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Tampa Bay at a crossroads in nurturing startup culture

Executive director Linda Olson, center, leads a preview tour of the FirstWAVE Venture Center, the 1-stop-shop for entrepreneurs and business start-ups opening with a federal grant on the 2nd floor of the Rivergate Tower, 400 North Ashley, Tampa. From left, FirstWAve director Jennifer Metz, chairman of FirstWAVE steering committe George M Gordon, Olson, FirstWAVE marketing associate Gracie Stemmer and FirstWAVE director of operations Deborah Neff.
Published Jun. 17, 2013

Tampa Bay stands at an innovation crossroads. While its emerging startup community exudes enthusiasm, big concerns persist about the long-term viability of this region as a serious hub for entrepreneurs.

For starters, let's come to grips with some basic rules of entrepreneurship:

• Most startups fail — don't rue the losses.

• Encourage risk.

• Numbers matter — keep the innovation pipeline full.

• Celebrate the innovative businesses that succeed.

The Tampa Bay Times reached out this spring to the founders of more than 60 area startups and to dozens of experts who live those rules every day. The idea was to capture a decent-sized sample to follow in the coming months and, for those that survive and grow, the years ahead. We also wanted to hear from enough entrepreneurs about how the Tampa Bay area rates as a place to start a business.

Some startups listed here like Tampa's KiteDesk or Palm Harbor's Alorum or Marxent Labs were founded by experienced entrepreneurs. Others like Banyan (which started here but relocated to Tennessee), Refresh-a-Baby, Check I'm Here and City Sleekers are startups by younger folk still getting their entrepreneurial feet wet.

Still others like Tampa's AbleNook and Black & Denim Apparel or KeriCure in Wesley Chapel make physical products to sell, while Citizinvestor and Cartooga provide online platforms to help fund local public projects or boost retailer sales.

And C2 Intel, an area startup that aimed to offer competitive intelligence to businesses, was pulling the plug when reached by the Times.

"Unfortunately, my partner and I have just made the decision to shut our operations down," emailed Michelle Frome, who now works as a research manager at Catalina Marketing in St. Petersburg.

What do all these innovators think is holding back the area's burgeoning startup community? Four hurdles came up over and over again.

1 Where's the startup money?

It's a longtime lament, but it's still too hard to find investors here willing to help early-stage startups, forcing many new businesses to close or relocate to friendlier investor markets. This is Tampa Bay's toughest obstacle.

"Find a way to strengthen the capital pipeline," implores Daniel James Scott, founder of the startup Alorum Inc. in Palm Harbor and a high-profile advocate for the regional startup community.

"It can be difficult finding funding unless one of the 3 F's — friends, family or fools — is willing to share the capital you need," says Jennifer Sineway, whose JLS MedEquip startup in Odessa sells medical equipment.

2 A failure to communicate.

For all the growth of this area's "entrepreneurial ecosystem" designed to encourage and sustain startups, many business founders including Omar Garcia of Tampa startup Shootrac told the Times that regional support remains too disjointed.

"Bring together and coordinate the fragmented efforts of various groups trying to develop the early-stage support ecosystem," urged investor and veteran entrepreneur Tom Cardy, now vice chairman of Tampa health care firm myMatrixx.

3 Veteran entrepreneurs must become stronger role models.

Serial entrepreneurs — folks with the skills and perseverance to start more than one successful business — are rare but desperately needed to provide guidance and serve as role models to the startup community.

"There are lots of incubators, accelerators, tech transfer offices, meet-up groups and trade groups, but precious few successful entrepreneurs who have stepped up to lead the ecosystem," says Mike O'Donnell, a Seattle entrepreneur who briefly tried to inject new blood into the startup community here before relocating to Fort Lauderdale. "There are lots of people selling picks and shovels, but not enough miners mining gold."

A short list of veterans leading the way already: Tom Wallace of Red Vector, Marvin Scaff of Gazelle Lab (and numerous startups), John West of Hire Velocity, Tony DiBenedetto of Tribridge, Mark Swanson of Telovations (now part of Bright House Networks), George Gordon of Enporion and Dan Doyle Jr. of Dex Imaging.

