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Incubating a Startup Scene: Creating a Vibrant Atmosphere for Tech and Biotech Firms to Grow in Jacksonville

Jacksonville Business Journals - November 2, 2018 - by Will Robinson - read full article here  

Incubating a Startup Scene: Creating a vibrant atmosphere for tech and biotech firms to grow in Jacksonville

When Jim Stallings founded PS27 Ventures five years ago after retiring from IBM, his goal was simply to invest in and support local companies. Today, his incubator supports eight to 10 companies and employs full-time staff to help those companies vet their ideas, mature their product offerings, find new customers and more.

“Five years ago, I wasn’t thinking that it would be like this, but it’s really evolved,” said Stallings.

Though PS27’s days as the only incubator in town are numbered, it’s not worried about finding companies in the future. With a full pipeline of companies looking to enter its program – including several from outside of Northeast Florida – PS27 is quadrupling its footprint so it can support more startups at a time. 

Stallings isn’t the only one who wants to meet that demand.  PS27 will soon be joined by two new incubators in Jacksonville. The University of North Florida has dedicated an area in its new facility in the Barnett Bank building downtown for a center that will house 10 to 15 entrepreneurs by the fall of 2019, and Mayo Clinic Jacksonville is building space for eight to 10 companies to use by April 2019. 

The incubators plan to collaborate and engage other community stakeholders to create a patchwork of support structures the likes of which Jacksonville startups have never seen.  “We’re beginning to see cohesion in the ecosystem like we’ve never seen before,” said Stallings. 

Though they serve different niches – early-stage companies, students and health care companies – all three are working to address the problems that have plagued Jacksonville startups for years: access to capital, siloed talent and an insufficient supply of local research.

Making the ecosystem

PS27, UNF and Mayo together could upend Jacksonville startups’ nemesis: a lack of capital. Last year, Jacksonville ranked 40th out of American City Business Journal’s 44 markets in the amount of venture capital raised by local companies.

The lack of investing in Jacksonville caught the eye of Kevin Kennedy, principal of corporate development and strategic investments at GuideWell. Kennedy was formerly vice president of acquisitions at Ponte Vedra-based Levco Group and corporate strategy manager at Acosta before taking opportunities outside of Jacksonville.

“When I moved back, I noticed that Northeast Florida had not participated in the capital markets growth that other markets had enjoyed,” said Kennedy. “We don’t have a solid capital infrastructure here for entrepreneurs.”

Consequently, local startups either tend to take on debt or bootstrap their companies with miniscule operating budgets, Kennedy said. Until recently, this has been an issue that was largely ignored here, Kennedy believes.

“Jacksonville’s approach has been to throw seeds out on the ground and see what grows,” he said. “But for something to grow, the soil has to be right, the temperature has to be right. Some of the conditions have been ignored.”

These incubators could provide more sustainable funding models. PS27 has been successful in vetting and grooming startups so angel investors feel confident in providing funds; UNF could follow the same path. Mayo has ample funds to invest where it sees potential, and many investors would be happy Startups could also “graduate” from UNF’s incubator into PS27 or Harbor View Advisors, a Ponte Vedra-based investment banking and consulting firm that haStartups could also “graduate” from UNF’s incubator into PS27 or Harbor View Advisors, a Ponte Vedra-based investment banking and consulting firm that has housed local software companies and assisted them in acquisitions. s housed local software companies and assisted them in acquisitions.  play second fiddle as investors in startups that Mayo spins off. 

Jacksonville is also often criticized for a lack of research universities. Investment hubs like Silicon Valley and Boston are anchored by research giants like Stanford University and Massachusetts Institute of Technology. 

This factored into the consideration Espero Biopharma, Jacksonville’s fastest-growing private company, gave to moving to California or Massachusetts, although it ultimately committed to keep its headquarters here. Similarly, biotech company NeuroInitiative launched a spinoff company in Cambridge, Massachusetts, though NeuroInitiative remains in Jacksonville Beach, while TapImmune, another biotech company, moved to Houston to be near the Baylor College of Medicine.

To see how barren Jacksonville’s research contributions are compared to major research universities, Kennedy said, look no further than the commercialization opportunities posted on their website. 

“Last I checked, there were three opportunities on [UNF’s site],” said Kennedy. “Compare that to the commercialization department at [the University of Florida] where there are three pages of opportunities. That speaks to the level of R&D being done here … . We don’t have it.”

