The impact of Gov. Rick Scott’s veto of a line-item in the state budget last month is already rippling through the South Florida tech community.
The Florida Institute for the Commercialization of Public Research was slated to receive $5.5 million to provide seed funding to startups. That was one of the $409 million in local items vetoed last month. The move came as a surprise: the program had been funded at the $5.5 million level since 2013, when the seed fund was incorporated into the Institute’s program.
The Florida Institute bridges early funding gaps for companies spinning out of Florida-based universities and research institutions by matching investments up to $300,000. South Florida startups Kairos, Candidate.Guru, Vigilant Bioscienes, Biscayne Pharmaceuticals, DealCoachPro, BlinkBio, EyeLife (now Biim Ultrasound) and Ovation Diagnostics are among the 71 companies that have been funded, most in the last few years. The result has been more than 4,000 jobs paying an average salary of $76,000, according to the Institute. The idea is to build tech companies that stay in Florida and create high-paying jobs, said Jackson Streeter, CEO of the Institute.
The Institute was not the only tech casualty of the line-item vetoes. Startup FIU was slated to receive $1 million to help fund its new campus-wide entrepreneurship program that includes several accelerators, including one focused on technology being developed. Other university programs, including several incubators and maker spaces in Orlando, the Tampa Bay area and Gainesville, were also not funded.
Florida Atlantic University’s Tech Runway, also a campus-wide and community accelerator, was slated to receive $1.2 million to help fuel its young program and the funding was vetoed by the governor, however nearly all the funding was restored by the Legislature during the special session.
Currently, Florida startups consistently attract only a small sliver of venture capital. The funding cutoff comes at a time when other states are dangling startup funds and other incentives to spur economic development and attract top tech talent.
Even before the Institute’s defunding, “the amount of funding the state was already putting into this was extremely low compared to other states,” Streeter said. According to the Institute, nearly 40 states have seed and early-stage funds ranging from $20 million to $500 million.
Bob Williamson, co-founder and chairman of Aegle Therapeutics Corp.
“Florida talks a technology game but refuses to fund it,” said Bob Williamson, co-founder and chairman of Aegle Therapeutics Corp., a Miami-based biotech company developing regenerative medicine therapeutics. Aegle, which licensed University of Miami technology, was one of the companies in the pipeline to receive Institute funding. “FICPR has helped fund more than 70 startups and been an integral part of technology in the state,” added Williamson, who is also a member of the New World Angels funding network.
“What is ironic is that FICPR funds are an investment, not a grant,” Williamson said. “The company must raise matching money from outsider investors. The state receives a return and grows businesses.”
Jane Teague, COO of the Institute, confirmed that Aegle was in the last stages of the pipeline for funding, along with a half-dozen other companies. Behind those companies were about 20 startups the Institute has been working with to get them ready for funding.
“Companies don’t have a lot of places to go for capital when they are that young,” said Teague, who has been part of the Institute since its founding in 2007. “We’ve put to work $23 or $24 million but our companies have gone on to raise $150 million. They match [Institute funding] one-to-one but then they go on to raise way more. And of course they are working on things like curing cancer and diagnosing diseases early.”
In addition to leaving companies in its pipeline unfunded, the Institute has laid off staff, and Streeter said he took a pay cut. The idea is to keep the organization going with a skeleton staff and regroup for the next Legislative session.
“Hopefully we will soon be back in the business of Florida innovation and getting companies formed with Florida technology and keeping them in the state,” Streeter said.