Panoramic Ventures recently issued its fifth annual The State of StartupsSM in the Southeast report, which delivers a comprehensive overview of the venture capital and startup ecosystem in the region. This year’s 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.
After nearly 18 months of balancing the COVID-19 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. The report makes it clear that the Southeast is now an area of focus for many investors.
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.
Regarding Georgia specifically:
- Investments in FinTech remain number one in Georgia for the second year in a row with 170 deals worth a total of $2.9 billion over the five-and-a-half-year period.
- SaaS is still a close second with 382 deals worth a total of $2.5 billion.
- 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 Georgia.
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. We hope this report will further educate investors on the emerging trends to watch as well as highlight the region’s growth and future opportunities.
About the Author: Mark Flickinger is a general partner and COO of Panoramic Ventures, one of the most active and successful venture investors in the Southeast. Follow Panoramic on LinkedIn or Twitter @panoramicvc.