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In Tallahassee, like the rest of
A Catalytic Moment
With startups blossoming, investment capital has catching up to do
BY T.S. STRICKLAND
There has been a lot of focus in recent years on growing Tallahassee’s startup ecosystem. Accelerators, incubators and pitch competitions have proliferated. Now, as the country lurches out of a suffocating pandemic, the city may be approaching a turning point where years of patient effort will produce a gush of innovation and growth. However, even as resources expand and the pandemic subsides, experts say one crucial ingredient — money — remains scarce.
Rick Kearney puts it succinctly: “Tallahassee is an investment desert,” he said.
Probably few folks understand the plight of local entrepreneurs as well as Kearney. Mainline Information Systems, the company he founded in 1989, became one of the top IT firms in the state and remains one of the capital region’s brightest success stories. He has been showered with awards recognizing his philanthropy and business acumen and once made the cover of Inc. magazine.
Through all these successes, he’s remained loyal to his hometown, and he believes it has the potential to spawn many more success stories. Before that can happen, though, something must be done to bridge the capital divide.
Quiet, patient money
Investors do exist in North Florida, but they are few; deal sizes tend to be small; and the nature of the opportunities they seek doesn’t always conform to the typical tech startup.
Robert Blacklidge knows this firsthand. The self-described “serial entrepreneur” recently became the director of entrepreneurship at Domi Station, an organization that provides education and mentorship to local startups. Before coming to Tallahassee, Blacklidge
Because much of the wealth in Florida is tied to real estate, communities, including Tallahassee, need to educate themselves about investing in technology, according to Robert Blacklidge, the executive director at Domi Station.
PHOTOS BY LINDSEY MASTERSON AND COURTESY OF PRESCIENT CAPITAL VENTURES (THOMAS)
worked in Tampa and Lakeland, where he they are and where they are. It’s very quiet, helped to grow the startup ecosystem as a patient money.” community organizer.
Before the pandemic, Blacklidge Investment limited was raising money for his own startup, One of these groups, Prescient Capital CourseAlign, which was focused on Ventures, has been quietly investing in educational software. That experience startups since 2009. Prescient is headed taught him that the technology sector by Thom Park, an investment advisor in Florida had a lot to learn from other who once coached college football at The markets — and inspired much of his Citadel, and Bruce Thomas, a successful community organizing. car dealer and real estate entrepreneur.
“It’s two sides of the same coin,” Park and Thomas have built a network Blacklidge said. “You have to have compa- of 120 to 130 investors over the last decade. nies that are investable, but you also have to About half reside in North Florida. have investors who are educated about how “Many people are interested in investing to bet intelligently on tech startups.” in early stage companies,” Thomas said,
Neither of these prerequisites are a given “but they don’t know where to find them. — particularly in smaller markets like You can’t just find an ad in a newspaper or Tallahassee. This is due, at least in part, to on television.” the nature of the wealth that exists there. Thomas said the group probably meets
“A lot of the wealth in Florida is real with about 30 companies each year. Of estate based,” Blacklidge said. “Tech and these, they invest in maybe one, with deal real estate are completely different animals. sizes ranging from a few hundred thousand Tech startups are a high-risk gamble. You’re to a few million dollars. Thomas said they’d going to lose nine out of 10 times.” only invested in two local companies during
That’s why investors in larger markets Prescient’s 12-year history. This is due, tend to specialize and hedge their bets by at least in part, to the quality of startups investing in numerous companies in the they’ve seen. same niche. “Being in a university town, we have a lot
“That gives you a unique capability of professors and students who have ideas at scale,” Blacklidge said. “As some of and want to monetize them,” Thomas said. those companies die off, you can roll that “A lot of them think that, if they bring in a talent and technology into the surviving million-dollar investment, their idea will companies. In Florida, that’s not always the just work. We bring them down to earth, case. You’ll see groups invest in 10 different but we try to do so gently.” companies in 10 different industries.” Thomas said Prescient did not have a
This is starting to particular industry focus. change, Blacklidge said. “The business just has As the startup ecosystem to make sense to us,” he matures, more and more said. He added that a investors are banding to- founder with skin in the gether to form syndicates game was a prerequisite. or co-ops of high-net- “We look at the leadworth individuals who ership of the company invest their resources to- and what they’ve done,” gether and share the cost Thomas said. “In most of due diligence and portWe look at the leadership of the cases, the founder has infolio management. company and vested some of their own
“There are family inves- what they’ve done. In money or devoted a lot of tors and smaller groups most cases, the founder has invested some of time. That’s inspiring. We here,” Kearney said. “You their own money or pay attention to that.” can go visit them in the devoted a lot of time. While groups like pine trees and do a deal, That’s inspiring. We pay attention to that.” Prescient provide some but you have to know who — Bruce Thomas runway for a select group
of startups, Kearney said there remained a big disconnect between the kind of early stage, small-scale investments these groups make and the large-scale capital needed to bring those ideas to market.
A role for the university
Kearney believes the state university system could be the region’s greatest asset in scaling the innovation economy — both by bringing academic research into the private sector and by helping entrepreneurs access the capital needed to bring those technologies to market.
“With the College of Medicine at Florida State University, as well as their chemistry department, we have a very high potential in pharma, chemicals and drugs,” Kearney said. “A lot could also be done in the energy, aerospace and transportation sectors in conjunction with FSU’s MagLab.”
Kearney said local universities — in addition to producing innovations and transferring them to the private sector — could prove crucial in soliciting the capital needed to take them to market.
“I think improving the capital landscape is a huge area of opportunity,” he said. “The universities really could become marketplaces for innovation.”
In other parts of the country, alumni networks act as a kind of connective tissue that brings together academia, venture capital and private equity.
“If you were just to look at people who went to school here or had careers here, the wealth exists,” Kearney said. “The problem is that the people who are in the investment industry don’t reside here. They are the missing connectors. Universities could help plug this gap, because they have the credibility, but there has to be a greater commitment.”
Growing the ecosystem
Domi’s Blacklidge, though, remains optimistic. Having worked closely with startups in other parts of the state, he said Tallahassee was ahead of the curve in many ways.
“We have an organized effort through several different partners to prepare entrepreneurs and connect them to mentorship,” he said.
He added that the pandemic, for all the chaos and tragedy it has produced, had also helped to dissolve some of the barriers to fundraising that had long hobbled startups in smaller markets.
As investors are forced to digitize their processes, they are also democratizing them. Hopping on a Zoom call is a lot more accessible than hopping a plane, and Blacklidge said he hoped the shifting landscape would favor good ideas, no matter where they originated.
“With the pandemic, the geographic barriers to raising money that existed before have dissolved,” he said.
Likewise, Blacklidge said the last year had brought an explosion of innovation.
“We went from seven or eight participants in our program to 44 in the last six months,” he said. Some of these founders turned to entrepreneurship after losing their day jobs. For others, a year of instability and change had simply rendered the risks of entrepreneurship less imposing.
Regardless, Blacklidge said he was optimistic about the future of Tallahassee’s startup community.
“I think we are at a catalytic moment,” he said. ●
MAKING THEIR PITCHES Participants in a Junior Achievement Shark Bowl competition
gain valuable experience by preparing presentations and making pitches to judges. For future entrepreneurs and capital investors, Junior Achievement can be a formative influence as it was for Ron Miller, the executive director at Tallahassee’s Innovation Park.
If you were just to look at people who went to school here or had careers here, the wealth exists. The problem is that the people who are in the investment industry don’t reside here. They are the missing connectors. Universities could help plug this gap, because they have the credibility, but there has to be a greater commitment.” — Rick Kearney
