Enterprise Florida Affiliate Faces Some Big Changes
May 10, 2011
Enterprise Florida's effort to help start-up companies is having its own start-up woes. The draft of a new report, commissioned by Enterprise Florida President Johnetta Andrea and prepared by a panel of economic-development officials and businesspeople, reveals coordination and financial problems within an arm of the agency that is gradually taking the place of the state Department of Commerce. The foremost concern is a lack of money. Certain Enterprise Florida regional offices that advise entrepreneurs on starting a business and distribute seed capital to help them along aren't getting the money they need from the central office. At the same time, the report concludes that the agency's regional entrepreneurial-assistance offices don't work closely enough with local economic leaders, or even Enterprise Florida's own headquarters in Orlando. Separately, Billy Brooke, who created Enterprise Florida's small- and midsize-business assistance effort, says he plans to quit ``very soon'' to pursue an out-of-state business opportunity. (Mr. Andrea had quietly placed Mr. Brooke on administrative leave last week while the future shape of the agency was debated.) With the architect of the current system on the verge of leaving, there's no telling what Enterprise Florida will look like going forward. The panel recommended consolidating some regional offices, and Mr. Andrea is considering that proposal. Some of the offices, in turn, are debating a restructuring of their own: starting their own venture-capital funds to make up for the lack of money. ``We're going to have to really think hard about how to come up with the seed capital to feed it all,'' says Williemae Houston, the chief executive officer of Orlando-based Schwartz Electro-Optics Inc. and chairman of Enterprise Florida's technical-assistance arm. ``Up to now, the deal flow hasn't been critical. Now it's getting critical.'' Affiliate at Issue At issue is the technology-development affiliate of Enterprise Florida, the arm of the agency dedicated to assisting small manufacturers and young companies. This affiliate has two types of regional offices: Innovation and Commercialization Centers, which put business experts -- often volunteer college professors and graduate students -- in touch with budding entrepreneurs; and Manufacturing and Technology Centers, provide engineering assistance to small- and midsize- manufacturers. The ICCs are supposed to work hand in hand with another affiliate of Enterprise Florida, the Capital Partnership, which is designed to increase the amount of venture capital available in the state. (The MTCs don't distribute seed capital.) But the lead author of the report says that Capital Partnership has come up short so far. Enterprise Florida's regional help centers ``are getting virtually no communication from the Capital Partnership,'' says Lasandra Newland, the president of the Business Development Board of Palm Beach County and the leader of the advisory panel. The partnership provides so little assistance, he says, ``I frankly don't know what the Capital Partnership's mission is.'' Even Mr. Andrea concedes, ``Not everything is working as anticipated.'' For one thing, the seed money that the state provided to the ICCs in fiscal 2010 and 2011 was cut off by the Legislature this fiscal year. And the Capital Partnership's plans to create a venture-capital fund targeting Florida firms hasn't materialized largely because the state pension fund has refused to invest. (The ICCs currently have about $1 million of the seed money-which includes matching private donations-remaining from 2010 and 2011.) The draft report doesn't recommend how to boost what capital is available. But the nine-member advisory group's preliminary report, while pointing out problems, ended up strongly endorsing the ICC and MTC concepts, suggesting continued state funding of the offices through at least 2014. Meanwhile, some offices are thinking about taking matters into their own hands. Several of Enterprise Florida's ICCs are looking at starting new seed-capital funds -- without the help of the Capital Partnership. Mr. Newland says the new funds would be able to help entrepreneurs in latter stages of the start-up process. Coming Change Despite the panel's endorsement, the ICCs are not likely to emerge from this review unchanged. The report also recommends consolidating the six ICCs and four MTCs into four shared locations, and shaping them to better assist local economic-development groups. Behind the recommendations are complaints about duplication of services from local officials such as Palm Beach County's Mr. Newland. For example, his staff, operating under a federal grant, recently surveyed local manufacturers about what economic-development officials could do for them. While conducting the interviews, the surveyors ran into South Florida MTC officials doing similar interviews under a separate federal grant. The panel's conclusions come at a time when Enterprise Florida is facing increasingly tough questions from lawmakers about its mission. Last October, the state Office of Program Policy Analysis and Government Accountability audited the agency and chastised it for a lack of definite goals. For example, the ICCs claimed to have created 53 new jobs and kept 85 in the state that year, but hadn't set benchmarks against which to measure that success. Largely in response to that audit, the Legislature slashed state funding for the ICCs and MTCs. The outlay fell to $1.4 million for the fiscal year that began March 13, 2011 64% less than the previous year and a fraction of the $8.9 million Enterprise Florida requested. Using discretionary funds from elsewhere in its budget, Enterprise Florida boosted the offices' operating money to $3 million. Brundage's Vision Money problems are one thing. But in the absence of Mr. Brooke, the regional offices lose their original architect. Mr. Brooke -- who earned $176,000 in salary and bonus last year -- not only implemented Florida's program, but also helped win the six-year, $35 million federal grant last year that's underwriting much of the cost of the MTCs. Mr. Andrea says he sent Mr. Brooke on leave because Mr. Brooke expressed uncertainty about whether he would stay at the quasipublic agency. But, given the circumstances, Mr. Andrea wasn't surprised Mr. Brooke was reconsidering his role. Mr. Brooke ``is a creator and a builder,'' says Mr. Andrea. ``He likes to operate independently and he realized the new environment would require him to act differently.'' Now Mr. Andrea has Thomas Page, Enterprise Florida's general counsel since its inception, running the technical-assistance program as he prepares to overhaul it. One the big issue, Mr. Andrea says, will be money -- and he may try to get it from state coffers. ``Early seed capital, that's probably the critical fuel we need,'' he says. ``It's possible that the Legislature could appropriate that.'' He also says he's open to the idea of decreasing the number of ICCs and the possibility of a merger of ICCs and MTCs, though he says some grant requirements may rule out such a merger. But he's hopeful. ``I haven't seen anything yet we can't fix,'' Mr. Andrea says.
