Larger capital raises and bigger exits signal a thriving startup technology community in the Tampa-St. Pete area.
While there’s still a need for more early stage funding options, “Overall I’m very bullish on our ecosystem,” said Linda Olson, president and CEO of Tampa Bay Wave.
Olson and Brian Deming, the 2020 chairman of the Wave board of directors, talked about the state of the startup community during an interview with the St. Pete Catalyst.
Related story: Tampa Bay Wave will deepen corporate engagement in 2020
Wave, a nonprofit that houses and services technology startups, is one of several organizations locally that have helped propel the area’s burgeoning tech industry to the national stage. Just in the past few weeks, there’s been three key recognitions of the growing tech presence here.
• Tech funding site CrunchBase named the Tampa Bay area as a high growth U.S. hub, No. 3 in the nation behind Detroit and Pittsburgh, and just ahead of Miami, Philadelphia and Atlanta. The local area experienced growth due to a large funding round to a single company, KnowBe4, according to CrunchBase. The Clearwater cybersecurity training company received $300 million in June in a funding round led by private equity firm KKR. It became one of the 77 U.S. unicorns in 2019 — companies valued at $1 million or more in a private funding round.
• The Tampa-St. Pete area was No. 20 on Inc.’s list of Surge Cities, which ranked the 50 best places for startups in the U.S. The magazine highlighted JustProtect, a secure-tech company that was in Tampa Bay Wave’s TechDiversity accelerator. JustProtect relocated its headquarters to Tampa from New York. High-profile exits for home-grown tech firms like Tribridge, a software and cloud computing firm, and myMatrixx, a pharmacy benefits management company, also contributed to the area’s thriving ecosystem, according to Inc., which credited Water Street Tampa, Tampa Bay Wave, Embarc Collective and Synapse for helping foster the startup ecosystem.
• The Tampa-St. Petersburg-Clearwater metro area ranked No. 19 on a list of metro areas where IT professionals can find work, earn a lucrative salary and seek a rewarding lifestyle. The Tech Town Index 2019, from CompTIA, the world’s leading tech association, said tech companies no longer have to be in Silicon Valley to be successful.
In addition, two Tampa startups made it to the top five in the Startup of the Year global competition and summit in October in Memphis. The local finalists, Immertec, a medical technology company, and Fruutfull, with a patent pending design for better-fitting bras, were two of the nearly a dozen competitors based in Tampa-St. Pete or with ties to the area.
National recognition is valuable.
“It’s one thing to say we’re the best kept secret, but that doesn’t help draw people to the area. I think for us to continue to grow we need that outside presence,” Deming said. “I think the recognition we’re getting from Inc. and others is great for the community. If you are outside the community, you get more connected to it. If you’re in the community, you take pride in it and you’re excited about it.”
Those national lists also give the area something to strive for.
“It continues to make us aspirational. We see area like Austin and others higher on those lists and we want to keep striving to be there. But we weren’t on those lists five years ago, so that’s very exciting to me,” Deming said.
Big exits help
Startups that relocate here represent a shift from the brain drain that occurred when tech companies left the area to be closer to investors or talent, Olson said. So does the uptick in seven- and eight-figure capital raises.
Related story: Tampa tech company raises $15M
“There are companies raising $6 million, $7 million these days,” she said. “You keep hearing folks are raising millions of dollars, and the more that happens, it tells you that something is working in this ecosystem.”
Still, funding remains a challenge. Funding goes beyond dry powder that investors are ready to deploy. It also includes more options for startups.
“When you look at the cities that are at the top of those lists, they’ll have a dozen or two or more early-stage capital options for their founders. We’re not quite there yet. Options help not only more capital end up getting deployed, but across a broader spectrum of founders,” Olson said.
Deming is encouraged by the big private equity investments and large exits he’s seeing locally.
“To me, that drives the message that companies that were started here and stayed here and had a successful end to the story — or even just a middle step to the story — speaks to the success of this environment and this ecosystem,” said Deming, co-founder and former president of Tribridge, which sold to DXC Technology for $152 million in 2017. “That gives the young entrepreneurs new motivation to say it can be done here, I’m going to be the next ConnectWise or KnowBe4. That shows there’s a path for them to go down.”
And, in a state where investment historically has meant putting money into real estate projects, big tech big exits could make a difference..
“The more success stories and exits you have locally, you create new pockets of wealth of folks who think differently. If you made your dollars in the tech industry, you’re more likely to say, yeah, I want to keep investing in people doing that because I know what can come there,” Deming said.
Wave plans to deepen and broaden its corporate relationships next year, including recruiting companies to fund accelerator programs with a specific industry focus, opening more relationships between startups and team members at bigger companies. More corporate engagement will demystify the startup community, Olson said.
“The more you have people getting first-hand exposure to startups, to technology, to innovators themselves, and understanding what it takes to get these companies from infancy to a place where they can be successful, understanding what that funding mechanism looks like and that it’s different from traditional real estate and other types of investments, makes people aware and builds education,” Olson said. “It’s hard to be a confident investor if you don’t understand how it works.”