Startup Capital: Where We Stand

To bring in the new year, we’re taking a look back at lessons learned and questions unanswered.

Over the past several years, the city has made strides in becoming a home for entrepreneurs. Here are just a few of Tallahassee’s recent accomplishments:

Still, for many there exists a tempered optimism. There is a collective understanding that Tallahassee has come a long way, but still has a ways to go. That’s why we’ve been hard at work trying to unravel the challenges faced by local entrepreneurs. Through more than a dozen interviews with local businesses, technology experts, professors, and community leaders, we’ve determined that there are still a few roadblocks.

Access to Capital

While access to investors is a common pain point for entrepreneurs everywhere, it’s especially difficult for cities like Tallahassee, where technology and entrepreneurship are not as widely accepted or supported. While not all startups need investors, others are desperately in need of the initial funding required to get off the ground.

“Unfortunately, it’s a somewhat rarefied circle of connections that you need in order to be able to access capital in Tallahassee.”
Ryan Aughtry, with the TalTech Alliance

Whether that’s to cover the costs of developing a new product, hire necessary staff members, or bring an existing product to market, young companies often need capital stimulus to survive and grow. There are plenty of “unicorns” out there, but not every startup needs a multi-billion dollar valuation to be successful. The combined efforts of a few angel investors can go a long way.

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Tallahassee has another, untapped avenue for funding entrepreneurs: the public sector. While there hasn’t been a huge amount of success harnessing the purchasing power of the state capital, our three institutions of higher education, or local government, some are looking to turn the tide. Mayor Andrew Gillum, specifically, has created the Tallahassee Innovation Partnership to attempt to create a bridge between the public sector’s purchasing power and the entrepreneurial community.

“In Tallahassee, the biggest challenge is building a more robust network of venture capital. We lag a little bit behind other markets.” – Keith Bowers

According to an investment report by PricewaterhouseCoopers, Washington, D.C., a very small metro area, had almost as much venture capital activity than the entire state of Florida. While we have made progress, there’s a lot of work to be done.

Talent Acquisition and Retention

What does it take to get someone — particularly someone young, talented, and with a particular set of skills — to come work for you? For starters, it takes a decent paycheck. Beyond that, it takes a city that is able to accommodate them comfortably and affordably, entertain them, and keep them from fleeing to somewhere that feels a little bit younger or cooler. The good news, on that front, is that we’re getting there. Tallahassee is becoming a place a where college graduate in their twenties might think about making a home.

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There are still a few things the city needs to focus on. Housing that is both affordable and close to growing areas of town does not really exist yet (and, if Tallahassee follows trends in other major cities, it will never exist). This is made all the more complicated by the expanding presence of student housing in College Town. While College Town has added trendiness and recreation close to downtown, it’s also driving up housing prices. The growth of that region will hopefully be managed so as to not squeeze out long-term residents.

Beyond economic factors that are out of the hands of entrepreneurs, Tallahassee is still lacking a “bridge” between students and local businesses; there is no one telling students that it’s possible to build a career here, that opportunity does exist, and that the city’s economy is growing. Most students at FSU, quite frankly, just don’t know about Tallahassee, and many never will, beyond that mile radius surrounding campus. Initiatives like the Tally Job Hop and FSU’s Jim Moran School of Entrepreneurship downtown will help to remedy this, but the city still has a lot of work to do here.

Communication Barriers

According to one interviewee, Steve Evans, different members of Tallahassee’s business community have a tendency to retreat into “silos,” or to isolate themselves and fail to communicate with or reach out to other groups. This is one area where, according to a few folks I’ve talked to, Tallahassee has made significant progress.

The so-called silos are a problem because there is real value in communication and networking. Even when two businesses are in completely different industries, they may experience similar roadblocks. When people start talking and sharing information, the solutions to these problems can become common knowledge. The resources in the community that not every business knows about can start to be used to their full potential. When people come together, everybody wins.

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Places like Domi Station, which encourage people from different groups and different industries to come together, are helping to bridge this divide. Organizations like the Tallahassee Innovation Partnership and the Angel Nexus also help people network and learn more about what the city has to offer. Showing more and more people the success stories of entrepreneurship in Tallahassee helps to build that vital momentum.

Diversity and Inclusion

Opinions vary on how to best build inclusion and diversity in an entrepreneurial ecosystem. But one thing is certain: inclusion needs to be deliberate. It’s not enough to talk about diversity and hope that it happens. Businesses and community leaders have a responsibility to actively pursue diversity in their hiring practices. In order to achieve inclusion, it needs to be built discreetly into a business’s growth model.

Tallahassee is a diverse community. Unfortunately, it also has the reputation of being a “good old boy’s club,” with old money and old connections seeming to hold much of the economic decision-making power. Through inclusive hiring practices, deliberate work towards diversity, and actively including underrepresented populations in the community, this can change.

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The Road Ahead

As you celebrate the holidays and ring in the new year, take some time to reflect on your own personal victories, and also reflect on whatever is holding you back. We know the problems – now let’s start working on the solutions.

“If you’re passionate about something, there’s no one else who can substitute for you.”
Mark Powell, RMS HWind

In 2017, we’ll be mixing up the format of our interviews. We’ll be publishing a single, in-depth interview once each month to give you a better look inside the minds of local influencers. We’re also excited to announce that Startup Capital will continue to be featured on the Nashville-based startup blog Startup Southerner. It’ll also be showing up in 850: The Business Magazine of North Florida and will appear as a monthly column in the Tallahassee Democrat. These syndications help us expand our reach and bring the story of Tallahassee entrepreneurship to thousands more readers.

Check back in 2017 for the next round of Startup Capital interviews, including our Q&A with Mayor Andrew Gillum, and for the release of our first podcast and video interviews. One final thanks to all of our readers and to all entrepreneurs who work so hard building the Startup Capital.

Signing off,

Nick Farrell,
Director of Communications, Cuttlesoft

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