South Florida startups may fare well despite recession outlook

In the distant future, Broward County entrepreneur Wanjan Gao envisions his smart growing system as a food source in faraway places: outer space.

But first of all. His start-up company, Bifarm, is seeking funding next year so it can sell its operating system to customers who want to grow their own food here on Earth.

“We are in talks with venture capitalists,” Gao said last week. We are looking for a major investor. “In New York, they’re very welcoming.”

There’s a caveat In 2023, startup experts warn, investors committing money to new projects are likely to be more conservative than in recent years as inflation and high interest rates slow the economy. become

Seven years ago, Gao started his company in his garage at the Westin. His idea: to create a system for domestic farmers to produce higher yields, especially in harsh climate environments such as the Middle East and Northern Europe.

The company’s operating system is based on aeroponics, where plants are grown in air without soil. This software allows growers to collect data and monitor important things like air and water quality, temperature, nutrients, plant stress and root stability.

“Currently, we are moving from the R&D stage to the market stage,” Gao said. “Now we are raising funds to increase our sales activity.”

In an effort to take Befarm to the next level, he turned the company’s operations over to Alan B. Levan The NSU Broward Innovation Center in Davie, where investors come to check the progress of projects and entrepreneurs exchange ideas on various topics.

Bifarm founders Wanjun Gao, left, and Hanna Gru, with their product, Aero XPS, an automated aeroponic growing system, next to John VanSween, president of the Levan Innovation Center at Nova Southeastern University, at the center in Davie on Thursday.

What is 2023 The prospect of raising money for South Florida startups like Bifarm looking for a boost to get to the next stage?

The South Florida Sun Sentinel asked several consultants, investors, executives and analysts about the possibilities.

Funds:

“Right now, startups are affected because the people who are investing … are more conservative,” he said. “They have money, but they don’t use it like last year.”

Starting from scratch will be difficult. “Most likely it will be difficult to start a company next year because there is a lack of funds,” he said. “People who want to become entrepreneurs think twice. You have to have a very good product and a very good network to be able to raise the necessary capital to start a company.”

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However, there are more venture capital funds in the region with money to invest, which is a positive sign for entrepreneurs. “The presence of entrepreneurs in South Florida right now is actually positive,” he said. “Location is now a tick on the box. It is no longer seen as bad. This takes the pressure off entrepreneurs. Now they have someone here to talk to them in person, to launch their companies.”

Industry Outlook:

It sees good growth in financial technology and healthcare.

“The banking system is old and rigid,” he said. And it opens the door to more efficient alternative payment systems.

Healthcare technology is “a big technology that we hope to benefit from.” Companies coming to South Florida include some from Israel, which help hospitals upgrade various systems.

Cryptocurrency, once a beloved growth sector in Miami that drew strong public and private sector support, is losing ground following the collapse of Bahamas-based exchange FTX and others.

“We have to look at what companies are legitimate in that space and provide a good value proposition, but there are a lot of them that are going away,” he said.

He said retail is a very saturated market. “It’s a race to position your brand to reach the customer on their phone,” he said. “You’re not going to see a new brand in the mall because [the entrepreneurs] “I don’t have money to pay for the store.”

Funds:

Las Olas Venture Capital funds early stage companies that develop software for businesses.

The capital is there, but those who have it may be more stingy next year. “I’m very optimistic about 2023,” Volchek said. “There’s a lot of capital. That’s the key thing for entrepreneurs to know. I think good companies with early traction and good products can get capital.

He said companies like his and others that help start-ups at the beginning “work really hard” to find funding for growing companies. Most of the funding for the next phase comes from out of state.

Industry Outlook

In general, the companies his firm helps do well, although there is “obvious concern” about the overall economy. For example, businesses Should I buy new software?

“Obviously some companies do better than others,” he said. Overall I think it was a good year at 22 and he is looking for a strong year in 2023.

“We continue to see growth throughout Florida, which is a great place to start a business,” he said.

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Despite the negative news surrounding digital currencies, he sees a bright future for further development of blockchain ledger systems in Florida because the expertise is here to do so.

He said there is a high demand for apps that offer faster and more secure financial transactions, and that his company is interested in financial technology.

