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.

Part Two in a Series: 

This is the second in a series of posts that deal with whether startup founders need to move their company from Florida in order to receive 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. However, I also noted that those who keep suggesting that there is no benefit to moving from Florida in order to get funded are probably misinformed or simply Pollyannaish.

In this post, I will address why the amount of money your startup needs to raise is the first step in deciding if funding can be done well in Florida. Because of the VC anti-Florida bias, your Florida-based startup is going to have to be better than it would need to be in NY, SF, Boston or Boulder in order to get funded by large VCs. The first question to ask is: who cares?  Most startups do not need funding from large VCs. We needed $7 million in our A round. If your startup needs less than $1.5 million, don’t even worry about what large VCs will or will not do. Your funding sources are probably going to be angel investors, angel groups and small VCs. You may have to combine several or even dozens of investors in order too get what you need, but Florida does angel investing increasingly well.

Florida’s angel investor community is potentially very large, due to a large population of high net worth individuals, but it has historically not been very active in private equity. Florida’s high net worth investors have traditionally favored real estate investments and “hard” assets. After the bubble burst and banking abuses showed that real estate is not all that safe, that has started to change.

In the recent past, even Florida’s “angel groups” were not very active and served more as an exclusive Moose Lodge than a genuine source of capital. However, some groups are now really doing deals. Tamiami Angels in Naples has invested in six companies since its formation in 2010.  New World Angels boasts a ten-company portfolio. venVelo is a relatively new fund that has already become a player in this space. Other similar funds and investor groups are on the way in Florida.  UCF has established its Florida Angel Nexus in order to bring organization to both the deal-flow and investor side of angel investing. Several out-of-state angel groups and small funds now see parts of Florida as attractive.

All of this is to say that if you are raising less than $1.5 million (and arguably less than $2.5 million), I now see leaving Florida as affirmatively disadvantageous. In my experience, angel investing is mostly a local phenomenon.  Angel List may change all of that with its celebrity angel rounds but I doubt that the local connection factor will change all that much. In fact, I think crowdfunding is going to make angel investing even more local (yes, the irony of the Internet driving local investment is not lost on me). Florida has as many “local” accredited investors as you will find anywhere if you do the head count in the winter.  Investors are already active at those levels in Florida and I believe that the deal-flow in Florida is increasing smaller than the investor appetite. If your startup needs more money in a more traditional A or B round, there are other factors to consider. More on that in a later post.

I think the exception is where your startup is in a specific industry that has a developed cluster in another part of the country. The benefits of finding educated investors, access to talent, access to strategic partners and the like may make moving sensible even if you only need a modest amount of cash. Otherwise, for rounds below $1.5 million, I think Florida is as good as almost anywhere right now.

Startup founders often ask the question of whether they can receive venture-backing as a Florida company.  Full disclosure here . . . I moved a company from Florida to Boston in 2008 at least in part in order to be viewed differently by, and have more access to, venture firms. To cut to the chase, the simple answer is that I do not believe that it is generally necessary to move to a trendier startup location like SF, Boston, NY, or Austin in order to get financed.  In fact, I think the downside usually outweighs the positive.  I know that sounds a little “on the fence” but that is because, like most complex issues, there are no simple answers.