South Florida’s tech economy is growing rapidly and becoming a solid and vibrant community. In fact, CompTIA’s Cyberstates 2016 report found that Florida’s tech industry ranked fourth in the nation. Despite this finding, the sector is facing a number of challenges that are hitting startups and early-stage companies especially hard. Here are seven problem areas that I encounter in my practice:
Money. Even in relatively good times, many startup and early-stage tech companies can’t raise adequate financing. This is frustrating given the amount of wealth that exists in Florida. We need to implement more platforms that facilitate financing opportunities. Lack of contacts with potential financing sources is one of the roots of this problem. We should also develop more angel investor groups and angel investment funds specifically focused on investments in tech startups and early-stage companies.
Tech talent. Many Florida startups and early-stage tech companies have difficulty in acquiring qualified tech employees. These problems could be substantially improved by better communication between the tech companies and the tech work force. Even with the availability of various platforms designed to facilitate this process, there is still a disconnect between these two groups that leads to the perception that there is insufficient tech talent in Florida.
Incomplete tech ecosystem. A complete tech ecosystem is essential to the functioning and sustainability of a tech economy. This tech ecosystem includes all components of the complete life cycle of a tech companies (from the fostering of an idea all the way up to a liquidity event). Our state’s tech ecosystem has improved and grown tremendously, but it is still incomplete. Major gaps exist in the ecosystem, and these gaps jeopardize young companies and their chances of growth and success.
Research university system. Florida’s research university system has improved substantially in recent years, but still needs to become a key driving force of the tech economy here. Good universities with strong research components are an essential component of any tech ecosystem.
Managing rapid growth. Many young tech companies are able to quickly begin the commercialization of their product or service and quickly generate revenue. The problem arises when sales grow too fast and outstrip the capabilities of management. Potential solutions here include engaging seasoned business advisers to help manage the growth process and qualified accountants and lawyers with experience in growth management.
Cybersecurity. Cybersecurity challenges affect every company, and are an even greater challenge if the company uses personal information or is in a regulated industry. Even small companies need to dedicate substantial resources to identify, anticipate and deal with cybersecurity concerns.
Competition from large companies. A startup or early-stage company can put substantial time and investment into a product or service only to learn that a large, well-funded company is doing the same thing. This could quickly become an opportunity, however, if the large company decides that it’s better to buy the smaller company and its technology rather than develop it internally. This can be a quick and lucrative exit for the smaller company’s principals.