H
ome to more than 383,000
millionaire households and
34 people on Forbes’ list of
the 400 richest people in
America, Florida has ample
funding available. While
success stories from across
The Corridor exhibit how startups like Orlando’s
Fattmerchant, Tampa’s Morphogenesis and
Gainesville’s Captozyme have tapped into such
wealth, the reality is most entrepreneurs struggle
in an increasingly competitive environment.
Fundraising has accelerated rapidly in recent
years. While funds grow in dollar amounts, the
number of funds has remained relatively the
same. This dynamic causes investors to write
fewer, larger checks, making it more difficult
for smaller companies seeking less capital
to benefit unless they boast a disruptive or
scalable idea. Indeed, MoneyTree’s Q1 report
this year ranked Florida among the top five
states for largest deals by dollar amount, with
$511 million in financing distributed amongst
just 20 contracts.
“On one hand, The Corridor region is a much
more credible geographic area to invest
in than it was 15 years ago and investors
from all over the country now consider
investing here,” said Randy Scott, partner at
Gainesville’s HealthQuest Capital and advisory
board member for the Florida Institute for the
Commercialization of Public Research. “On the
other hand, the businesses starting here tend to
be the ones raising smaller amounts of capital,
which will make it tougher to raise capital in this
era of bigger deals.”
Randy has been an executive, board member,
entrepreneur and investor in health care and
medical technology companies for more than 30
years. He recommends smaller companies in
The Corridor seek funding from “less traditional
sources like angel groups or family offices,”
which offer assets from wealthy individuals or
families with longer investment horizons.
Tampa’s Ballast Point Ventures, the most active
venture investor in Florida over the past 10 years,
is not an angel group or family office, yet it does
assist companies in earlier stages generating
around $3 million in revenue. According to
Principal Sean Barkman, who works largely with
66
software-as-a-service companies, this segment
of the entrepreneurial ecosystem is underserved
by larger funds.
“We are pleased that five of our first 10
investments in Ballast Point Ventures III (a
$164-million fund raised in early 2015) are
based in Florida and three of those companies
are based in Central Florida,” said Sean.
Similarly, IDEA Fund Partners is one of the
most active seed and early-stage venture
investors throughout the Southeast with stakes
in three Florida companies, including one in
The Corridor. With offices in North Carolina
and Orlando, its managers review over 1,000
business plans a year, but typically make only
one investment a month. This scenario is not
uncommon among firms, said Founding Partner
Richard Fox.
All three investors would agree success stems
from investing not only in funds, but also in
entrepreneurs. For Florida and The Corridor
to advance the entrepreneurial ecosystem,
assisting early-stage companies in the
competitive environment is key. As Randy
explained, venture capital money “chases talent
more than technology.”
“We need to turn Florida into a
destination for high potential
and already successful
entrepreneurs to move to.
Then, everything will take care
of itself in time.”
Several groups across the region, such as
NEXUS and Seed Tampa Bay, are aware of the
challenges facing early-stage companies and
are working to help company founders more
easily access funds. Before entrepreneurs utter
one word of their business pitch, however,
much preparation is required. Investors are
more likely to work with founders who possess
strong business acumen, leadership capability,
industry awareness and a realistic company
valuation. They must also be adaptable.
“In all the companies we invested in that
were successful, every one of them had to
pivot because of outside influences, surprise