It’s been a tough decade for the venture capital industry, but at the Florida Venture Capital Conference this week in Orlando, the mood was decidedly sunny.
“Contrary to the headlines, the ecosystem is working,” said John Taylor, head of research at the National Venture Capital Association. It was a record year for seed and early stage deals in 2013, and first-time financings were up, both nationally and in Florida. Another positive sign nationally: There was a sharp increase in initial public offerings in 2013; of the 82 IPOs, 42 were in biotech, where Florida has a number of companies.
“In the life sciences, we are seeing crazy interest,” said Scott Weiner of Pappas Ventures. Pappas, which concentrates on healthcare, participated in three IPOs and two mergers last year.
The three-day conference held at the Hyatt Regency Orlando attracted a record crowd of about 100 investors and about 430 total attendees, including investment bankers, entrepreneurs, lawyers and other service providers, said Kevin Burgoyne, president of the Florida Venture Forum, a 30-year-old trade organization that puts on the annual conference.
Along with panels, workshops and hallway networking, 16 entrepreneurs presented their ventures on stage, hoping to attract funding or at least win a meeting (or three) with some of the suits in the crowd. South Florida companies Avionica, Deliver Lean, Guide, itopia, Kleo, Leapfactor and Mergenet Medical were among the companies selected to present. Most of the companies said they received serious interest from at least one or two firms. For all of them, it was their first run at venture fund investment.
Florida Gov. Rick Scott gave keynote remarks at the opening day luncheon, delivering a positive message about job creation growth in Florida and joking that Texas Gov. Rick Perry better watch his back. “The future’s so bright, you gotta wear shades” was the title of a presentation by Jeff Saut, chief investment strategist of Raymond James, who presented reasons why he is bullish about the U.S. market year ahead.
While Florida has not been a hotbed for venture capital, attracting just 1.4 percent of the capital invested across the U.S. in 2013, the VCs said they are seeing “great innovation” and “quality companies” coming out of the state. Still, they said, many of those ventures aren’t yet developed enough for their portfolio requirements.
“Deal flow has been strong. Some of our most successful companies were founded by entrepreneurs that lived in an industry for awhile and saw a problem that needed to be soldved,” said Travis Milks of Stonehenge Growth Equity Partners. “It’s a favorable time to take those risks. We’re very excited about the outlook.”
Stonehenge has made 10 investments in Florida companies in the last decade, and typically invests in companies with $3 million or more in revenue, he said.
"There is nothing more mobile than capital. If there is a good deal, we are all over it," added Randall Poliner, president and managing partner of Antares Capital, with offices in Miami Shores and Melbourne. Antares looks for expansion-stage companies with $2 million to $25 million in sales.
Looking ahead, VCs are expecting a big year for big data companies, as well as cloud computing, e-commerce and wearable technologies. Adding to the bullish outlook: Corporate venture capital flows have been increasing, even in down years. In 2009, corporate VC entities such as Intel Capital participated in 22 percent of the top 100 deals, but in 2013 it was 40 percent. Mark Rostick of Intel Capital said corporate VCs are often strategic investors, co-investing with traditional VCs and helping drive customers to the venture.
Serial entrepreneurs at the conference had some advice from the other side of the table.
“There is no perfect investor. Do you share the same chemistry and is there a mutual respect? Every venture is a team of people, not a spreadsheet,” said Peter Kassabox, chairman, CEO and founder of Digital Risk and co-founder of Connextions.
Added Jonathan Taylor, chairman and co-founder of Tropo, who founded seven companies including Voxeo and acquired 17 others: “Be yourself, otherwise investors will figure it out.”