This is the last in a series of posts that deal with whether startup founders should move their company from Florida in order to receive sufficent investor-backing. In the first post, I outlined why I moved a company from Florida to Boston in 2008, at least in part, in order to be viewed differently by venture firms. I offered that the anti-Florida bias that exists in the financial centers is genuine–but can be overcome. I also alluded to my conclusion that, in 2013, it is generally not necessary to move to a more trendy startup location like SF, Boston, NY, or Austin in order to get financed. In part 2, I addressed why the amount of money your startup needs to raise is the first step in deciding if funding can be done well in Florida. If your funding sources are probably going to be angel investors, angel groups and small VCs, Florida does angel investing increasingly well. Angel investing as it has existed to date has mostly been a local-investor phenomenon and areas of Florida are doing pretty well.
In this last post of the series, I will give some thoughts on these issues if you have one of the less than two-percent of companies that: (i) fit the venture investment model, (ii) are at a stage of being investment-grade for venture firms and (iii) need to raise several million dollars in the current offering. In other words, you need institutional funding (“Series A” deals–more than angels can typically do), you are ready for venture funding (you are not too early) and the venture institutions that can provide that level of funding will fund your type of business (your business fits the venture model of scalability). If you are in this category or your startup is headed single-mindedly in that direction, your decision to move or stay in Florida will be the toughest.
Like many, I am convinced that venture firms have a local investment bias and, with a few notable exceptions, Florida does not have an indigenous venture community. That is a legitimate and continuing challenge. When I was in Boston, it was easy to meet people in the venture community simply by attending routine networking events. Even Florida’s “venture” events tend to be pretty light on venture attendees. (Note: Attend the events anyway–just don’t expect to bump into Fred Wilson or Marc Andreessen at the Florida Venture Forum).
This local challenge can obviously be overcome but the onus is going to be on you to build relationships with institutional firms in other locations. Don’t wait until you need the money to do that. Several out-of-state venture firms do have an emphasis on Florida. Check the Florida sourced Form D filings and do research on companies that have the right sized offerings in Florida. Follow Florida Venture Sourcing for deals. If out-of-state VCs are coming to Florida for board meetings already, it makes it easier for them to justify making additional investments. Contact them and build relationships. Sizable exits in Florida have also raised our profile with other out-of-state firms who have yet to make an investment.
The bottom line is that if your startup has enough traction, it is going to get funded no matter where it is located. If your startup has a management team with a track record and expertise, it will get funded in Florida or virtually anywhere else. It is the companies on the bubble, those that really need some meaningful capital to prove the model, that might find the difference between success and failure by moving to Boston, New York or Silicon Valley (or even Austin or Boulder). Companies of lesser quality get funded in those areas and the bar is simply lower.
However, if you do stay and you do pull it off in Florida, your startup will benefit from a lower cost-of-living, likely more press coverage and support options and the oft-valued Florida “quality of life.” It is a judgment call for the small minority of startups that fall into this category. Only the biggest Florida homers would suggest to the contrary. Best of luck.