The FTX logo can be seen on the court where the Miami Heat basketball team plays in Miami.  Although the collapse of a Bahamas-based cryptocurrency exchange has stunned the industry, money managers say investors are moving away from exchanges. "self custody" of their possessions (AP Photo/Marta Lavandier, File)

Funds:

“People will be hesitant in the future,” he said. “But I saw a $100 million check yesterday that was collected for an encrypted blockchain company. “You still see the capital increase of the best projects.”

He said: Inflation is decreasing.

The scary part is how to stop the inflation [Federal Reserve’s targeted] A score of 2% and you suddenly experience a decrease in inflation.

When the market smells that the Fed is done [raising interest rates] “And the growth is zero or negative, they will have to cut rates.” We pay an ungodly amount for interest charges. I believe we cannot continue to keep rates this high.”

Industry Outlook:

He believes that blockchain technology will continue to attract investment and will continue to attract a “healthy amount of investment” over the next five years.

As a crypto fund manager, he sees the technology being used and developers continuing to build it.

Many people who own digital currencies withdraw them from exchanges and take them personally. “You own your offices. You own your keys.”

Technology that allows investors to personally hold their crypto, he added, “is going to be a major issue as these exchanges die out.”

Funds:

He said it’s a myth that startups need a lot of money. “Most great businesses in America are started with less than $5,000.”

Another favorable aspect of the startup is that assets can be accumulated more “cheaply” in an economic downturn, which the Fed encourages in its efforts to reduce inflation.

Now, people are looking for other places to park their capital because “the stock market hasn’t exactly been great.”

Additionally, “more and more people are moving to Florida every day.” Many are interested in investing.

“Here in South Florida there’s more excess capital that people have,” he added.

Industry Outlook

“I think one of the most exciting areas in Florida is going to be health care and longevity,” he said. “People who talk about longevity in particular think about how much more time they have here on Earth. There’s a lot of progress in that.”

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But he is less excited about hotels and restaurants because, he says, their failure rates are high and they are labor and capital intensive. “I see a lot of lease signs for commercial space in Boca.”

Funds:

The veteran capitalist looks at the attitude of investors from two sides.

Rapidly changing interest rates and fears of a potential recession have raised caution flags and even advice for a pullback. Everyone feels less wealthy and less willing to take big risks.

“It’s definitely real,” Williams said.

On the other hand, technological revolutions make it “impossible not to write a check. You find a way. You find the money. “Maybe you’re a little more discriminating.”

“We’re still writing checks,” he said.

There is also a social component. “You do it with other investors and it pays off.”

On February 7-8, the Florida Long-Term Investment Association will hold a “Latest Stage” Funding Conference in Miami, one of three funding conferences that connect entrepreneurs and investors each year. He urges startup operators to show up even if “you can’t get on stage this year” to make a match.

“I tell everyone to attend this event…because there are so many deals in the aisles.”

Industry Outlook

Life sciences, biotechnology and medical devices have led to success for entrepreneurs and angle investors in Florida.

“What’s happening is exceptional because it’s really hard,” he said. “An angel investor should be prepared to lose 80% of his money.”

Funds:

Vanswein said he sees more investors visiting the Luan Center to interview resident entrepreneurs about their projects.

“I’m optimistic that the funding is there,” he said. “I think there are more angel investors and [venture capital] “Investors are coming to us.”

The so-called ground showcases, which were attended by 10 or 12 people a year ago, now attract 90 to 100 people.

“There’s more money than opportunity there,” he said. “It’s amazing. People can’t get rid of their money so quickly because they can’t find opportunities.

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Industry Outlook

VanSween stated that Covid-19 had the effect of accelerating startups due to the range of health, logistical and other problems it created. So new companies were created to help solve them.

Each of South Florida’s three counties has its own industry focus: Broward on health and medical technology, Palm Beach on insurance, real estate and financial technology, and Miami-Dade on blockchain development and the cryptocurrency sector with an asterisk.

In Broward, he sees growing interest in robotics and machine learning, a subset of artificial intelligence in which machines mimic intelligent human behavior.

“Cybersecurity is a huge new opportunity,” he said. “Bad guys are often smarter than those who need security around them.”

Generally, more entrepreneurs like Wanjun Gao are becoming members of Levan Center.

“We currently serve about 100 founders, both solo entrepreneurs and small teams,” he said.

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