A combination of factors and emerging trends are positioning the Southeast United States as a global leader in technology innovation and wealth creation. Established and cash-rich companies worldwide are hungry to acquire the latest technology from fast-moving startups. However, to develop innovative products and services, these startups need access to capital, which is in very short supply.
Economies in the Southeast US are poised for explosive growth over the next 5 to 10 years are ready to capitalize on this trend. This paradigm shift of technology innovation to the Southeast creates a compelling opportunity for investors who recognize the trend and understand the importance and value of early investments in innovative startups.
The Southeast US has most of the pieces in place to continue building companies with attractive growth potential: excellent educational institutions, skilled personnel, technical innovation, experienced entrepreneurs, and all the required service providers such as legal, banking, and accounting.
However, TechFarms Capital has found that one key factor is missing: there is simply not enough organized capital in the region to serve the growing number of new startups. Failure to provide adequate funding for deserving companies results in slower economic growth, fewer knowledge-based jobs, and lost opportunities for investors. To capture this opportunity and produce significant returns for its investors, TechFarms Capital is launching two early-stage investment funds that will target select innovative and scalable technology startups.
TechFarms Capital Fund I, LP “Fund I” will target technology startups located in Florida, Georgia, and Alabama and will consider investments in startups that are committed to relocating their headquarters and significant operations to any of these three states.
TechFarms Capital Fund II, LP “Fund II” will target technology startups companies located in Northwest Florida and will consider investments in startups that are committed to relocating their headquarters and significant operations to this region. Fund II has been specifically structured to comply with the economic development strategy outlined in Northwest Florida Forward’s Regional Strategy for Economic Transformation (see www.NorthwestFloridaForward.com). This comprehensive regional strategy seeks to diversify and transform Northwest Florida’s economy, which is mostly a two-dimensional economy heavily dependent on tourism and the military.
THE RISE OF THE SOUTHEAST
A wealth of affordable human capital and more favorable business conditions are the key reasons that companies are moving significant operations to the Southeast. In parallel, many startups are forming to support these larger entities, but that’s only the beginning.
The Southeast is home to startups that are working to commercialize university research and military intellectual property as well as new businesses working to exploit opportunities in fields such as software, mobile, cloud computing, information technology, and cybersecurity, among others. However, one key factor is missing: There is simply not enough organized capital in the region to serve the growing number of new startups. Failure to provide adequate funding for deserving companies results in slower economic growth, fewer knowledge-based jobs, and lost opportunities for investors. TechFarms Capital was formed to capture this opportunity and ultimately produce significant returns for its investors.
TechFarms Capital has selected an industry-proven structure for its funds, one that it believes best fits the strengths of its founders, the nature of its Investment Region, and one that is capable of producing the best returns for its investors.
As shown in the diagram below, the fund consists of the traditional limited partnership arrangement in which investors (Limited Partners) own a percentage of a Limited Partnership that is managed by a General Partner who is, in turn, managed and controlled by a management entity.
Both partnerships are open to accredited investors and institutional partners, including corporations and university endowments. These investors contribute capital to the fund; all other duties, including due diligence, screening, investment decisions, and ongoing management, are performed by the fund’s General Partner. Proceeds (and/or losses) flow to the Limited Partners in proportion to their individual investments.
The Partnership will seek capital appreciation by making equity and equity-related investments (including notes and equity securities). To help diversify risk, the Partnership will make limited investments in debt securities in companies operating and/or headquartered in each fund’s investment region.
TRIUMPH GULF COAST
In order to increase the size and regional economic impact of Fund II, TechFarms Capital has submitted a pre-application to Triumph Gulf Coast for matching funds. Triumph Gulf Coast, Inc. is overseeing the expenditure of funds recovered by the State of Florida for economic damages to Florida that resulted from the 2010 Deepwater Horizon oil spill. (see: www.MyFloridaTriumph.com). If TechFarms Capital’s final application is accepted, Fund II will be renamed the “Triumph Angel Fund” and the majority (~80%) of the fund’s investments will go to promising technology startups in the 8 disproportionately affected counties, with the remaining ~20% going to the other 5 counties comprising Northwest Florida.
TechFarms Capital is proud to be an original member of Northwest Florida Forward, an initiative founded by Florida’s Great Northwest to drive economic growth and vitality in the Florida Panhandle. The initiative operates utilizing a strategy made up of goals and actions carefully designed to ensure the region’s talent base, job creation, and investment opportunities, not only thrive, but grow.
The target region is comprised of thirteen counties: Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington, Bay, Jackson, Calhoun, Gulf, Liberty, Franklin, and Wakulla. The initiative is based on five aspirational goals that Florida’s Great Northwest has defined as the key focus areas in their effort to grow and strengthen the region’s economy: Talent, Business Vitality, Infrastructure, Entrepreneurship & Innovation, and Quality of Place. Active companies in this campaign include Gulf Power, University of West Florida, West Florida Regional Planning Council, and TechFarms Capital.