Corporations could help fill that void by financing internal research and development, Kennedy noted, much like Mayo’s approach.

“We need to create an environment where everybody has their own R&D environment in Jacksonville,” said Kennedy. “We don’t have MIT or Harvard. We have to be creative.”

Aaron Rosenthal, a serial entrepreneur and founder of perennial fastest-growing companies and Thought Projects LLC, is intrigued by the new incubators.

“I’ve done this a few times now, but with my first business, I didn’t know what I was doing,” said Rosenthal, noting he could have been helped along by an incubator.

Rosenthal believes incubators could go a long way by providing mentorship and opportunities for collaboration, especially getting entrepreneurs in the same room with programmers and managers.

“That kind of introduction is important,” he said. “The idea person is not necessarily the right programmer.”

Rosenthal hopes UNF and Mayo will engage the Jacksonville ecosystem as a whole, not just the downtown area, but ultimately, he believes the two new incubators will help Jacksonville entrepreneurs no matter the specific approach.

Mayo Clinic: Commercializing research

Vic Nole, director of Mayo Clinic Jacksonville’s bio-incubator, knows Mayo’s incubator mission well. In his four years as the director of business development at a Mayo incubator in Buffalo, Nole grew the facility’s stable of companies from 40 to 150.

“The focus is twofold,” said Nole. “First, helping commercialize intellectual property created at Mayo and helping researchers and physicians bring their products to market. Second, scouring the planet for biomed startups that are complementary to Mayo and could benefit from co-locating.”

Nole believes eight to 10 companies will start in Jacksonville’s bio-incubator, and it has a more specific focus than the 150-company incubator in Buffalo, meaning it won’t grow to that size. But the incubator fits into a full Mayo development pipeline that takes a company from idea to market.

The pipeline begins with an “idea lab” to vet Mayo’s home-grown ideas and teach scientists how to commercialize products and operate a business. Companies who advance from this stage could launch in the bio-incubator. Then, if the company aligns with Mayo’s mission, it can go into a Mayo accelerator to help it scale, attract investors, hire management and find customers.

Mayo has no shortage of commercializable ideas, according to Dr. Charles Bruce, director for business development in the Center for Regenerative Medicine and associate medical director for Mayo Clinic Ventures. The company spends $1 billion on research every year and generates two ideas for commercial products a day on average, Bruce noted. Over the last 15 years, 42 percent of these resulted in a commercial return.

Mayo Clinic Jacksonville is also working with Florida State University and Georgia Tech to bring in engineering and medical students to work with Mayo inventors and scientists, and Bruce hopes to add more academic partnerships to Mayo’s arsenal. Mayo is further looking to collaborate with GuideWell, which operates an “innovation center” in Lake Nona, and with incubators in Miami.

“We’re trying to reach down the spine of Florida and up into Georgia,” said Bruce.

Mayo is not ignoring Jacksonville’s talent, Nole noted. It is working with PS27 and others to find local talent, and it is working with JaxUSA to help with messaging to attract talent.

UNF: From student to startup

UNF’s entrepreneurial center will blend education with the incubator, according to Mark Dawkins, dean of the Coggin College of Business. The center will give startups space, faculty-monitored interns, access to educational resources and feedback from local entrepreneurs and executives.

“The key for me is students learning about entrepreneurship,” said Dawkins.

The center is open to UNF students and to entrepreneurs from the community, Dawkins said. Students can either get the opportunity to test their own idea in the incubator or learn what it is like to work for a startup by becoming an intern. Non-UNF students who move into the incubator but have little experience will also be encouraged to take classes, Dawkins said.

UNF’s incubator will have a strict “up or out” policy, meaning entrepreneurs will have at most two years to use UNF’s space. The incubator’s cohorts will be chosen by a panel of local entrepreneurs through a Shark Tank-like pitch evaluation. 

Long-term, Dawkins hopes the community will embrace the center and invest in some of its startups.

“We do want to raise capital from the community,” Dawkins said. “We want the whole community to be involved.”

Startups could also “graduate” from UNF’s incubator into PS27 or Harbor View Advisors, a Ponte Vedra-based investment banking and consulting firm that has housed local software companies and assisted them in acquisitions.  

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