Fifth Annual Report Focuses on the Growth of the Southeast Ecosystem; $48.0 Billion Invested in Region Since 2016
ATLANTA, Oct. 6, 2021 /PRNewswire/ -- Panoramic Ventures, one of the most active venture capital firms in the southeastern United States, announced today the availability of its 2021 The State of StartupsSM in the Southeast eBook, which delivers a comprehensive overview of the venture capital and startup ecosystem in the region. This fifth annual report takes an in-depth look at startup activity in the southeastern United States over the five-and-a-half-year period from January 1, 2016, through June 30, 2021. The free report informs investors and entrepreneurs of emerging trends and highlights the area's current and future opportunities, particularly with respect to understanding the maturation of the southeastern venture ecosystem and its capacity to generate strong returns.
"In last year's report, we discussed the impact of the pandemic on deal dynamics and how the Southeast's persistent maturation positioned it well to emerge from the crisis with momentum," said Mark Flickinger, general partner of Panoramic Ventures. "This year's report further validates that maturation—specifically, through the large levels of capital being deployed in the region and the increase in post-money valuation/revenue multiples."
The 2021 State of StartupsSM in the Southeast report reveals that:
Following the initial shock of the pandemic that slowed funding in Q2 2020, capital has continued to flow into the Southeast at record levels, signaling investors' continued confidence in the region. In fact, total capital deployed by quarter reached its highest level with almost $5.0 billion invested in the region in Q2 2021.
New habits were formed over the past 18 months around how we consume entertainment, interact with friends and family, and conduct business. Consequently, distributed technology solutions are more necessary than ever. Many technology companies saw their sales pipelines accelerated by months, if not years, due to increased demand for their solutions.
The Southeast VC market continues to attract larger checks, with average check size reaching a new high of $10.5 million in the first half of 2021, an increase of 42 percent year over year.
Valuation multiples in the Southeast have steadily risen over the last four years. From 2016 to 2020, the average post-money valuation/revenue multiple has increased from 13.4x to 20.0x, bringing the Southeast closer to valuations seen in the more mature Innovation Hubs.
Notable trends and observations by state include:
Overall, the number of investments in Alabama is on track to meet or exceed 2020, but with slightly lower dollar amounts.
For Florida startups in general, 2021 is looking to be a great year. In the first six months, the state is on pace to exceed 2020 numbers, both in number of deals and dollars invested.
The dollar amounts invested in Georgia in the first six months of 2021 ($2.0 billion) have already surpassed all of 2020 ($1.9 billion). The number of deals is on pace to equal 2020, confirming that bigger rounds are closing in the state.
Biotech/Pharma in Kentucky remains the most popular category for the fourth year in a row, bringing in 55 deals worth a total of $490 million over the five and a half years examined.
The amount of money invested across Mississippi continues to decline year over year since a high of $15.1 million in 2017.
BioTech/Pharma was toppled as North Carolina's most popular investment segment. Consumer led the way over the past five and a half years, attracting more than $3.4 billion in investment money over 415 deals.
While the number of deals in South Carolina is on par to be equal to 2020, the dollars invested are coming in higher. Investors have already put $175 million into South Carolina companies, around 40 percent higher than all of 2020.
Similarly, Tennessee's number of deals for 2021 is on par to be equal to 2020, but the dollars invested are coming in higher. Investors have already put $497 million into the state's companies, exceeding all of 2020's dollars.
Virginia is also seeing healthy investment levels so far in 2021. The first six months of this year saw 145 deals across the state worth a total of $1.2 billion, exceeding all 2020 deals combined.
What the Future Holds
Panoramic's experts draw a number of conclusions from the report data in regard to what investors can likely expect in the coming months and years, including:
Valuations have continued to rise to all-time highs on the strength of both a maturing Southeast and a generally heightened market, but may plateau over the near term.
Given the slowdown in earlier-stage (Seed) investing, a significant opportunity will arise at this stage over the near term. The lack of attention paid to the earliest stage of the ecosystem has created a opportunity for investors to back the next great innovators looking to build new solutions to large problems.
The introduction of novel solutions catering to new habits created by the COVID-19 pandemic, and all of the concerns around workforce efficiency, connectivity, security, and mental health that come with them.
The fundamental shift toward "work from anywhere" will continue to drive capital toward geographies outside of the historical Innovation Hubs. Some of the locations welcoming that talent with open arms are here in the Southeast, including Atlanta, Miami, and Charlotte, to name a few.
"After nearly 18 months of balancing the pandemic's impact with the need to move the ball forward, the maturation of the southeastern startup ecosystem has allowed for a steadfast response in the face of adversity," said Flickinger. "It's clear the region is now an area of focus for many investors. Although forever reshaped by the events of 2020, we expect the state of startups in the Southeast to continue to persevere and strengthen in the years ahead."
Multiple data sources were used to create The State of StartupsSM in the Southeast report, including interviews with employees at multiple funds, interviews with entrepreneurs, and independent third-party data. The full report details, including findings per state, can be reviewed here.
About Panoramic Ventures
Panoramic Ventures is a venture capital firm based in Atlanta that takes a "wider-view" approach to investing by targeting the Southeast and Midwest and placing a focus on diverse founders and university startups. Panoramic opens new doors for overlooked founders, giving more entrepreneurs access to capital to build leading tech companies. For more information, visit www.panoramic.vc or follow Panoramic Ventures on LinkedIn, Instagram, or Twitter @panoramicvc.
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SOURCE Panoramic Ventures