A local venture capital firm is making moves to grow its portfolio, despite metro Orlando seeing a 71% year-over-year drop in investments being made.
Winter Park-based Govo Venture Partners is an investment group that specializes in early-stage companies where doing business with governments or navigating government regulations is an important factor for growth. Making two initial portfolio investments in the first quarter and second quarter, Govo leans in where others might shy away — the heavily-regulated industries that are complicated to navigate.
There’s a reason for that, as Orlando Inno learned from Govo’s Managing Partner Rob Panepinto. He said the fund seeks to leverage its partners’ and advisors’ ties to Florida’s innovation hubs that are largely fueled by government.
For Panepinto, it comes naturally to tap into the knowledge and relationships he has earned through a long career in investing and business leadership. A scan of his resume shows the interconnectedness of his experiences working in strategic roles supporting entrepreneurs and startups.
One of the hats he wears now is at the UCF Business Incubation Program, where he is director of innovation districts strategy and partnerships and senior strategic advisor. This puts him in proximity to innovative people, activities and thoughts in Florida and well beyond, which ultimately means exposure to the crème de la crème of potential portfolio companies.
Here, Panepinto sat down with Orlando Inno and shared what Govo is looking for in prospective investments.
Govo has a clear view of what it wants to do. Can you define that for us?
We invest in companies at an early stage that are either heavily regulated by government or selling directly to government. And they’ve got to be generating some revenue. This is a big growth area right now as government tries to modernize a lot of those software and technology applications. There's a lot of money that came out of a lot of the Covid stimulus bills.
With the VC market down, do you see any advantages to the route you’ve taken?
Early-stage companies are hanging onto their value. The reason for that is because fewer deals are getting funded; the best companies are getting funded. But late stage companies, for example, can't exit. There’s no public market for that. … We are looking at the best early-stage companies.
Revenue-wise, where does a company need to be?
Not a second stage coming out of $5 million to $7 million. Probably in that $250,000 to $2 million range.
Are you seeing opportunities here in Orlando?
Most of what we're seeing in Orlando still is a little bit too early. But I'm going to be shocked if we don't make some local investments. If everything goes through with our third investment, that will be two out of three in the state. We're not just looking in the state of Florida, but clearly, based on the industries that are here and our connectivity to the market, there’s a lot of potential.
Govo’s Q2 investment
On June 21, Govo announced it would lead the seed round for its second portfolio company investment, Urban SDK Inc. The Jacksonville business built a management platform for government agencies to use data to improve policy, budgeting and operational decisions. Today, the company serves clients across 17 states in public works, transportation organizations, civil engineering and law enforcement, by providing an advanced data analytics solution that converts data to actionable insights. Govo invested $500,000 in this round.
CEO Drew Messer began the company about five years ago with COO Justin Dennis. The idea at the time was to provide some momentum and energy to the Smart North Florida Data Exchange, with access to that data open to become the backing statistics to current and future public-private projects.
“We’ll do a total of $3 million in this round, and so to date we’ll have taken in a total of $8.5 (million) over the past three years,” Messer said. “The funds will be dedicated mostly to revenue-generating activities, enhancing our sales engine, a bulk of that being hiring more people on the sales side and then doubling down on our marketing.”
The current thrust is to help cities diagnose their traffic issues.
“An example of that is, citizens typically call public works directors or city council members whenever there’s speeding or crashes or too many cars on local roads,” Messer said. “They ask the city to do an investigation into the speed issues or the volume on those roads. That typically is an expensive and a long process the cities have to endure to investigate every one of those citizen complaints. Our tool is a quick diagnostic for cities to really understand, is there actually speeding on this road, what’s the volume of cars on this road, and do we have historical issues with accidents or incidents on the road, before they have to spend time and money to investigate those.”
Jacksonville Business Journal reporter Wes Wolfe contributed to this story.
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