In case you needed another reason to be bullish on the Southeast tech startup scene, BIP Capital released its 2020 State of Startups in the Southeast Report this week. It shows that, even with coronavirus-related slowdowns, the region is attracting investment dollars and startups are growing across diverse industries.
Since 2015, Southeastern Startups have attracted $34.5 billion in investments, according to the report. And even with Q2 2020 slowdowns due to COVID, the report points out that investors are tending towards deploying “larger checks into a more curated set of bets.”
The eBook, which can be downloaded here, is designed to be an accessible guide and comprehensive overview of the venture capital and startup ecosystem for the first half of 2020. Last year’s report showed that “the rate of maturation in the Southeast is exceeding that of the Innovation Hubs of Boston, the San Francisco Bay Area, and New York City,” said Mark Buffington, co-founder and CEO of BIP Capital. This year, the report looked at the overall impact of COVID on various parts of the Southeast’s tech ecosystem.
Overall, the report found that investors are tending to put more money into their existing portfolios, as follow-on investor participation over the past few quarters has gone up, while first-time investments in new startups have decreased.
A few state-specific takeaways from Georgia include:
- Georgia’s FinTech market saw the largest growth in 2019, overtaking SaaS to become the top investment sector. In fact, the FinTech sector received nearly $700 million in investment in 2019.
- Georgia BioTech/pharma startups attracted $743 million in investment
- Georgia Tech’s Create-X topped the list of incubators in the state, bringing in 91 investors this year.
For Mark Flickinger, the COO of BIP Capital and a research leader for the report, BIP’s findings showcase the region’s resiliency.
“I think there were two really surprising findings in this year’s report,” Flickinger told Hypepotamus. “First was how quickly the market showed signs of a rebound. There was this massive shock to all aspects of the world, yet after only three months, we saw a huge increase in year-over-year capital deployment in the month of June.”
“The second surprise was how the impact of COVID-19 was not the same across all deal sizes. I think the relative adolescence of the Southeast ecosystem plays a part here, but the fact that we saw a precipitous decrease in the number of deals done in the first half of 2020 for smaller than $1 million deals, while at the same time seeing a relative flat deal count in deals between $5 million and $10 million, was an interesting finding,” Flickinger continued.
Buffington added in a statement: “While we saw a rapid downturn in March due to the pandemic, both in the number of deals closed and dollars deployed, it does appear that the steep year-over-year decline we witnessed has begun to recover, with momentum returning as we head into the second half of 2020. We believe the Southeast’s persistent market maturation has positioned it well to emerge from the current crisis.”
The report does suggest that the next few months will remain relatively slow, but investments — particularly in minority and women-owned companies — have tremendous potential in the years to come.
The report also concludes that even more talent will leave Innovation Hubs on the coasts as a result of the pandemic, which could bring new opportunities to the Southeast region.