New York Times

December 29, 2008, 7:11 am
Florida, the Next Hotbed of Venture Capital?
By Claire Cain Miller
Silicon Valley, Austin, Boston, New York … and Orlando?
The state of Florida wants to tap into the billions of venture capital dollars invested in young companies each year. It is seeking venture capital funds in which to invest money from the $29.5 million Florida Opportunity Fund, established by the state to funnel more venture capital to Florida start-ups.

The fund will look for regional and national venture capital funds that have done business in Florida and plan to invest in young Florida companies, particularly those developed at Florida universities and research institutions. Then, the fund will invest portions of its $29.5 million in those funds, with the goal of creating and growing Florida businesses.

The Florida Opportunity Fund hopes to create more venture capital activity in the state, said Gail Rayos, a spokeswoman.

The fund is managed by Florida First Partners, which is a joint venture between Milcom Venture Partners, a Florida venture capital fund manager, and a Credit Suisse investment group that runs similar funds in Ohio, Michigan, Indiana, New York and Oregon.

Venture capital is spreading outside its historic hotbeds in Silicon Valley and New England, but so far, Florida has not been getting a significant chunk of the money. The fastest-growing regions for venture capital investment over the last decade are New Mexico, Pittsburgh, Seattle, Los Angeles and the District of Columbia, according to the National Venture Capital Association. Florida will receive only a small fraction of the $30 billion that is expected to be invested in start-ups this year.

The Florida Opportunity Fund hopes to change that. It is tapping into the state’s existing industries, including aerospace engineering, homeland security, military and clean energy, and hoping to build up its life sciences and information technology sectors.

Despite the venture capital industry’s poor returns and pessimistic outlook, the state says it believes that investment in technology start-ups will help Florida’s work force and economy remain competitive, Lt. Gov. Jeff Kottkamp said in a statement.

Venture capitalists have invested $6.4 billion in some 700 Florida companies since 2000, according to Enterprise Florida, a government economic development group.

Some of those companies have already attracted top venture capital firms. This year, Kleiner Perkins Caufield & Byers and Index Ventures invested $34.5 million in Lehigh Technologies, a Naples company that makes rubber powders for greener manufacturing. Benchmark Capital invested $12 million in Pentaho, an Orlando open-source business intelligence software company that has also been funded by Index Ventures and New Enterprise Associates.

.10 Comments
1. December 29, 2008
9:02 am

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Florida has a fast money mentality more suitable to hucksters than venture capitalists. Bad idea.

— Lyle Vos
2. December 29, 2008
10:03 am

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Good thought - wrong implementation.

Putting money into the venture capital stage of risk investing is misdirected for a State Development Agency.

Florida should be putting its money into the Seed stage. And then successful seed investments are further funded by the Venture Capital stage.

Please see - http://www.slideshare.net/ElliottDahan/start-fund-12012008-presentation

Thank you,

Elliott Dahan

— Elliott
3. December 29, 2008
10:03 am

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Florida funds.

— Joseph J. Kreder
4. December 29, 2008
10:11 am

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We tried this in MIchigan. It will take at least a decade to see if it works. Current signs are it won’t. In any case to have a chance Florida needs several $ billion not the paltry sum they are proposing.

— Geoffrey Henny
5. December 29, 2008
10:37 am

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I’m not sure 29.5 million would get a new theme park ride off the ground….

— lm
6. December 29, 2008
10:40 am

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Ah, Florida!

The scam capital of the United States. The state where corporate thieves and the likes of OJ Simpson go, so no one can touch their assets and they can continue to live the way they want on the money they have stolen.

— jss
7. December 29, 2008
10:49 am

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Completely mis-guided, and typical of a gov’t agency to pursue an economic model, which in itself is under severe stress. A clear sign perhaps of a market top (and that’s with the financial markets already reeling)?

— Roy Liu
8. December 29, 2008
1:42 pm

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Someone hasn’t done their homework. The biotech industry is plunging into Palm Beach County as well as other counties in Florida.

We have been fortunate to have have a pro-business Governor and legislature, both term-limited as the U.S. Congress should be, the past ten years that understand investment.

Term limits require that the Governor and the legislature return to the private sector where they have to live with their legislation. Maybe the U.S. taxpayers will catch on an bring Congress back to reality, if it ever was there.

Insofar as scams are concerned. I always thought that we should ban the thugs from NYC from migrating south and polluting our air.

— Prudent Man, CFA
9. December 29, 2008
6:23 pm

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As someone who has raised in excess of $20M in VC capital for an Orlando-based technology startup, I have firsthand experience with our state’s unique challenges. First, there are very few VC firms with Florida offices. Second, Florida offers very few of the incentives (development grants, low cost loans, training $, etc.) that most other states provide; despite the longterm benefit of creating high wage, non-service sector jobs/balance. Thirdly, our very, very poor public school systems make recruiting/attracting young engineers difficult. On the plus side, corporations such as Lockheed, Harris, and L3, to name a few, do help when it comes finding strong exec and tech teams and there is a lot of very experienced, helpful, retired execs that can be tapped fairly easily to help tech startups.

— Rob Strandberg
10. December 29, 2008
11:29 pm

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I’ve wondered why Orlando hasn’t given this a lot more effort. Let’s face it, Orlando is an especially nice place to live if a family has children. Also, their tech corridors (with Tampa and Cocoa Beach) could tap into a lot of nearby technical talent.

I’ve been living in China for the past five years, came here via Silicon Valley (and via META Group, Oracle HQ and Microsoft’s Silicon Valley campus). If/when I come back to the States, I’d rather go back to a place like Orlando than a place like Silicon Valley. Although I miss Silicon Valley, changes in my life make Orlando look a lot more attractive. In fact, Orlando would appeal to me more than ANY of the places you’ve listed — by far.

Here’s an idea for Orlando: Focus more on greentech; don’t let California walk away with all the best talent. Greentech is still open for grabs and I’ve noticed that most of the folks in both solar and wind tend to be family types. (My last couple of years have been in solar and wind, which is what I’m still doing.) This might be a good match for Orlando. Silicon Valley appeals to youth, but the greentech “industry” is filled with more seasoned execs — execs with gray hair (or, no hair). It’s not run by 20-something clones akin to the Facebook management team, not by a long shot.

Orlando, go for greentech. And even though Orlando is hardly the best place for wind, this doesn’t mean that wind power technologies couldn’t be developed there for “export” to the Midwest or Europe. In a general sense, ditto for biomass. Solar, of course, is more likely a natural fit.

— David Scott Lewis