Venture capital fund ready to launch startups

By Joe Coombs, business writer
The Gainsville Sun

January 16, 2003

In his new role with a local venture capital fund, Dan Rua probably won't spend too much time sitting in the office and waiting for budding business owners to approach him for money.

"I'm not really big on spending all day behind my desk," said Rua, a managing partner with Inflexion Fund L.P. "I'll probably be spending a lot of time at the University of Florida and the local incubator facilities and seeing what's out there. Those places have been a great launching pad for local companies."

Inflexion has become the first "VC," or venture capital fund with a physical location in Gainesville. For the past year, Inflexion's principals have been recruiting financial partners to form a fund that will invest in some of Florida's startup companies in the communication, software and life science industries.

Inflexion also will maintain offices in Tampa and Orlando. Rua, who said UF's life sciences connections hold promise for local investments, will work out of the Technology Enterprise Center of Gainesville/Alachua County, an incubator facility.

Regulations of the U.S. Securities and Exchange Commission prohibit Inflexion from revealing the actual amount of its fund, or potential investors of the fund in the future. Rua did say that there are several individual investors who have contributed to the fund, as well as the University of Central Florida, Progress Energy's Florida division and Orlando-based Darden Restaurants Inc.

Inflexion will likely invest in between three and five companies per year for the next three years, Rua said. Those investments should range from $250,000 to $1 million each, and they'll be used toward "seed," or initial rounds of funding for each company.

Inflexion's affiliation with Massachusetts-based Village Ventures Inc. could be beneficial for companies who receive Inflexion's early investments, Rua said. If a company succeeds in its initial stages, it could be eligible for future funding from Village, which manages $100 billion in investments with its financial partners around the country.

VC funding is generally a financial investment in a young or early-stage company that comes with a stake of ownership in that business. With that investment comes an expected rate of return, or profit, for VC investors.

Some Gainesville-area firms have benefited from VC funding, but many say the local investing environment has suffered from a lack of fund managers physically located in this region. Most VC funds are based in the Northeast or California, in order to be close to their holdings.

"A lot of people around here should be excited about (Inflexion)," said Bill Rossi, a spokesman for UF's Center for Entrepreneurship and Innovation. "This means a lot for the business community. Many startups rely on money from friends and family, but that only goes so far. VC is the way to go."

Apart from funding, VC firms typically are well-connected with managers and executives who are adept at running young companies.

They'll often recruit those professionals to head operations at one of their investments, if needed.

"There's a real gap in this region for early-stage funding," Rua said. "It's critical to get that first investment, especially in today's market."

Rua previously was a partner with Draper Atlantic, an East Coast VC firm, and he also spent seven years working in research labs for IBM. With 15 years of VC experience, Jim Boyle will head the Orlando office of Inflexion, and Charles Resnick, who has held senior management positions with Tropicana and Procter & Gamble Co., will be in charge of the Tampa division.