The State of Startups in the Southeast Report is Here
We’re proud to announce the availability of our 2021 The State of StartupsSM in the Southeast report, which delivers a comprehensive overview of the venture capital and startup ecosystem in the region.
This fifth annual report (download here) 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.
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. It’s clear that the Southeast is now an area of focus for many investors.
As you’ll see in the report, we looked closely at four specific trends that have either accelerated or taken shape as we move farther from the pandemic’s onset:
- Acceleration of Startup Investing
- Shift in Sector Preference by Investors
- Larger Check Sizes
- Increase in Valuation Multiples
Notable observations in the 2021 report include:
- 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.
Here are some additional observations on a state-by-state basis:
- 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 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.
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.
We invite you to read The State of StartupsSM in the Southeast report here to dig deeper into the numbers and learn more about what to expect next.
As always, we welcome any feedback or questions you may have.