Record $1.8B year for metro Atlanta venture capital

For the entire year, speculators invested around $1.8 billion into Atlanta companies across 157 deals, compared to $967 million from 141 deals in 2018.

Though 2019 was a record-breaking year for raising venture capital in Atlanta, the Southeast hub finished Q4 with a fizzle more than a bang. Local startup funding declined by 71%, compared to the same period of 2018.

According to a report by PitchBook and the National Venture Capital Association that covers the fourth quarter of 2019, startups in the Atlanta-Sandy Springs-Marietta metropolitan statistical area raised a measly $146.37 million across 31 deals in Q4 compared to $504.52 million from 40 deals in Q4’18.

Though the last quarter was unusually quiet for Atlanta VC activity, the city still saw the largest amount of venture capital ever raised in 2019. For the entire year, speculators invested around $1.8 billion into Atlanta companies across 157 deals, compared to $967 million from 141 deals in 2018.

Here are the top 10 Atlanta area deals included in the Q4 PitchBook-NVCA Venture Monitor report:

  1. LeaseQuery – $40 million
  2. PlayOn! Sports – $25 million
  3. ControlRad – $15 million
  4. BioIQ – $14 million
  5. SaaSOptics – $9 million
  6. Ohoopee Investments – $6 million
  7. onQ – $6 million
  8. Popmenu – $5 million
  9. Lume Technologies – $4 million
  10. Springbot – $4 million

Most notably from this list, Springbot also made the top 10 Atlanta area deals in Q4’18 after raising $15 million.

Unlike last year, there were no exits in the city or state that made the cut for Pitchbook’s data.

We don’t always get the full overlook of venture capital deals and exits in these data logs, simply because of how deals are reported and how different organizations amass data. This is why we find significant differences from one analysis to the next. For instance, Pitchbook’s data doesn’t include any private equity deals in its round-up of Q4, such as when Florence, an Atlanta-based clinical trials software startup, raised $7.1M in a Series B round led by Fulcrum Equity Partners.

Dan Drechsel, senior VP at BIP Capital, said within the SaaS market, pressure started to emerge in 2019 to contain spending in growth companies where the growth rate was not significantly above average.

“This is pushing some companies to ‘burn’ less than $250,000 per month when previously they were incurring significantly higher burn rates,” Drechsel said in a recent roundtable with BIP Capital regarding trends in VC. “In 2020, one trend we’ll see is the introduction of broad applications of machine learning and artificial intelligence. Examples of this include our portfolio company Kobiton, which automates the production of test scripts for testing mobile applications across many phone platforms. Another of our portfolio companies, Pointivo, is using AI for image capture by drone and manned aerial platforms to assess the condition of large assets.”

Kevin Lee, CEO of Kobiton, said at the roundtable that there were several investment trends in 2019 that impacted the SaaS market.

“With the maturation of machine learning and artificial intelligence engines, SaaS companies can much more readily and inexpensively leverage capabilities that previously required on-premise or global enterprise resources to implement,” he said. “This allows SaaS organizations to expand their total addressable markets to solutions that previously were only affordable as offshore resources working in large teams. ML and AI truly provide a higher quality result faster at a much lower cost.”

Mark Flickinger, COO of BIP Capital, focuses on fundraising, talent acquisition, marketing/branding and accelerating the growth of the firm’s portfolio companies. He advised high-growth startups to set out to solve a pain that customers can’t solve on their own in 2020.

“In order to ensure you’re doing that, get close to your target customer and walk in their shoes to thoroughly understand the problem, inside and out,” he said. “Oftentimes, a good idea turns into a product that is directionally correct but doesn’t hit the bulls-eye of your customer’s needs. Lots of time and money can be saved by engaging in market research in the beginning and using it to inform your product road map. Early effort on this will increase your chances of success.”

National Stats

U.S.-based companies raised about $136.5 billion across more than 10,700 deals in 2019, according to PitchBook. 2019 VC activity was slightly lower than 2018, when U.S. companies raised $140 billion across 10,500 deals. The dip was due to a slower fourth quarter, PitchBook says.

But overall, the data shows that venture capital raised by U.S. companies has been steadily rising since 2006.

California startups saw the most funding of any state, with companies raising more than $63 billion across 3,623 deals. The state had several multi-million-dollar deals from San Francisco companies such as DoorDash, which raised $700 million last year, and Databricks, which raised $400 million in October.

Following California was New York, whose startups raised more than $27 billion across 1,315 deals, and Massachusetts, which saw more than $10 billion raised in 2019 across 740 deals.

When it came to startup exits, 2019 hit a new record for U.S. VC exit value, coming in at $256.4 billion across 882 liquidity events. One of the year’s largest exits was Honey, which was acquired for $4 billion by PayPal in November.

Female-founded companies saw record activity on both a capital and deal count basis, raising $18 billion across 2,184 deals in 2019, compared to nearly $17 billion across 2,057 deals in 2018.


By  – Atlanta Inno Staff Writer, Atlanta Business Chronicle

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