Growing a Business
In an effort to boost venture capital investments in Florida — which have fallen from $2.6 billion in 2000 to $304 million last year — Gov. Charlie Crist this summer signed legislation creating the Florida Opportunity Fund. The fund will give a total of $29.5 million to VC companies that will match the money and invest in Florida-based startups in life sciences, information technology, advanced manufacturing processes, aviation and aerospace, homeland security and defense.
[Art: Jerry Hoare / Getty]
Florida entrepreneurs have always found it difficult to find seed or early-stage financing — even in the late 1990s, when VC funding in Florida was at a peak.
In 1998, the Florida Legislature tried to remedy that by providing an incentive for insurance companies to invest in state-certified capital companies, or CAPCOs, which in turn invested in new or expanding businesses. The CAPCOs invested almost $100 million in 59 Florida businesses, but the investments resulted in job losses rather than job gains, in part because of the technology bust at the turn of the century. Critics argue that with CAPCOs only the government puts money at risk, not the investors, and insurance companies were benefiting from state tax credits they received as a result of their CAPCO investments.
The new Florida Opportunity Fund requires VC firms to put investors’ money at risk in order to receive state funding.
To apply for money from the new Florida Opportunity Fund, venture capitalists must be based in Florida, have a full-time staff in the state or be an out-of-state firm with a history of investments in Florida.