VC, Ed Cespedes
I have yet to see a deal come out of Florida that I would consider funding,'' says Edward Cespedes, 34, vice chairman and managing director of California-based Prime Ventures (www.primeventures.com). "That's why I packed my bags and moved from Florida to California.''
Prime Ventures is best known as the venture capital fund that bailed out drkoop.com. Ed now has the somewhat dubious honor of being the president of drkoop.com.
Interestingly, drkoop wouldn't appear to fit the classic mold of what a VC would want to invest in today. Even Ed commented that when his team first looked at it, "We thought it was a dot-com disaster.''
According to Ed, what made drkoop attractive was that "it had a brand any corporate executive would pay a billion dollars to build.'' He's confident that they can turn it into a profitable dot-com. I wouldn't bet against him.
In Ed Cespedes we have a personable Florida native who loves it here (I can attest that he looked quite content during our lunch on Las Olas), visits often, made a whole bunch of money here, but feels that this isn't the place for a tech-focused VC fund.
As a Florida lawyer who tries to find funding for the many business plans that hit my desk, I had a selfish motive in trying to learn how the West Coast money people view Florida. The answer is poorly.
He was blunt. "The quality of the business plans I've seen from Florida lack sophistication and detail.''
Ed points out, "You don't have a Stanford, Harvard, Berkeley or MIT in Florida. Industry grows up around major university centers like Stanford. It's all about human resources and they're lacking in Florida.''
"Industry also grows up around previous huge successes. Therefore, you have mega growth in places like Seattle, based on Microsoft's success, and Austin, Texas, based on Dell's success. In Austin, they have a word for them-Dellonaires.''
Having said all this, he still wants to do Florida deals. Like anybody else, he'd like to do deals in a place he likes to visit. He wants to work with Floridians to create a Florida success, and he's committed to seriously reading and considering any deal that comes from people he knows in Florida. He's sincere.
The problem is that I've never seen a deal that I'd send to him, and I've read more Florida based deals than I could ever count. That's sad. The fact is that if I sent him the plans that hit my desk, he'd stop reading what I send him. It's better not to send anything until the right one does hit my desk. I have seen some that are close to ready for prime time.
Earlier, I alluded to the classic mold of what a VC wants. Drkoop broke the mold because of an extremely valuable brand. The classic criteria for a fundable deal starts with the management team.
As Ed put it, "We're investing in the people. We have to believe in them and their abilities.''
In a tighter market like the one we have now, a fundable management team can't be led by a bunch of second line players. The management teams I see are usually led by people who've never had a previous major success in business.
While a VP of Marketing can be filled by a person who headed up marketing for a major company and the CFO (Chief Financial Officer) can be just a bean counter, there needs to be a core leadership team of two or three people who have been there and done this before. If you're thinking that Florida may have a chicken or egg problem because we lack major success stories to build a management team around -- you're right. However, that's our problem and not the problem of those with the money to invest. They can find plenty of deals that fit their criteria -- just not here.
Still, I don't think Florida deals are that far from ready for the big time. We may not have the density of successful tech entrepreneurs that they have on the West Coast, but we do have some. Getting Florida to the next level as a tech center requires that our best and brightest find each other and make their play together.
We have thinner human resources here than places like Silicon Valley, New York City and Austin, but thinner is a long way from a vacuum. We have to make better use of what we have.
It would be great if we could get Florida's 100 most successful entrepreneurs together in one place for a weekend retreat. The results of that type of networking would be unimaginable. If you think you belong on this list (you know who you are) and would be interested in attending a low profile event, drop me an e-mail. Just a few responses would be a beginning that will lead to an interesting and successful event.
Ed has even agreed to join you, and he's promised to bring a few of his West Coast VC buddies.