- or two-year cycles, but 10 years or more," he said. "And while venture investing has come back in a number of markets with critical mass, like California and Massachusetts, it hasn't gotten back to the peripheral markets."

Among Florida companies receiving funding in the latest quarter, Health Integrated Inc. of Tampa closed the largest deal. The company, which provides health care management for government and commercial insurers, received a total of $7.4-million.

The bulk of that investment came from HealthNow, which is part of Blue Cross Blue Shield of New York. Michael Yuhas, Health Integrated's chief executive, said HealthNow had been a client since September and began discussing a closer partnership earlier this year.

"We were looking for a little less money, but as we worked through the deal with HealthNow and realized the ability it gave us to ramp up our infrastructure and jump-start our growth, we were very happy it turned out that way," Yuhas said.

Health Integrated has about 200 employees in Tampa and with proceeds of the latest investment expects to add several dozen more employees locally. The company also will use the money to open a second call center; HealthNow's hometown of Buffalo is a likely site for the facility, Yuhas said.

--Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

[Last modified July 26, 2005, 01:15:21]