2nd Annual High-Tech Hot Spots

#5 Orlando, Florida

The mouse is roaring loud now because Orlando can claim to be every bit as big a deal as Texas on the tech scene. Last year, it placed #8; this year, it's climbed three spots, and the future trajectory will be straight up as the region's tech reputation spreads, says Mike Kovac, executive director of High Technology Engineering Development for the University of South Florida. He adds, "Five years ago, we set out to market Orlando/Tampa as a high-tech corridor, and we've been succeeding."

Who's there? The big player is Lucent/Cirent-the AT&T spin-off that's a leader in providing the infrastructure that powers the Internet-but there are hundreds of smaller companies. And Orlando wants to keep growing. "The government is very supportive," says John Krug, a vice president of the Metro Orlando Economic Development Commission. A giant Orlando plus: "Every year, millions of executives vacation here. They like what they see, and many think about living here full time," says Krug. That's a boost both to recruitment of employees and campaigns to get whole companies to relocate.

Why it's hot: "This is as close to a tropical paradise as you can get but still be in a metro area," says Krug. Add in affordable housing and business costs, and Orlando is sold.

So it's hard to find venture capital in this city-not a problem! Read The Truth About Venture Capital to work your way to start-up cash.

What's not hot: "There's still not enough local venture capital," admits Kovac. "It's increasing, but we need much more." Another drawback: Vacationing hordes can clog roadways in the summer.

Hot eats: The "in" place is the Citrus Club, says Jackie Kelvington, director of PR for the Metro Orlando Economic Development Commission. Another "in" eatery: Pebbles downtown.

Hot networking spots: Orlando offers plenty of meeting spots, including the Church Street Station Presidential Ballroom or any of the events put on by the Central Florida Business & Technology Incubator.

Follow The Money

Feast on this: In the first quarter of 2000, $17.22 billion in venture capital flooded into fledgling firms, a hefty increase over the $14.68 billion recorded in 1999's fourth quarter, according to PricewaterhouseCooper's Money Tree Survey. "This is a rising tide that is raising many boats," says Kirk Walden, PricewaterhouseCoopers' national director of venture capital research.

Bright news in recent surveys is that "more funding is occurring in more parts of the country," says Walden. Silicon Valley still comfortably leads this pack (the Valley got 36 percent of all venture funding in Q1 2000), but the fastest rate of growth in venture funding is elsewhere. "We're seeing much more venture funding in Atlanta and Chicago, for instance," says Walden, who adds that VC firms are looking pretty much everywhere in a hunt for prospects to fund. "The VCs are putting feet on the street around the country."

They are finding plenty of businesses to fund, too. In Q1 2000, 1,423 companies won venture funding by the Money Tree count, and that's up from 732 companies a year earlier.

But big as this VC money gusher is, it's still tough to win a share of this investment capital, even for tech start-ups. "Funding rates at VC firms range from one in 200 business plans that get reviewed to one in 1,000," says Walden.

Another dose of hard news: "Established VC firms increasingly are reluctant to make investments under $500,000," says Walden-and many firms are setting their minimums at $1 million. Why? Demands on partners' times are much the same, whether an investment is for $50,000 or $5 million, and with partners engaged in a hectic search for bright new prospects, the big firms seem to have decided to put more money into every deal that gets done. A lesson to learn: When seeking VC cash, be prepared to make a credible case for receiving substantial funding.

What if that door is closed? Do as start-up entrepreneurs have always done: "Angels remain a primary funding source," says Walden, who acknowledges his firm doesn't track the scope of investments by these friends and family members but concludes that angels are often the best bets for small, early-stage start-ups.

Find out more about this PricewaterhouseCoopers research by visiting www.pwcmoneytree.com.



 

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This article was originally published in the November 2000 print edition of Entrepreneur with the headline: 2nd Annual High-Tech Hot Spots.

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