A $300,000 federal grant will play a key role in building local capital for startups, says Linda Olson, president and CEO of Tampa Bay Wave.
The three-year grant from the U.S. Economic Development Administration, along with matching local funds, will be used to launch the I-4 Innovation Investors Collaborative, a partnership between Wave and StarterStudio, a startup hub in Orlando, and will focus directly on addressing early-stage capital funding gaps in central Florida.
“Florida ranks comparatively low in access to early-stage capital despite its size, partly because many of Florida’s accredited investors often focus on real estate or other low-tech investments because they are unfamiliar with equity-based investment mechanisms and opportunities in innovative technology companies,” the U.S. EDA said in awarding the grant to Wave, a nonprofit that houses and supports young tech companies.
A new ranking of the 50 best places in the United States to start a business backs up that concern, Olson said.
While Tampa Bay comes in No. 24 overall on Inc. magazine’s new list of “Surge Cities,” the Tampa metro ranks No. 42 among the 50 cities in early stage funding deals and below average on rates of entrepreneurship.
“When you talk to people in the investor community, they say deals are getting done,” said Olson. “There’s more early stage capital for startups today in Tampa Bay than ever.
“That’s probably true. But even for all that progress we are still 42 out of 50. That’s what this grant is all about.”
The grant will be used to expand capital options for entrepreneurs across Central Florida, establish best practices around structuring a deal for early-stage companies and educate investors.
Both Tampa Bay Wave and StarterStudio have received EDA grants previously, and the agency suggested they collaborate on the seed fund support grant, Olson said.
“We can get bigger and better outcomes for our communities when we act regionally,” she said. “It helps creates a bigger pool of investors and startups, and when you have that critical mass it helps the region attract more talent and capital and the other things needed to be successful.”
Central Florida has an estimated 128,000 households with accredited investors – wealthy people who are financially savvy and understand investment risk — and only about 100 of those households currently participate in startup funding, Olson said.
“We’re not going to try to convince everyone they need to invest in tech startups. It’s still high risk investing. But if we can build education and excitement, and if we can go from 100 to 200 investors, that would double the pool of investors.
“We also want to attract outside capital in, but this is about how to move the needle in Central Florida and help local investors build more wealth here and create more momentum.”
The $300,000 in federal grant funding is being allocated equally to Wave and to StarterStudio. Another $375,000 in local matching funds are coming from the Vinik Family Foundation, Stage 1 Ventures, Tampa Electric, University of Central Florida and Kirenaga Partners, an early-stage venture capital firm with an office in Orlando. Of the local match, $225,000 has been committed to Wave and $150,000 to StarterStudio.
The match from Stage 1 Ventures, a venture capital firm based in Boston, is separate from the Stage 1 Ventures Accelerator Fund that has been created by Jonathan Gordon, a Stage 1 partner and Wave board members who lives in Tampa. The accelerator fund has not yet made any investments but expects to do so soon, Olson said.
The federal grant is relatively small, she said, but strategically significant.
“It helps send out the message that early stage capital is a gap we need to close and hopefully we can use this to move the needle.”