Tampa Bay Innovation Center recently featured Robin Lester, executive director of the Florida Venture Forum, in its monthly newsletter. She discussed the state of venture capital activity in Florida and what is to come in 2012. We’ve summarized her thoughts on where the industry is headed.
How would you describe VC activity in Florida during the past year?
2011 was a rebound year and VC firms are now reloading with cash. Funds typically invest with a five- to seven-year horizon for their portfolio companies. As they approach the last years, which many of them are now, they determine the exit strategy for portfolio companies, distribute proceeds to investors and raise capital for new funds. When they reload, they are in a better position to invest in earlier stage companies.
What were some of the more interesting trends in 2011?
There’s a lot happening in Florida, particularly in technology and bioscience. This includes robotics, simulation, medical devices, diabetic research and a number of very specialized research fields. In addition, the growing reputation of Florida research institutions has elevated the perception of our companies, including university spinoffs, and their investment potential. On the downside, though, we continue to see that too few investors are aware of the strength of the Florida market – something we are working hard to change.
Which companies received funding?
Later stage companies are often edging out earlier stage firms for funding. Technology, healthcare, life sciences, alternative energy and medical devices are at the top of a number of “shopping lists.” An interesting trend is the emergence of strategic partnerships for growth capital. Companies that have a strong management team, a proprietary technology that is propelling growth and a steady stream of revenues are of tremendous interest to institutional and early stage investors.
What was of concern to you?
We still have a capital gap after bootstrapping and friends and family financing. The days of financing a start up with a second mortgage and credit cards seem to be gone, at least for the time being. In addition, angel investors have become more leery. What remains is the challenge of finding financing in the $200,000 to $400,000 range.
How do things look for 2012?
I think prospects for 2012 are much improved. As I mentioned earlier, venture capitalists are reloading with cash and looking for quality investments. Within the state of Florida, we have enormous capacity for clean tech, alternative energy and healthcare.
What advice do you have for smaller, earlier stage companies?
If these companies can assemble a strong management team, get up to revenue and build a well-connected advisory board to give them access to capital and industry influencers, at least some of them will bubble up to the top. Organizations such as Tampa Bay Innovation Center and incubators throughout the state are invaluable in providing this sort of mentorship.
My final thought is, “Innovation will always be funded.” Those with the most innovative technologies and applications will be sought after, no matter where they are.