PitchBook News - A Miami tech state of mind

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The Weekend Pitch

December 5, 2021

Presented by Masterworks

(Julia Midkiff / PitchBook News)

Looking back, the timing of Miami Tech Week couldn't have been better. The late April gathering of techies occurred after widespread vaccine access in the US but before the Delta variant quashed all hopes of a rapid return to normal.

Investors and founders assembled maskless in the sunshine while the rest of the industry remained pinned to home desks, hopelessly jealous in their unwashed pajamas.

The week of happy hours, one-on-ones and dinners accelerated a "techodus" of those who were fed up with San Francisco and New York. It also kicked off an informal experiment to see if a critical mass of money and hype could boost Miami from a startup laggard to a leader. On the latter point, the early numbers are in and … it's complicated.

I'm James Thorne, and this is The Weekend Pitch. You can reach me at james.thorne@pitchbook.com or @jamescthorne on Twitter.

Miami vs. the metaverse

Miami Tech Week was, as far as I can tell, tweeted into existence by venture capitalists Keith Rabois and Delian Asparouhov of San Francisco's Founders Fund, with help from other notable transplants like David Blumberg of Blumberg Capital.

It wasn't all hype. Venture deals in the Miami area have risen considerably this year, with $3.5 billion raised across 234 transactions—nearly triple last year's dollar amount—according to PitchBook data.

The population of tech investors has started to grow, and it's not just one-off venture partners looking for a sunnier place to work from home. Billion-dollar managers have opened or expanded offices in Miami, including Steven Cohen's Point72 Ventures, Blackstone, Thoma Bravo and G Squared.

SoftBank launched a $100 million fund for Miami that has since grown to more than $250 million. It too is said to be seeking more office space in the area.

If you're a Miami booster, savor the above and stop reading. Because once you dig deeper, you realize it's more fiction than reality.

If globalization made the world flat, the coronavirus made it distributed. Tomorrow's companies are everywhere and nowhere. The way we used to think about geography, about building networks and ecosystems, is now irrelevant. A company is based wherever its CEO lives; employees decide where they want to pay income tax.

In the WFH economy, is there really such a thing as a genuine headquarters?

Quote/Unquote

Former Twitter CEO Jack Dorsey (Joe Raedle/Getty Images)

"There's a lot of talk about the importance of a company being 'founder-led.' Ultimately I believe that's severely limiting and a single point of failure."

—Jack Dorsey on resigning from his role as Twitter CEO

Deal Flow

Valuation increases are seeing ever-larger multiples across the entire US venture market, but the trend has been especially prevalent in early-stage startups as mega-deals become more common.

Average step-ups in early-stage valuations hit a record multiple of 5.1 times through the third quarter, PitchBook analysts show in our latest US VC Valuations Report.

Founders are raising hefty amounts of funding all the while. Around 104 early-stage mega-deals were completed by Q3—a significant jump from the previous full-year record of 61 in 2020, according to the latest edition of the PitchBook-NVCA Venture Monitor.

Learn more about these and other trends in our data-visual breakdown.

Datapoints

(Spencer Platt/Getty Images)

Broadly speaking, the IPO market has outshined blue-chip stocks for the past decade. But the tables have turned in 2021.

According to the PitchBook IPO Index, shares of newly public VC-backed companies took off and widened their divergence over the S&P 500 in mid-2020 as financial markets rebounded from their initial pandemic shock.

Year to date, however, it has been an entirely different story. IPOs began to underperform the broader market in March as investors started to fixate on inflation worries. And since then, this year's IPO class has been largely flat. Read more in PitchBook's latest analyst note on the IPO market.

Did you know ...

… That fundraising in the global private debt market in 2021 is on pace to eclipse the totals raised in each of the past three years? And that is happening despite the fact that firms this year have raised far fewer debt-focused funds, underscoring the hefty war chests being amassed.

Indeed, PitchBook research shows that as of the end of Q3, more than 82% of global VC funds raised were larger than their predecessor vehicles. PitchBook analysts did a deep dive on this trend and the broader fundraising landscape in our Q3 2021 Private Fund Strategies Report.

Recommended reads

The Golden Ice Axe is alpine climbing's most revered reward. But whether it honors or encourages risk is debated in the sport. [The New York Times]

Crime prediction software promised to be free of biases. But new data shows it actually perpetuates them. [Gizmodo]

The James Webb Space Telescope is the most powerful space telescope ever created. For it to do its job, almost everything has to go right. [The Atlantic]

How female founders are crashing the billionaire club. [Fortune]

Two decades later, Enron remains as a symbol of corporate greed and fraud. A look at where some of the prominent players are now. [Bloomberg]

Jack Dorsey is departing his CEO role at Twitter with an $11.8 billion fortune. But the vast majority of his net worth doesn't come from the social media company. [Forbes]

This edition of The Weekend Pitch was written by James Thorne and Alexander Davis. It was edited by Alexander Davis, Angela Sams and Sam Steele.

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PitchBook News - A Miami tech state of mind

Miami vs. the metaverse

Quote/Unquote

Deal Flow

Datapoints

Did you know ...

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