In the distant future, Broward County businessman Wanjan Gao envisions his smart farming system as a source of food in faraway places: space.
But first about everything. His new company, Bifarm, is seeking funding next year so it can sell its operating system to consumers 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 are very hospitable.”
There is a warning. In 2023experts in the field of startups warn,Investors putting money into new projects are likely to be more conservative than in recent years as inflation and high interest rates slow the economy.
Seven years ago, Gao started the business in his garage in Weston. His idea: to create a system for indoor agricultural producers to produce higher yields, especially in harsh climatic environments such as the Middle East and Northern Europe.
The company's operating system is based on aeroponics, where plants are grown in the air without soil. The software allows growers to collect data and monitor critical elements such as air and water quality, temperature, nutrients, plant stress and root stability.
"Right now we are moving from the research and development phase to the market phase," Gao said. "We are now raising funds to increase our sales activity."
In an attempt to raise Bifarm to a higher level, he transferred the company's operations to Alan B. Levan | The NSU Broward Innovation Center in Davie, where investors come to watch projects progress and entrepreneurs brainstorm a number of topics.
Which is2023the prospect of raising money for South Florida startups like Bifarm looking for a financial boost to get to the next stage?
The South Florida Sun Sentinel asked various advisers, financiers, managers and analysts about the possibilities.
Claudia Durán, CEO of Endeavor Miami
"Right now, startups are affected because the people who are investing ... are more conservative," he said. "They have money, but they are not distributing it like last year."
It will be difficult to start from scratch. "Most likely next year it will be difficult to start a company due to lack of funds," he said. "People who want to become entrepreneurs think carefully. You have to have a very good product and a very good network to go out there and raise the capital needed to start a company.”
However, there are more venture capital funds in the region with money to invest, which is a positive sign for entrepreneurs. "It's really positive for entrepreneurs right now to be here in South Florida," he said. "The location is already a tick in the box. It doesn't look so bad anymore. This reduces the pressure from employers. Now here they have someone to talk to personally, to present their companies."
Duran sees good growth in fintech and healthcare.
"The banking system is old and rigid," he said, opening the door to alternative, more efficient payment systems.
Health technology "is one of the biggest and we hope to get more of it." Companies coming to South Florida include some from Israel to help hospitals upgrade various systems.
Cryptocurrency, once a favorite growth sector in Miami that received strong support from the public and private sectors, is losing steam after the collapse of the Bahamas-based FTX exchange and others.
"We need to see which companies in that space are legitimate and offer good value," he said, "but there are a lot of them that are failing."
She said retail is a very saturated market. "It's a race to position your brand to reach consumers through their phone," he said. "You won't see a new brand in the mall because [entrepreneurs] don't have the money to pay for the store."
Mark Volchek, founding partner of Las Olas Venture Capital
Las Olas Venture Capital funds early stage companies developing business software.
There is capital, but those who have it may be more demanding next year. "I'm very optimistic about 2023," Volchek said. “There is a lot of capital out there. This is the key that entrepreneurs should know. I think good start-up companies with good products can find capital."
He said companies like his and others that help startups get off the ground are "working very hard" to find funding for mature companies. Much of the later-stage funding comes from outside the state.
insight into the industry
In general, the companies his firm helps are doing well, although "there are clearly concerns" about the broader economy. For example, it will be workesbuy new software?
"Obviously some companies do better than others," he said. "Overall, I think '22 was a good year and he expects a strong year in 2023 'even though the economy will struggle.'
"We continue to see growth across Florida, which is a great place to start a business," he said.
Despite the negative news surrounding cryptocurrencies, he sees a good future for the further development of the blockchain system of record in Florida, as there is experience for it.
He said there is a high demand for applications that enable faster and more secure financial transactions, which is why his company is interested in financial technology.
Brent Campbell, founder and CEO, NXS Crypto Fund
"In the future, people will have doubts," he said. “But yesterday I saw a check for $100 million raised for an encrypted blockchain company. You still see the best projects raising capital.”
