Growing Florida's Startup Companies

What exactly does it take to be a successful startup?

From Florida Trend

Across Florida, private sector entrepreneurs and researchers at state and private universities are constantly developing products and ideas that can be commercialized, and the economic impact of developing the startup companies born from those ideas within the state can be significant. Florida is currently expanding its capacity to keep startup companies in the state and is helping develop companies that will provide high-wage jobs to Floridians.

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The benefits of enhancing entrepreneurship and innovative capacity are substantial. One statistic highly noted by economic development professionals is that innovative regions (regions with high levels of intellectual property and local entrepreneurs) have 125% higher employment growth, 58% higher wage growth, 109% higher productivity, and less sensitivity to economic downturns than the average region.1 Developing these startup businesses in Florida can help diversify the economies of all regions in our state.

THE PATH OF A SUCCESSFUL STARTUP COMPANY

Innovators and entrepreneurs bring many benefits to the region: they set up small businesses that bring high-wage jobs and investment returns. Angel investor networks and business incubator networks are vital tools that enable entrepreneurs to take their ideas and inventions and turn them into profitable companies.2

Funding is typically the biggest impediment to starting a self-sustaining business. Entrepreneurs often engage in several rounds of financing, spending substantial amounts of time making the same investment pitch, using up valuable time that they could use to focus on growing their company. Angel networks help to solve this issue by bringing together potential investors and entrepreneurs, so entrepreneurs do not need to spend time pitching their business plan multiple times to multiple investors.

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Angel investors provide the majority of U.S. startup funding in the early investment stages by filling the gap between start up and sustainability. Angel investors invest in more than 60,000 companies per year -- 22 times more companies than venture capital firms. In 2010, angel investors across the U.S. invested about $20.10 billion. Massachusetts and California lead the way, but the Southeast U.S. as a region comes in fourth according to the Angel Resource Institute. (See chart at right)

Also, unlike venture capitalists, angel investors provide experience and guidance to startups -- not just financing -- in return for a stake in the company. Since Angel investors invest in more companies in earlier stages of development, they can play a key role in boosting innovation and startups in Florida.

 

SUCCESSES IN FLORIDA

To try and provide more support for Florida’s startups, a statewide network of investors and investment groups known as the Florida Angel Nexus has been developed to help grow companies in Florida. The Nexus has teamed up with UCF’s Business Incubator Program and other groups such as the Tamiami Angel Fund, the Florida Institute for Commercialization of Public Research, and the Florida Next Foundation in order to connect qualified companies with the mentorship and capital needed to create a viable company and product.

The Business Incubation Program at the University of Central Florida (UCF) was named 2013 Business Incubator Network of the Year by the National Association of Business Incubators.

According to a regional economic impact study conducted from October 1, 2011 through June 30, 2013, UCF’s program helped generate a direct regional output of $327 million out of a total output of more than $620 million, during that time period. The program directly supported 1,856 jobs, and indirectly supported another 1,500 jobs, in which employees earned an average income of $58,000. These jobs brought $18.5 million in additional tax revenue to state and local governments.3

The Florida Angel Nexus’ partnership with UCF is already seeing success; it has closed three deals, and is on track to meeting its goal of investing $1 million by years end. With this team, the Nexus plans to make Florida the next major innovative ecosystem in the U.S.

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IMPROVING THE FLORIDA ENTREPRENEURSHIP ECOSYSTEM

According to a 2012 MoneyTree report, California, Massachusetts, and New York attract 70 percent of all investment financing while Florida attracts less than 1 percent.4

According to Blaire Martin, Director of the Florida Angel Nexus, there are five main opportunities to develop Florida’s entrepreneurial ecosystem by developing interconnected Angel groups:

  1. Investable companies spend too much time raising capital causing talented entrepreneurs to leave Florida
  2. Lack of early communication between investment groups is time consuming and expensive for both angels and companies
  3. Lack of an efficient method to start and administer successful Angel Networks, makes it challenging for new groups to gain momentum and trust
  4. Some potential angel investors miss opportunities to invest by using a portfolio approach of disciplined and systematic due diligence, potentially causing lower returns
  5. Florida lacks an efficient marketplace to connect entrepreneurs, qualified investors/mentors, potential growth companies, and community resources

Conclusion

Opportunities abound for Florida to encourage the growth and expansion of startups. As they become more successful, the companies and their principals and investor groups can also mentor young entrepreneurs. Keeping graduates of Florida universities in the state will result in a better return from taxpayer investments in education, will develop high-paying jobs, and will diversify the Florida economy.

1   U.S. Small Business Administration, www.sba.gov 
2   The October and November 2011 Florida TaxWatch Economic Commentaries, Angel and Venture Capital in Florida, and Florida’s Business Incubators detail how angel investors and business incubators work in more detail.
3   National Business Incubation Association,http://www.nbia.org/success_stories/awards/2013/ucf.php
4   PriceWaterhouseCoopers MoneyTree report, available athttp://www.pwc.com/us/en/technology/moneytree.jhtml

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Virginia MacKoul

Virginia is a graduate from the University of Florida's College of Design Construction and Planning with a degree in Sustainability and the Built Environment, and a minor in Urban Regional Planning. Virginia joined the Front Street team in 2011, as an intern. Upon graduation, Virginia joined the Front Street team full-time as the Director of Client Services. Ms. MacKoul’s addition furthers Front Street’s continued growth and expansion within Gainesville and other North Central Florida markets. She was promoted to Director of Marketing in 2014 and now manages the firm’s team of interns and oversees all marketing and branding activity. Virginia was born in Boston and moved to Lee County, Florida in 1997. Virginia graduated her high school's International Baccalaureate program and started at the University of Florida with a focus on Architecture. Virginia shares Front Street's passion of giving back to the community and those in need. Virginia's hobbies include photography, cooking, football, movies, music, and spending time with her dog, Brinkley.

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