By guest authors Irina Patterson and Candice Arnold
Irina: Does your fund have any industry preferences, or is it pretty broad?
Tim: [First], I think we need to have a more robust entrepreneurial ecosystem here in the entire state of Florida.
And there are a lot of elements to that ecosystem. Not only access to early stage capital; we just need an entrepreneurial culture here. A lot of that comes from either people who report on and talk about entrepreneurship or from investing. You’re part of that ecosystem that helps us to spread the word and talk about these important topics.
In terms of sectors, it seems to be a bit of everything. We saw deal flow from the following sectors last year: Internet and Web services , consumer products, media and entertainment, software, financial services, business products, health services, industrial/energy, biotech, food and drink, clean tech, marketing, and advertising. Our largest percentage of deal flow came from Internet and Web services. I read those off in our ranking order.
Irina: Do you have any preference?
Tim: From a fund perspective, we’re just starting to learn about the makeup of our group. I would say that our group would favor – from my limited knowledge so far – Internet Web service, medical devices, clean tech, homeland defense, and life sciences/biotech – I think I already mentioned those. So, those are probably the ones we’re looking at.
Irina: Life sciences and biotech are pretty capital-intensive. Are you going to syndicate those deals?
Tim: Oh, yes. Absolutely. I doubt there’s a deal we’ll be able to fully fund in our current structure, just because we are so small. I mean, you don’t see a lot of business plans that are looking for $200,000.
There are plans out there that are looking for that. But this probably means that they’re somewhat limited in scope.
We would have to syndicate. We look forward to doing that and are in discussions with some of the other angel funds in Florida about syndicating on some of the deals that we’re in due diligence with.
Irina: On the other hand, Web-based businesses aren’t that capital-intensive.
Tim: Yes. I’d say Internet Web services and software are the sectors we see the most deal flow from. And two of the three companies that we have in due diligence are from those sectors. So, those may end up being the sectors we make our first investment in.
Irina: Do you have a preferred investment type?
Tim: Yes. We would like to invest in some sort of preferred share or convertible debenture. We prefer not to go into straight common [shares].
Irina: The most likely exit would be acquisition?
Tim: Yes, most likely. Also, this doesn’t happen that often, but we’d consider exiting prior to an M&A if a venture capital firm came in and wanted to buy us out.
Irina: From your perspective in Florida, what do you think are the challenges of entrepreneurship?
Tim: I think there are particular challenges in the state of Florida that don’t exist in other areas. You’re in Miami covering Silicon Valley, so you know what kind of an entrepreneurial ecosystem they have.
It may be a tongue-in-cheek comment, but you can go to a Starbucks for your morning coffee, come up with a business plan on the back of a napkin there, meet your management team there, bump into the venture capitalist and the branding and marketing folks, and by noon, you’ve got your venture launched and all the components in place. That kind of spontaneous capitalism that happens in Silicon Valley does not exist in Florida.
We don’t have such a developed entrepreneurial ecosystem.
So, I describe Florida as an emerging region. Just because we don’t have it doesn’t mean we can’t build it and can’t get there.
I think part of the challenge we faced here in southwest Florida is that when most people hear about Naples, Florida, they think it’s a fairly wealthy region and city in Florida.
But we had never had an angel fund prior to August 1, 2010. Just because it doesn’t exist doesn’t mean we can’t build it, not only in our region, but in the entire state.