ATLANTA, Oct. 3, 2018 /PRNewswire/ — BIP Capital, one of the premier venture capital firms in the southeastern United States, announced today the availability of its second annual The State of StartupsSM in the Southeast report, delivering a comprehensive overview of the venture capital and startup ecosystem in the region. The report takes an in-depth look at startup activity throughout nine states in the southeastern United States over the five-and-a-half-year time period from January 1, 2013, through June 30, 2018. The report is free and can be read online.
Valuations: The Southeast vs. The Innovation Hubs
Most notably, this year’s report takes a closer look at the different types of deals being done in each southeastern state and how that compares to the established “Innovation Hubs” of Boston, New York City and the San Francisco Bay Area. “We anticipated that we would find significant disparities in the percent of ownership that a dollar buys from region to region and perhaps from state to state. We were wrong,” said Mark Buffington, CEO at BIP Capital.
The State of StartupsSM in the Southeast report reveals that a $1 million investment buys the same ownership percentage of a company regardless of region or state. However, businesses based in the Southeast have more revenue at the same valuation, perhaps implying that investors get more value for their dollar in the Southeast. This fact might explain why large venture capital funds from the Innovation Hubs have shown a growing interest in investing in southeastern companies.
“Successful companies are now being built outside of the traditional investment centers in a more balanced supply and demand environment. While the dominant venture capital investors supporting southeastern companies are based within the region, if you look at the top five most active VC firms in each state (45 in total), nearly one-third are coming from the Innovation Hubs. In summary, people are starting to recognize that the Southeast is a great place to invest and we expect even more participation in southeastern venture capital as money finds its way to the best risk/return opportunities regardless of region,” said Buffington.
Some additional key observations revealed in the research report:
- The number of startups and venture capital funds in the region continues to increase, reflecting the continuing maturation of the startup ecosystem in the Southeast.
- Funding in the Southeast has grown significantly since 2016—averaging 20.6 percent annual growth over the last two years.
- Incubators and accelerators remain a crucial driver of the Southeast’s innovation ecosystem.
Specific notable trends and observations by state include:
- Biotech remains Alabama’s hottest market, drawing $25 million more dollars than the second biggest sector, Manufacturing/Industrial Tech.
- While the number of deals has consistently declined since its best year in 2014, Florida companies are receiving significantly more money from investors than ever before.
- Georgia remains the Southeast’s SaaS innovation leader, with 358 deals totaling $1.6 billion over the time period reviewed.
- In Kentucky, no other category comes close to Biotech/Pharma in drawing investor interest. Overall, Kentucky continues to see a slowdown in the number of deals being done, but investment dollars are staying steady.
- 2018 is shaping up to look very good for Mississippi in terms of dollars invested. Deals worth a total of $7 million have already closed this year—more than in 2016 and 2017 combined.
- Biotech/Pharma continues to lead the way in North Carolina, attracting almost $2 billion in investment money over 310 deals since 2013.
- Forty percent of all the deals done in South Carolina were for companies based in the Charleston area, dubbed the East Coast’s “Silicon Harbor.”
- 2017 was a great year for Virginia, pulling in more than $903 million—the state’s best year for investing in the time period studied. 2018, however, seems to be much slower and will likely come in a few hundred million dollars under the previous number.
What the Future Holds
BIP Capital leaders draw several conclusions in the report regarding what investors can likely expect to see in the coming months and years, including:
- As the region’s venture market matures, more talent will stay put in the Southeast rather than leave for the East and West Coasts.
- Fewer deals will be done annually in the Southeast, but more dollars will be invested.
- The monetization of data created by IoT, ERP, Insurance Claims, Mobile, etc., through the use of Predictive Analytics to make companies/markets more efficient will continue to be a growing investment area.
- The Southeast will see the growth of solutions that provide customers with more lifelike digital experiences through AR/VR technology.
Multiple data sources were used to create The State of StartupsSM in the Southeast report, including interviews with key players at multiple funds, interviews with entrepreneurs and independent third-party data. The full report details, including findings per state, can be reviewed here.
About BIP Capital
BIP Capital is recognized as one of the most active and successful venture investors in the Southeast, serving entrepreneurs, investors and operators to grow the emerging company ecosystem. It applies experience and process to make investment decisions and operational recommendations, allowing its portfolio companies to achieve and stay on a glide path of growth. Areas of focus include Enterprise SaaS, Healthcare IT, Digital Media, Dev Tools and MarTech. For more information, visit www.bip-capital.com or follow BIP Capital on Twitter @BIPCapital.
SOURCE BIP Capital