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Letter to the editor

Venture firm is bullish on Florida

By KRIS HUNDLEY, Times Staff Writer
Published January 15, 2008

The founders of Sunrock Ventures, a new venture firm with offices in Tampa and Miami, say investors have been receptive as they work on raising their first $100-million, early-stage fund.

Sunrock's pitch? Florida has attracted top-notch research institutions over the past few years. Now who's going to finance the spinoffs and, most important, make sure they don't leave the state?

Sunrock's managing directors, all Florida natives previously employed with venture funds, include Tate Garrett of Tampa, Matthew Shaw of West Palm Beach and Jeffrey Wolf of Miami. Garrett, previously with Advantage Capital Partners in Tampa, recently talked about Sunrock's plans.

What's Sunrock's niche?

Companies that are looking for their first institutional round of financing. They've been around for a year or two, raised all the money they can from family and angels and have a proven concept. I expect half the companies will be in Florida, the other half scattered around the Southeast.

The three of us have complementary backgrounds. Mine is in information technology and software. Matt's done some medical device deals and service companies. Jeff is an expert in early-stage life sciences. I expect we'll have a portfolio that will be heavier in health care companies than in life sciences in the beginning.

How many deals?

We'll invest in four to six companies a year, so over four years, we'll get up to 20 companies or so. We'll start with an initial $2-million to $3-million investment, then do follow-on rounds up to a total of $7-million to $8-million each. An investment of $3-million is too small for a lot of institutional funds. But if someone can come in with that, they can make a big difference.

Executives from SRI International in St. Petersburg, Scripps Florida in Jupiter and Torrey Pines Institute for Molecular Studies in Port St. Lucie have joined Sunrock's advisory board. What's their role?

The majority of our board will be major investors. But we started with those three people because they demonstrate our main investment thesis: There's world-class research in Florida today, but not enough capital to support companies that are spinning out of these institutions. When I had lunch with Richard Houghten, head of Torrey Pines, he pulled three business plans out of his briefcase. I had to slow him down. It's amazing to me that venture capital funds from California haven't set up satellite offices in Florida.

What difference does it make if the money comes from Florida or California?

When you've got a startup, the investor has to bond with the management team. You've got to be part of the interviewing process for the CFO, not just show up once a quarter. And I've seen it happen where an investor has told a Florida startup that he'll only invest if the company moves to Boston. That burns me up.

What's the status of your fundraising?

It's a good environment to raise money because you've got a number of wealthy individuals who realize real estate is not as safe as they thought. They're willing to talk about diversifying into things once perceived as too risky. Our investors are all folks who have a primary or secondary residence in Florida. Many of them raised money for their own companies down here and had a heck of a time, so after doing well and selling their companies, they want to continue to make money and make it easier for the next guy.

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified January 14, 2008, 22:56:38]