Lack of Early-Stage Venture Capital Hurts Small Business and Limits Economic Growth
Florida is competing nationally for early-stage venture capital to spur growth. Venture capital is considered an important source of equity for startup companies. In order to improve and diversify our business climate and create high wage jobs, we must do a better job of attracting emerging companies and technologies with venture capital. Sunshine and beaches aren’t enough anymore. During the past decade a majority of states have adopted programs to increase venture capital, leaving Florida at a distinct disadvantage. According to Florida’s premiere economic development organization, Enterprise Florida: • Venture capital investment in the state has fallen sharply since the late 1990s; • Since 2000, early-stage and start-up/seed funding in Florida has dropped by 89 percent; • While Florida is the fourth most populous state, we ranked 13th in terms of venture capital investment in 2004 ($263 million in Florida compared to $9.3 billion in California); and, • Florida accounted for only 1.4 percent of the total U.S. early-stage venture capital funding in 2004 and 1.7 percent in 2005. Venture capital will allow Florida to finance new companies that have high growth potential – stimulating economic growth and attracting a highly educated, stable workforce. Additionally, venture capitalists will help develop emerging products and services, which would help Florida emerge as a leader in technology. If we invest in early-stage venture capital, Florida will be more competitive with other states in attracting innovative small businesses that offer explosive job growth and breakthrough research. Florida must do a better job providing residents with high wage jobs, especially with 1,000 new people moving here each day. Investing in early-stage venture capital will also help address the gap our state currently has between the strong demand for this capital and its availability in Florida. Venture capital firms in Florida receive more viable early-stage deals than they have the resources to fund because of this gap. The private sector provides venture capital funds to many established companies, but does not do enough to fund emerging companies that need start-up money. This lack of funding limits economic growth and until funding increases, many viable business deals conceived in Florida may never get started or may move to other states where early-stage venture capital is available.
Frank Ryll, Jr. President
While Florida is the fourth most populous state, we ranked 13th in terms of venture capital investment in 2004.
Since 2000, early-stage and start-up/seed funding in Florida has dropped by 89 percent.
Because this lack of funding is detrimental to Florida’s growth, attracting emerging businesses with early-stage venture capital is a priority issue in Florida’s 2007 Business Agenda – the consensus agenda for Florida’s business community. One of the Florida Chamber’s goals during the upcoming legislative session will be to pass legislation to attract and invest early-stage venture capital in emerging companies to create and expand new Florida businesses and technologies. Your action and support is needed to ensure that Florida takes these innovative, emerging companies to the next level so they will bring high wage jobs to Florida. With legislative committee meetings scheduled for January, we need you to get involved now. Please contact our Governmental Affairs department at fbrainard@flchamber.com or 850.521.1242 to find out what you can do to help us fight for this issue and other pro-jobs legislation. The Florida Chamber looks forward to working with you during the upcoming session to ensure that Florida’s business climate remains stable and strong. For more information about this and other issues in Florida’s 2007 Business Agenda, visit www.floridachamber.com.
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