Inflation, he said, is "coming down".
"The scary part is how inflation stops at [the Fed Reserve's] 2% and suddenly you have deflation."
"When the market senses that the Fed is done [raising interest rates] and growth is zero or negative, they will have to cut rates," he added. "We are paying an incredible amount of money in interest. I don't think we can afford to keep rates that high."
He believes that blockchain technology will continue to attract investment and will continue to attract "a healthy amount of investment capital" over the next five years.
As a crypto fund manager, you see the technology in use and the developers who continue to develop it.
Many people who own cryptocurrency delist it and own it personally. "You own your own books. You have your own keys.
Technology that allows investors to hold their cryptocurrency personally, he added, "is going to be a problem because of the loss of use of these exchanges."
Siri Terjesen, Associate Dean, Research and External Relations, Florida Atlantic University
It's a myth that startups need a lot of money, he said. "Most of the great businesses in America started with less than $5,000."
Another good thing about getting started is that property "can be had cheaper" in an economic downturn, which the Federal Reserve encourages in its attempt to reduce inflation.
Right now, people are looking for other places to park their capital because "the stock market hasn't been very good."
Plus, "every day more and more people are moving to Florida." many are interested in investing.
"Here in South Florida, people have a lot more extra equity," he added.
insight into the industry
"I think one of the most exciting areas in Florida is going to be health care and longevity," he said. "People who talk specifically about longevity are thinking about how much time they still have here on earth. There are so many possible advancements in that field.”
But she is less enthusiastic about hotels and restaurants because, she said, their failure rates are high and require labor and capital. "I see a lot of commercial space for rent signs in Boca."
Rhys Williams, President Emeritus/Co-Founder of New World Angels, Boca Raton
The financial veteran observes the views of investors from two directions.
Rapid changes in interest rates and fears of a possible recession have prompted warnings and even recommendations for a pullback. Everyone feels less wealthy and less inclined to take high risks.
"It's definitely real," Williams said.
In another sense, revolutions in technology make it “impossible not to write a check. You find a way. Find the money. Maybe you are a bit more demanding.
"We're still writing checks," he said.
There is also a social component. "You do it with other investors and you pay back."
The long-running Florida Venture Forum will hold a late-stage funding conference in Miami on February 7-8, one of three funding conferences that connect entrepreneurs and investors each year. It invites startup operators to attend even if they "can't take the stage this year" for the launch.
"I'm telling everyone they should attend these...because there's a lot of dealing in the aisles."
insight into the industry
Life sciences, biotechnology and medical devices have led to success for both entrepreneurs and investors in Florida.
"It's extraordinary that it's happening because it's really difficult," he said. "An angel investor must be prepared to lose 80% of his money."
John Wensveen, NSU's Chief Innovation Officer and Executive Director Alan B. Levan | NSU Broward Innovation Center
Wensveen said he sees more and more investors visiting the Levan Center to interview local entrepreneurs about their projects.
"I'm optimistic that the funds are there," he said. "I think we're getting more angel investors and [venture capital] investors."
The so-called launch showcase, which a year ago was attended by 10-12 people, now attracts 90-100 people.
"There's more money than opportunity," he said. "It's unbelievable. People can't get rid of their money fast enough because they can't find opportunities."
insight into the industry
Covid-19 has had the effect of accelerating startups, Wensveen said, because of the wide range of health, logistical and other problems it has created. So new companies were created to try to fix them.
Each of South Florida's three counties has adopted its own industry focus: Broward on healthcare and medicine, Palm Beach on insurance, real estate and fintech, and Miami-Dade on blockchain and the growing cryptocurrency industry.
In Broward, he sees increased interest in robotics and machine learning, a subset of artificial intelligence where machines mimic intelligent human behavior.
"Cybersecurity is a great new opportunity," he said. "Bad people are in many cases smarter than those who need security protection around them."
In general, more business people like Wanjun Gao become members of the Levan Center.
"We currently serve about 100 founders, whether they're solopreneurs or small teams," he said.