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Jeff Vinik, Tampa Bay Wave work to unlock local capital for startups

Margie Manning

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Rebecca White, James W. Walter Distinguished Chair of Entrepreneurship and Director of the John P Lowth Entrepreneurship Center at Sykes College of Business at University of Tampa, interviewed Jeff Vinik.

More work needs to be done to get the word out about the startup technology community in the Tampa-St. Pete area.

That was the message at two parallel events Thursday, in St. Petersburg and in Tampa, as leading funders made the case for more investment in young companies here.

The Tampa-St. Pete area has made great strides in supporting entrepreneurial activity, Tampa Bay Lightning owner Jeff Vinik said at University of Tampa’s “State of the Tampa Bay Entrepreneurial Ecosystem” gathering.

“We need to continue to do that. This is the future of Tampa Bay, to develop a strong knowledge economy here. If not, we’re going to lose market share in terms of economic activity,” Vinik said.

It’s especially important to get local financial backing for young firms in the area, said Linda Olson, president and CEO of Tampa Bay Wave, speaking at Upsurge Florida in St. Petersburg, a program to educate investors and potential investors about the local opportunities.

Wave and StarterStudio, a startup hub in Orlando, have a $300,000 grant from the U.S. Economic Development Administration to focus on addressing early-stage capital funding needs.

“The EDA believes that unless we can figure out how to unlock more local capital for these companies, we’re going to be stuck in a place where we can’t help this region reach its full potential,” Olson said.

Money on the sidelines

The need is especially strong for companies that have maxed out funding from friends, family and founders’ resources, but are still too small to attract venture capital interest.

Almost all founders will say their first early-stage, low six-figure investment was critical to  their success, said Allen Clary, Wave co-founder and director of investor relations.

“As an ecosystem we have to close that gap or we won’t put enough companies into play,” Clary said.

Some companies go outside the area to fill their funding gap, Olson said.

Linda Olson, president and CEO, Tampa Bay Wave

“But for a lot of startups to get that first $50,000, $100,000, $200,000, even $400,000 or $500,000 it’s probably not going to come from outside of your community. It’s probably going to be local capital,” Olson said.

While investing in startups can bring great opportunities, it also is risky, Olson said. That’s why the Upsurge Florida event was for  “accredited investors” — generally people with earned income that exceeds $200,000 (or $300,000 together with a spouse) or with a net worth over $1 million, according to the U.S. Securities and Exchange Commission.

There are about 128,000 households across the Interstate 4 corridor that meet the requirements for accredited investors, but fewer than 1 percent of them actually participate as early-stage investors, Olson said.

And while Florida is the third largest state by population, it ranks No. 17 nationally when it comes to early-stage capital.

“Something is out of whack,” Olson said. “There’s plenty of money in Florida. It’s not that we’re a poor state. So how do we unlock this amazing potential we have?”

The EDA grant, which is matched by private contributions – including from TECO and the Vinik Family Foundation – is designed to do that. Wave and StarterStudio are holding UpSurge Florida events across the I-4 corridor to educate investors, introduce them to startups and provide investment opportunities.

A big key is finding lead investors, either funds like Florida Funders in Tampa or Seedfunders in St. Petersburg, or individuals with experience investing in early stage tech.

“There are millions of dollars just in Tampa Bay sitting on the sidelines because there’s not enough leads,” Clary said.

Educate investors

Entrepreneurs in every city say there’s not enough funding, Vinik said at the UT event.

“But in terms of capital, this is a Florida situation,” said Vinik, who has been a lead or co-lead investor in several deals, including for StemRad, a company that was in the Florida-Israeli Business Accelerator program, and for Tampa-based educational technology firm Knack.

“There are huge amounts of money in the state of Florida, but a lot of it was in businesses,” Vinik said. “People had their own businesses, CEOs, and they moved down here. And a lot of it was in real estate. We are educating all this money about how venture capital works. Don’t invest in two companies, you’ve got to invest in 40 and hopefully three of them work out for you. It’s a process for all of us … just to keep pushing ahead and getting a higher profile.”

Vinik made a pitch for the coaching provided by Embarc Collective, a downtown Tampa startup hub he is backing financially.

“You will get the best coaching here, then the capital will follow, the employees, the talent. It will all start pouring in,” he said. “What we’re doing has to happen times five or times 10 in the community. We all have to provide that and make ourselves the premium place for this ecosystem.”

When asked about his top wish for the regional entrepreneurial ecosystem, Vinik singled out communication. The area’s story doesn’t get told enough, he said.

“Publicize where the message is heard nationwide what a great place Tampa Bay is, and what a great place it is for young people and startup community,” he said.

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