And Kurt Long, founder of Clearwater patient privacy firm FairWarning, recently joined up with the Pinellas Education Foundation to start a program that encourages high school students to acquire business skills.

But Tampa Bay needs more Kurt Longs. As many as possible.

4 Share government incentives with local startups.

If the state, counties and cities can go out of their way to promise tax incentives and public funds to lure out-of-state businesses, why can't some of that money instead go to local startups trying to establish headquartered businesses right here?

"Tampa could offer supportive capital funding via loan mechanisms similar to those provided by state-level organizations," urges Mark Lloyd, co-founder with Marilyn Bui of 2DP, a spin­off based on innovations first discovered at Moffitt Cancer Center, where the two scientists work.

One public official who gets it is Hillsborough County Commissioner Mark Sharpe. He recently bucked the bureaucracy to persuade fellow commissioners to approve $2 million for "EDI2" — the county's Economic Development Innovation Initiative — to promote Tampa as a startup hot spot.

Let's see how that develops. So far it seems a good, if modest, first step toward diversifying taxpayer funds beyond out-of-state business recruiting.

• • •

If Tampa Bay is at a crossroads in nurturing a startup culture, what should it do? Find more investors? Absolutely. Make sure the explosion of startup incubators, accelerators, startup camps and university programs talk more and compete less with one another? No question. Educate this region's residents and public officials? Constantly.

But most of all, it's about having faith and commitment to the long haul.

"A startup community is a virtuous cycle, and we must create that in order to thrive. This will not happen overnight, and there is no silver bullet," says longtime entrepreneur Joy Randels, whose resume spans 11 startups, 17 acquisitions, two IPOs and raising more than $300 million in venture capital.

Randels warns against consolidating a regional startup culture so that it speaks with one voice. That stifles innovation, the entrepreneur's fuel.

"We must change the mind-set of the majority and embrace and encourage startups because this is how our community can grow to produce and reinvest wealth here," she says.

"Building communities like Austin, Seattle, Denver or even Atlanta takes decades, not days, of concerted effort by true entrepreneurs."

Brent Britton chairs the Gray Robinson law firm's "emerging business and technology practice group" and is a prominent voice in the area startup community.

"Bottom line: People want startups to happen and many folks are getting serious and taking action," he says.

Money is a key. "We need more high net worth individuals to write more seed-stage (early) checks to our startups," Britton said. "Money is the oxygen in the room. Without more of it, our startup culture will wither and die."

That same issue resonates with USF College of Business dean Moez Limayem in Tampa.

"Selling Tampa Bay to entrepreneurs is only part of the equation," he says. "We must do a better job of selling the region to venture capitalists. When you have a great idea, you have to have funding to move forward."

The business dean points to local entrepreneur Scott Riley of Fintech, an innovator in electronic funds transfers. As a sponsor of a business plan competition hosted by Tampa's USF Center for Entrepreneurship, Riley provided $75,000 in seed money to local companies owned by USF students.

Entrepreneur Marvin Scaff is building a reputation here thanks to his energy and past Silicon Valley experiences. He wants to see more support from the "old guard companies," not only to give startups a shot at earning their business but also to consider investing in them.

University of Tampa business professor Rebecca White says Tampa Bay needs a few startup wins to crow about.

"We need to celebrate and communicate the successes we do have," says the director of UT's Entrepreneurship Center.

At downtown Tampa's FirstWaVE Venture Center, a startup business accelerator launched this year with the help of federal funding, director Linda Olson said more financial deals are happening with area startups than we think because many transactions are kept quiet.

"The real progress will come when talk turns to action in our community, and we start to see the rise of multiple angel (early-stage investing) groups and funds — and active ones at that," Olson says. "Personally, I'd be happy to see even one active group in Tampa Bay who is willing to go public."

Tampa Bay, like many Florida metro areas, often gets distracted by the latest shiny new object of affection. The region should stay focused on building a home where entrepreneurs will flourish and want to remain.

Startups: Good luck!

Contact Robert Trigaux at trigaux@tampabay.com.

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