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Want To Invest In A Tampa Bay Startup? Tips On Riding Florida’s Funding Wave

New deals and big numbers seem to pour in every other week.

Blockchain services firm Blockspaces raised $5.75 million in seed funding. Digital video studio Vu Technologies pulled in a seed investment worth $17 million. Symphonic Distribution, a music distribution service, raised $37 million. Cloud services company Blue.cloud sold a majority stake to a private equity company for a sum in the high eight figures. Health app Peerfit, restaurant technology firm Omnivore Technologies and banking services startup Engage Fi all sold, or sold majority stakes, to larger companies or equity funds.

And that’s all in the last three months.

The thing all of these companies have in common: They’re based in Tampa Bay.

“Florida has really the fastest-growing technology ecosystem in the United States,” said Saxon Baum, vice president of investor relations at Tampa venture capital and angel investor firm Florida Funders. “Over the last three years, we’ve seen an explosion in new capital, and we’ve seen an explosion of new intellectual capital in terms of some amazing companies and entrepreneurs that have moved down to the Sunshine State.”

What started as a “feel-good thing” for Florida’s startup landscape, Baum said, has turned into a serious opportunity for venture investors, with millions, if not billions, flowing into the state from afar. It’s been especially true during the pandemic, as investors from New York and Silicon Valley started paying closer attention to a state that looked open for business.

“They were open and vocal on social media about, ‘Oh my gosh, Florida’s a great place to be, and oh by the way, we’re moving a significant portion of capital from our investment firms down here,’” he said. “When you have capital like that continuing to talk and try to push the narrative, entrepreneurs and talent follow.”

Florida Funders, which makes about half of its investments in Florida, recently closed its second venture fund at $60 million, three times the value of its first. The firm might start eyeing a third by the end of 2022.

How can more inexperienced investors get in on some of the Sunshine State’s funding action? Baum, who started as a tech entrepreneur himself before moving into venture capital, shared a handful of tips.

Saxon Baum is vice president of investor relations at Tampa venture capital and angel investor firm Florida Funders. [ Florida Funders ]

1. It’s not too late to buy in.

Tampa Bay has seen a handful of “unicorns,” or companies valued at $1 billion or more, in the last few years, including cybersecurity firms KnowBe4 and ReliaQuest, and blockchain services company Pocket Network.

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Does that mean tech investment opportunities are already peaking? Hardly.

Baum believes Tampa Bay will have five to 10 more unicorns in the next few years, with about half of them launching initial public offerings or selling for massive sums. He even believes we’ll see at least one “decacorn,” a company valued at $10 billion.

“That’s going to continue to attract international talent and international people to the city of Tampa,” Baum said.

Baum points to Ark Investment, the New York firm that’s building a talent incubator and innovation hub in St. Petersburg, similar to Tampa’s Embarc Collective or Tampa Bay Wave. The new focus on Pinellas startups will draw even more attention and outside funding, often for startups in the pre-seed stage.

2. You don’t have to be a millionaire.

Florida Funders operates on a hybrid structure, pulling in funds from both venture capitalists and angel investors, who can buy in at different levels of commitment.

Take, for example, the firm’s recently closed $60 million fund. All of Florida Funders’ investments will pull from that fund, built from buy-ins worth tens or hundreds of thousands of dollars from high-net-worth individuals or groups. But the firm will also pitch about two-thirds of its investments to an outside network of individual angel investors who don’t need nearly as much capital.

“For as little as $5,000, they can invest alongside our fund,” he said.

Other Florida angel networks include Miami’s New World Angels and Black Angels Miami, Sarasota’s Bridge Angel Investors and Naples’ Tamiami Angel Funds. Some require higher minimum investments than others.

“These groups really provide nice angel groups so that individuals can get involved in this type of early stage investing,” Baum said. “There’s really no right or wrong way to do it. Just like on the entrepreneur side, it’s all about doing your research.”

3. Recognize what Tampa Bay does well.

Florida Funders made an early $500,000 investment in Pocket Network, the blockchain services company whose value has soared to more than $1 billion amid the global cryptocurrency boom.

That doesn’t necessarily make Baum and his partners crypto investors or evangelists. Rather, he sees the industry boom as an opportunity to invest in “fixing troubles of the blockchain ecosystem,” particularly as it relates to Web3 — the decentralized, blockchain-based vision of the internet viewed as rich with opportunity by major firms like Ark Investment.

If Tampa becomes a blockchain hub — much as it has become a cybersecurity hub, thanks to nearby MacDill Air Force Base and the University of South Florida — investors who hone in on early-stage, business-to-business startups in that sector may have an advantage over outsiders who come later.

“Since we’ve been in Florida, and we’ve been in this ecosystem for a while,” Baum said, “we’re looked at as a trusted source by a lot of later-stage capital firms saying, ‘Hey, we know Florida Funders is doing really great work, we want to invest alongside Florida Funders, we want to invest after Florida Funders.’ And that’s when a company continues to mature and grow well.”

4. Get out and network.

It was true when Baum was a young tech entrepreneur, and it’s true now that he’s an investor: Meeting face-to-face with people in the local startup community makes a difference.

It’s easier to do in Tampa Bay, which is still in growth mode, unlike Miami or Austin. There are copious resources available for startups and investors alike, from groups like Embarc Collective and Tampa Bay Wave to conferences like the Synapse Summit, and the market isn’t so crowded that new companies struggle to stand out.

“It’s not Miami,” Baum said. “It’s not a massive metropolitan, international city yet. It’s a city where you can really get your hands dirty, you can find the right people, you can make a difference. From a qualitative, personal aspect, that plays very well with entrepreneurs.”

Developing personal connections can also pay off down the line, as some startup founders become successful enough to start making local venture investments of their own.

“We’ve seen this thing starting, and now we want more people to be a part of this,” Baum said. “We want them to join the communal feeling of, ‘We’re going to be one of the biggest startup innovation cities in the country, and we’re on our way to doing that.’”

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