Florida may be the Sunshine State, but it has been a perpetually cloudy day for its entrepreneurs. Sunrock Ventures hopes to change that with a $100 million fund focused on tech and life sciences companies based in the Southeast.
The Tampa, Fla.-based venture firm, was co-founded by Managing Partners Tate Garrett (formerly with Advantage Capital Partners), Matthew Shaw (Crossbow Ventures) and Jeffrey Wolf (Seed-One Ventures). It plans to focus on early stage companies, but it will also consider expansion and seed stage deals.
Citing numbers by the National Venture Capital Association, Sunrock says that Southeastern startups raised less than 5% of the total venture capital investments nationwide in 2006, and that just 2.3% of the total U.S. venture dollars are managed by firms in the region.
“There are a large number of companies in the Southeast that have raised dollars from angel investors and used these funds to prove that their product works and that customers will pay for it,” Garrett says. “However, these companies may still have trouble finding a venture capital firm to lead their first institutional round.”
The plus side, the partners say, is that there are plenty of opportunities in the region and there’s a relative lack of competition for good deals.
The partners are targeting institutional LPs and are open to raising funds from high net-worth individuals and family offices. Wolf says that the firm has received a positive reception from LPs, so far, as investors are receptive to hearing from a Southeast-focused fund. Wolf says that about 20% of the fund is “spoken for,” but the firm is not releasing any details.
They plan on a first close in late January, and expect to hold the final close next summer or early fall.
Though the region is bereft of venture activity, there is apparently no lack of entrepreneurs in need of funds. Garrett says that since Sunrock announced its launch in early October, the partners have received many new business plans. And he anticipates the volume will increase. The firm expects to make its first investment before its final close.
The firm will invest in between 18 and 24 companies over the next four years. Each company could see an investment range of about $4 million to $7 million, with the possibility of Sunrock going as high as $10 million for a portfolio company.
Garrett says that the firm will target information technology, health care and business services, which is how the three co-founders will divvy up their time. Garrett has a computer science degree and started his career with Accenture, so he’ll be the go-to guy for information technology.
There are a large number of companies in the Southeast that have raised dollars from angel investors and used these funds to prove that their product works and that customers will pay for it.
Shaw has previously invested in business services, and Wolf has worked for 15 years with biomedical and life sciences companies.
Locations: Tampa, Fla., and Miami
Fund target: $100M (20% committed to date)
Team: Managing Directors Tate Garrett, Matthew Shaw and Jeffrey Wolf.
Early stage information technology, health care and business services companies based in the Southeast.
Investment size: The partners plan to invest in 18 to 24 private companies, with total investments ranging from $4M to $7M. Each partner will invest in six to eight deals over four years.
Did you know? Citing statistics from the U.S. Bureau of Economic Analysis and the U.S. Census Bureau, Sunrock says the Southeast is one of the fastest growing economic regions in the nation. It includes six of the top 10 cities for entrepreneurs, four of the 10 fastest growing states, and represents 16.5% of total U.S. expenditures in research and development.
Source: VCJ reporting