Venture Capital-Backed Tech Fund Promises Economic, Innovation Growth In Alachua County – Gainesville Sun

Step aside Silicon Valley, Boston and Chicago — Venture capitalist Dave Scalzo says Florida is the nation’s best-kept secret when it comes to technology growth and innovation. 

Scalzo’s venture capital firm, Kirenaga, which has invested in startup companies and innovators in the Sunshine State for the past six years, is ready to take on Alachua County businesses to provide the funding and resources they need to become commercial successes.  

Kirenaga is drumming up the interest of investors for a Gainesville Tech Fund that in its first round of funding is expected to have up to $10 million available to local startups. It’s part of a larger Florida fund totaling up to $100 million.  

“You have tons of ideas being percolated and generated in the Florida system,” Scalzo said. “Ideas that can change the world and generate a lot of wealth. if you’re smart, you’ll be investing in the ecosystem.” 

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So far, the Gainesville fund has raised more than $6.7 million from about 45 investors who are mostly other local startup founders and innovators. Kirenaga’s plan is to fully fund the Gainesville program by the end of June.

Scalzo said a lot of people were leery back in 2015 when he said Kirenaga would be setting up an office in Orlando and investing in Florida startups.  

“They said, ‘Well, Florida’s where tech companies go to die.’ That used to be the case because there was an enormous lack of funding,” Scalzo said. “That’s changing.” 

‘Technology venture goldmine’ Scalzo said several factors make Florida a great environment for startup companies to upscale and commercialize.  

One is the diverse and growing population — Florida is one of the few states to gain a Congressional seat as a result of the 2020 Census. The population is made up of younger families, retirees, immigrants and thousands of college students. And pre-pandemic, Florida had a $1 trillion economy, the 16th largest in the world.  

“That’s larger than some Asian countries,” Scalzo said.

Since opening a Florida office in 2014, Kirenaga has worked with 10 companies that provide about 30% annualized returns on investments.

Florida’s industries also align with the types of businesses Kirenaga has worked with before and focuses its efforts on, including space, engineering, health and the academic environment. 

Academia draws bright mindsThe University of Florida and Santa Fe College have popped up on Kirenaga’s radar in recent years, with standout computer science and biotechnology programs that have put them on the map. 

UF Innovate, the university’s business incubator, has for years graduated profitable new startups.  

Mark Long, the outgoing director of Incubation Services at UF Innovate who will retire later this month, said Kirenaga is one of the few firms that contacts UF Innovate on a regular basis.  

“It’s one of the few firms in the southeast that takes Gainesville seriously,” he said. “They see tremendous opportunities and I think [the tech fund] is going to be fantastic for the area.” 

Other tech infrastructure in Alachua includes Progress Corporate Park and San Felasco Tech City. A new, unnamed 420-acre research community is also under development. 

Rich Blaser, co-founder of Tech City and Gainesville’s Infinite Energy, said Alachua County has an unfortunate history of attracting the best minds to attend school before leaving the area to set up a permanent business base, because that’s traditionally where the money has gone.  

“How do we get people to stay in this community, where the research is going on?” he said. 

He and Mitch Glaeser, CEO at the Emory Companies and co-founder of Tech City, have hosted pitch competitions for startups to meet with potential investors. With a professional venture capital firm like Kirenaga involved, he said, the mission he’s set out to accomplish at Tech City can grow to an even larger scale.  

Glaeser said it’s the responsibility of a community to help homegrown talent flourish.  

“We know people have big hearts and the vision,” he said. “If somebody doesn’t do this, we’re going to continue down the same path.” 

Commercialization is key Scalzo said about six to eight local startups can expect to receive support from Kirenaga. Funds will be targeted toward businesses with significant potential for commercial growth and success.  

The commercialization component is key, he said, because that’s what will drive economic growth and increase quality of life for residents. 

“A large company comes and sells its product or service outside the city, but it brings the jobs and money back into the area,” Scalzo said.  

Opening a new business like a restaurant just doesn’t have the same impact, he said, because in all likelihood it’s going to displace another restaurant and not bring in an entirely new workforce. 

“When a company commercializes outside of the area, that’s what increases the standard of living,” Scalzo said.  

The new ‘Research Triangle’ Kirenaga’s Scalzo said rising costs to start a business and high costs of living in areas traditionally known for their tech growth — most notoriously Silicon Valley and the San Francisco Bay area, but also Chicago, Boston and Austin, gives Florida a leg up against competitors. 

Scalzo said he views Florida as the new Research Triangle — the area in North Carolina anchored by three major research universities: North Carolina State, the University of North Carolina at Chapel Hill and Duke University.  

Florida’s triangle area, Scalzo proposed, centers in the Orlando metro area, heading east toward the Space Coast and north into Alachua County.  

With more investment capital flowing into the Sunshine State, he said, even more investors will become attracted to the area and more businesses will benefit.

One of the companies Kirenaga has worked with in recent years is ecoSPEARS, based in Altamonte Springs.  The company, whose founders worked at NASA at the time, introduced the industry’s first green cleanup solution for polychlorinated biphenyls (PCBs) and dioxin contamination in sediment, soil and groundwater. 

Co-founder and CEO Serg Albino said Kirenaga provided ecoSPEARS with $3.3 million since 2017, after they came forward with plans to get an exclusive license for their product and hire on a team. 

“One of the big issues in the central Florida market is that it lacks gusto when it comes to large checks that are needed,” he said. “We have good ventures here but they don’t often make it past the two-year stage because they run out of money. They think $250,000 is a lot of money, and the founder spends 80% or 90% of the time raising money rather than running the business.” 

Kirenaga’s approach to keep a portion of the fund focused in the local community helps encourage talent to stay in the area and promotes further innovation, he said. 

“Being able to raise a fund and dial in a large portion to stay local is the best thing you can do for the local economy,” Albino said.

A minimum investment of $25,000 is required for the Gainesville Tech Fund.

Emily Mavrakis reports on business and Alachua County government. She can be reached by email at emavrakis@gvillesun.com and on Twitter @emmavrakis.