Innovate
Jeff Vinik, Tampa Bay Wave work to unlock local capital for startups
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.
Andy Gold
November 18, 2019at2:34 pm
The Everyday Entrepreneur Seed Fund at Hillsborough Community College has funded five businesses thus far over the past year. These five businesses will generate over $500,000 in revenue and will have created ten new jobs in just 12 months or less. HCC is expanding this seed fund to include participants in the STRIVE Veterans Entrepreneurship Program, a partnership between HCC and Syracuse University’s Institute for Veterans and Military families (IVMF), which is the national leader in entrepreneurship training, research, and resources for Veterans and their families. HCC has received nine applications from veterans and HCC students seeking to take advantage of this funding opportunity. HCC anticipates growing this seed fund to $5 million by 2024.
Beth Kerly
November 18, 2019at8:59 am
Another “unknown” reesource locally is the $500,000 (and growing) SEED Fund at the Hillsborough Community College Foundation. This proves that there is an opportunity outside of Tampa to provide access to funding that is a bit nontraditional. HCC’s innovative thinking and persistence to excellent programming for early stage startups gained the attention of a national audience.
Through the bold vision, and generosity of the Everyday Entrepreneur Venture Fund Foundation, the HCC Entrepreneurship Program was able to secure a $250,000 matching seed fund grant for our students to launch and grow their businesses. Complete one of our entrepreneurship college credit certificates or degrees, get assigned to a business mentor/advisor, and qualify to apply into our $250,000 seed fund.
Funding options include:
1) Grants for funding requests up to $8,000.
2) Interest free loans for funding requests up to $35,000.
3) Below market interest bearing loans for funding requests up to $75,000.
Joy Randels
November 18, 2019at8:28 am
There are a lot of Angels making investments in local and regional companies and many of us have been doing it for decades. I currently have 53 companies in my portfolio, 37 of them are based in Florida.
I and others in my local network also put our money into VC Funds. Most of us invest through holding companies or family offices which allow us anonymity to prevent unwanted solicitation which also means we do not show up in the numbers reported here. Most of us are not part of an Angel Group in part because we would rather see 100% of our money go to startups rather than fees. That said, we often circulate deals to one another, co-invest with each other and funds, and we elevate deals to others in our network who are not local. Almost all of us are entrepreneurs ourselves and have been on the other side of the table we look to create a fair deal for both parties and 100% of us mentor and work with startups regularly.
It is also important to note that a very large portion of households which fall into the accredited investor category are those who are retired or at the age of retirement. The majority of those people will not take on the risk of investing in early stage startups. The very high net worth individuals will sometimes take the plunge because the can tolerate the risk without impacting their future. Even then, many choose philanthropy over startups.
I particularly appreciate what Embarc is working to create here because the criteria for participating in their program is geared towards scalability and sustainability. We have made tremendous progress and will continue to do so. People who were not a part of this community two decades ago have no idea how far we have come. We still have a long way to go but there are more investible companies here today and that is what will change our future. We have never had a problem with marketing, our community has the best marketing around. It is about having the right companies to invest in and that is evolving.
Beth Kerly
November 16, 2019at9:58 am
Hillsborough Community College found a way to reach out and secure over $500,000 in funding for student/veteran start up businesses. Innovative thinking and strong national relationships are at the core of landing this opportunity. A small foundation called the Everyday Entrepreneur Venture Fund out of CT invested $250,000 for the Tampa community to match. Which we have! This shows the richness of the Tampa startup community! We have some of the best innovative minds at work here! No doubt. https://news.hccfl.edu/press-release/hcc-awarded-250k-everyday-entrepreneurship-venture-fund