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Q&A: What the pandemic downturn means for startups

Many types of companies are getting hit by the pandemic-caused economic downturn. Tom Wallace talks about what it means for startups and early stage companies from the perspective of being  managing partner at Florida Funders.  His company is a hybrid of a venture capital fund and online investing platform that invests in early-stage technology companies in Florida. The firm is led by an experienced team of serial entrepreneurs, venture capitalists and  angel investors with track records of successful exits and a shared passion for growing the next generation of Florida tech companies.

Tom Wallace is managing partner at Florida Funders

What this risk of recession means for funding for startups?

I fully expect that funding for early stage tech companies is going to be a more challenging environment for at least the next quarter or two and could last up to a year or longer. Angel/early stage tech investors are all seeing a significant hit to their equity portfolio and I believe this will bleed over and have an impact on the amount of funds that they allocate for early stage tech investments.  I don’t see funding for startups drying up completely—I think there will be less capital to go around and therefore it will be a more competitive landscape and that overall fewer deals will get funded.

What does volatility mean for those seed/early stage investors that startups rely on?  

Volatility is never a good thing for investors. Just like in the public equity markets when there is a significant amount of uncertainty, investors tend to get skittish and are not compelled to do anything, including making new investments until things get back to some level of normalcy. Having said this for investors who are willing to be bold, as we plan to be at Florida Funders, then valuations should be lower (i.e. better for investors) and there should be less competition for the best and most exciting early stage investment opportunities.

Will investors hold back on investment to be safe?  

I am sure that some investors will, but again we see this challenging environment as one that can be very beneficial to the investor who is “in it for the long run” and is willing to take risks on strong founders with good business models/solutions.

For more information on Florida Funders, please visit www.floridafunders.com. Keep up with the latest news from Florida Funders on Facebook, Twitter, and LinkedIn.

 

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.