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Florida lags in venture capital

Florida entrepreneurs must possess cast-iron constitutions to try building start-up companies in these economic times. Ask Florida Venture Capital Forum executive director Robin Kovaleski in Tampa what the climate is like these days for venture capital funding and she alternates between "tough" and "brutal."

But not impossible. The latest national figures show venture capitalists, firms that invest in new-idea businesses, plowed $4.8 billion into 637 deals in the third quarter of this year. Of that, a paltry four Florida companies received VC funding, according to the quarterly MoneyTree report put out by Pricewaterhouse­Coopers and the National Venture Capital Association. The survey may quibble with me, but I'll add one more name, Sharklet Technologies of Alachua, as a fifth Florida company to get funding just as the second quarter ended and third quarter began.

So five VC deals in Florida translates into an astonishingly puny 0.8 percent of all venture capital investments in the third quarter nationwide.

"Good technology and innovation are still getting funded," argues a never-say-die Kovaleski. Her group is Florida's middleman for capital-hungry start-ups and venture capitalists looking for the Next New Thing. But what used to be $3 million in funding is now $1.5 million. And venture capitalists now want to use their remaining cash to help firms they already have invested in to survive.

If this all sounds too familiar — that Florida is a void of venture capital funding — take heart. Let me suggest, and Kovaleski would agree with this notion, that former Florida Gov. Jeb Bush did the state a great favor back in 2003 by cobbling together half a billion dollars to lure California's Scripps Research Institute to expand and build a research facility in this state.

It's a given that Scripps is now a magnet for biotech expansion in Florida. Less realized is that the Scripps move alerted all venture capitalists — not just biotech investors but high tech, software and clean energy players — that there's more to Florida's entrepreneurial potential than meets the eye.

Consider this. In the past year and a half, world-class companies like Intel, Pfizer and Merck have sent their own venture capital teams to Florida to fund deals of $150,000 to $300,000 with innovative businesses. That never would have happened if Scripps had not taken the plunge into the Sunshine State and was not soon followed by such like-minded biotech firms as Burnham Institute, Torrey Pines Institute, Max Planck Institute, SRI, Draper Lab and others.

Another milestone for the state was the 2008 decision by Silicon Valley's venture capital granddaddy Kleiner Perkins to invest $38 million in a Florida high-tech tire recycling business in Naples called Lehigh Technologies.

Like Scripps Research, where Kleiner Perkins goes, others will follow. Eventually.

Just to keep our perspective, while Florida had five VC deals in the third quarter, California's Silicon Valley alone enjoyed 210 deals worth more than $2.2 billion.

It's not that Silicon Valley is so much smarter. It's because Silicon Valley makes it so convenient to invest by its sheer geographic density and infrastructure of lawyers and accountants so well versed in start-ups. We can learn from such tried-and-true methods.

Contact Robert Trigaux at trigaux@sptimes.com.

Who got recent venture capital funding?

Revolution Money, St. Petersburg: Part of AOL founder Steve Case's bevy of start-ups. Got $15.2 million for new card payment technology. Last month, American Express said it will buy the company.

Persystent Software, Tampa: Provides software to automatically repair PC problems, funded by ABS Ventures, Valhalla Partners.

Solicore, Lakeland: Maker of ultra-thin, flexible lithium batteries got $13 million-plus from five VC firms and tech manufacturer Rogers Corp.

Pasteuria Bioscience, Alachua: Got $300,000 for its quest to fight crop pest nematodes.

Sharklet Technologies, Alachua: Makes surfaces, based on sharkskin research, that inhibit growth of bacteria like Staph. Got $1.5 million from a Texas VC firm, Limestone Ventures.

Florida lags in venture capital 11/30/09 [Last modified: Tuesday, December 1, 2009 2:37pm]

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