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SW Florida needs to invest in economic innovation
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If “necessity is the mother of invention” as Plato said, then it is high time for Southwest Florida to invent a new economy!
For too long our region has satiated itself on real-estate development as if it were the only item on the menu in a restaurant serving economic development. This addiction has resulted in our region teeming with residential-housing inventory — with no appetite to scan further down the menu. This craving has created lethargic regional economic performance and taken the shine out of our Sunshine State.
In order for our region to get in shape, we must seek out a “balanced diet” and train our collective eye to discover other entrées, in particular, those under the heading of economic and business development.
What then, should our region do to get into shape? As Plato told us, invent something.
Listening to the ancient sage, who is considered to have built the philosophical foundations of Western culture, our region must invest in an innovation economy. Not as the new main course served on a silver platter for our economic woes, but as part of a portfolio approach in which our regional leaders include innovation on their economic menu.
Our tendency as Americans, with our focus on individual liberty, is to believe that entrepreneurs are solely responsible for innovation. To the contrary, the Edward Lowe Foundation study entitled “Building Entrepreneurial Communities” discovered that the mythical image of “entrepreneurs is depicted as rugged individuals who single-handedly built great companies; however, the reality is that consummate entrepreneurs are networkers, who thrive in communities.”
Think of the greatest entrepreneurial region in the world, Silicon Valley; it is not just the entrepreneurs with the ideas, but the ability to recruit a management team, find capital, hire service providers and go public — all in one day and usually before finishing your latté at Starbucks.
Consequently, what is the recipe for an innovation economy? A talented entrepreneur can succeed in almost any region, but taking lessons from Silicon Valley, they are more likely to prosper in a region with the following characteristics:
1. early stage capital
2. university or specialized research
3. regional brand or culture
4. professional networks
5. entrepreneurial support infrastructure
6. “entrepreneur-friendly” government.
Ultimately, we, the people, must prevail upon our leaders to cultivate innovation. Everyone’s home values may depend on it, irrespective of homestead portability.
In response, the economic development partners of Southwest Florida, including Charlotte, Collier, Glades, Hendry, Lee and Sarasota counties, in cooperation with the Gulf Coast Venture Forum, a nonprofit Angel Investment Network, and the Regional Business Alliance, and the region’s higher-education institutions are supporting the establishment of a Southwest Florida Regional Angel Fund. The goal is to activate some of our regional wealth and direct it towards innovation within our region and our state.
While venture capital is crucial to entrepreneurial success, it is not immediately available to startup companies, those that are most innovative. Most venture capitalists fund companies that have survived their earliest stages and are rapidly expanding firms, or “gazelles,” as named by MIT economist David Birch. Typically, venture capital is not readily available in the smaller amounts that might be appropriate for a very young company. Therefore, venture capitalists leave a funding gap as to time — during the earliest stages of a startup’s life — and as to capital — for amounts under $2 million.
Angel investors, defined by the U.S. Securities Exchange Commission as accredited investors, fill these funding gaps.
Our region, with an embarrassment of riches for this type of investor, must figure out how to activate and engage this latent natural resource into our regional economy. Early stage capital is the lifeblood of entrepreneurs and innovation. The GCVF and the supporting regional organization are taking the first step: establishing a Regional Angel Fund. The state of Florida has taken the second step: establishing the $30 million Florida Opportunity Fund (Florida HB 83). The region’s litmus test will be the response from our region’s accredited investors.
As previous described by the Edward Lowe Foundation, it is not just one entrepreneur or one angel investor acting independently but the entire Southwest Florida region acting collectively to invest in an innovation economy. As you consider the arguments above, remember Charles Darwin’s observation: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.”
n For more information on the Southwest Florida Regional Angel Fund, please contact me at (239) 262-6300 or Susi Winchell at (239) 263-8989, ext. 109.
Timothy J. Cartwright is president of the Gulf Coast Venture Forum, a nonprofit organization of angel investors in Southwest Florida. He is managing director of Compass Advisory Group LLC, a firm he founded in 2003. It is an investment bank that completes mergers, acquisitions and corporate restructurings for middle-market companies. Prior, he co-founded By-Products Interactive, an electronic-trading, market-research and publishing company; and Benchmark Solutions, a supply chain consulting company.
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