How South Florida’s startup scene keeps growing and hits the national spotlight
By Kevin Gale
There was more than tourism going on this winter season in South Florida. The Sup-X Startup Expo, a general meeting of Athenian Venture Partners and the Tomorrow Tour produced by Comcast NBCUniversal and Technical.ly were attracting national participants and putting the spotlight on the region’s startup community, angel investors and venture capitalists.
The expo in Fort Lauderdale had dozens of exhibiting startups and advice for both investors and entrepreneurs. Speaker Mark Volchek, founding partner of Las Olas Venture Capital, joined the South Florida venture capital community after co-founding Higher One (NYSE: ONE). He gave the following advice for entrepreneurs:
• It’s tough to go solo. Try to find a co-founder, which gives you someone to bounce ideas off of and makes a stronger team to raise money.
• Lay out clear goals, such as how much money you need and why.
• People who say no initially can eventually be investors.
• Make your company more attractive to investors by seeing if you can convince someone of stature, like a corporate VP, to join your team.
• Make sure your pitch presentation is perfect – no typos.
• Have absolute integrity.
Troy Knauss, an experienced angel investor from North Carolina, gave the following advice and insight for investors:
Don’t put all your investments into one company. His grandfather gave him $100,000, which he put into a wood composite decking company that went out of business. Putting $50,000 in a plastic toy company, which he passed on at the same time, would have generated $5 million.
Diversify by joining an angel fund or network. He now has 45 companies in his personal portfolio.
Keep some of your investing powder dry – for every dollar he writes in the first funding round for a company, he keeps $2 back for future rounds.
Don’t shoot low on returns – every company he invests in needs to have at least a 10 times potential return.
Athenian Venture Partners
Athenian Venture Partners started out at Ohio University, but it has opened an outpost in Fort Lauderdale. Its annual general meeting came as founder and managing partner Karl Elderkin was looking to raise a new $75 million fund.
Panel discussion moderator Jane Teague was executive director of the Enterprise Development Corp., which helps emerging companies, for 10 years before becoming COO of the Florida Institute for Commercialization of Public Research in 2012. The institute leverages a $2 billion statewide research infrastructure to build spinout companies, including mentoring and seed capital of up to $500,000 per company, Teague says. It has funded 48 companies and more than $70 million in capital has been raised.
Panelist David Day, assistant vice president for Technology Transfer and the director of the University of Florida’s Office of Technology Licensing, says the university gets over 300 inventions a year out of the faculty and has two incubators. For investors, there’s low-hanging fruit to be found in the state. “The really smart people get here early,” he says.
Robert Strandberg, CEO of the Enterprise Development Corporation, which has offices in Boca Raton, Coral Springs and Miami, says one advantage for South Florida is that it has great universities, such as Florida International University’s School of Engineering and Computing. “The whole U.S. is coming down to grab these engineers,” he says.
The region also has a retired base of experienced executives who want to give back. There’s a lot more funding than people realize here, Strandberg says, noting Magic Leap has raised $1.38 billion and Open English has raised over $100 million.
Nabyl Charania, CEO and co-founder of Rokk3r Labs in Miami Beach, says his organization has looked at over 6,500 ideas and co-built 32 companies in the last four years. Eighteen have had a second round of funding.
Florida has an advantage as a gateway for Europe and Latin America. Moreover, “You would be surprised how many engineers and smart people want to come from Harvard and the West Coast when we say we have a condo on South Beach,” Charania says. One of the allures for programmers to come to Rokk3r is: “You don’t work on a small piece of code for Facebook, you get to work on a real startup and get equity.” One Rokk3r co-build, HYP3R, won the future stadium competition held by the NFL, the Stanford Graduate School of Business and TechCrunch.
Kim Gramm, associate vice president for Florida Atlantic University’s Tech Runway, says companies in FAU’s program have raised more than $8 million in funding and have hired an average of five to six employees, 73 total. Interns get academic credit to work with startups and mentors have provided 16,000 hours of help – about 1,000 per company.
Gramm says a student, Logan Rae, gave her fiance bacon dipped in chocolate and rolled into rosebuds. People started raving about them. The concept turned into BaconBoxes.com and gained attention from USA Today for its gift-wrapped treats.
The Tomorrow Tour by Comcast NBCUniversal and
tech news site Technical.ly chose Miami as one of only six stops nationally. “We knew Miami would be one of those critical cities,” says Derek Cooper, vice president of government affairs and community investment at Comcast, Florida region.
Keynote speaker Kelly Hoey of CNBC says every area that’s emphasizing startups thinks it’s more mature than it is. Miamians may think they have hit the teenage part of the cycle, but they haven’t yet. She says entrepreneurs need to do as much work on studying investors as they do on their business. They should know what type of companies they like to invest in and how much is left in their fund. “The percentage of companies that obtain any funding is minuscule – like 1 percent,” she warns. “The reality for most people is you are going to have to bootstrap your company. You are going to have to use your savings.”
Panelist Jason Ibarra was the lead organizer of the Miami chapter of Startup Grind, which is designed to connect and educate entrepreneurs. He recently launched RecoveryPassport.com, which combines clinical tools along with interactive social and gaming technologies to help members manage recovery from addiction.
Panelist Felecia Hatcher, co-founder of Miami’s Code Fever, which helps underserved minority youth learn to code and create technology enterprises, also helped put on the Black Tech Week conference. There are a lot of investors looking for diverse opportunities, including entrepreneurs of color, she says. Black Tech Week was an easy sell to get people to visit and the region is starting to be perceived nationally as a tech hub.
Panelist Pandwe A. Gibson, founder of EcoTech Visions in North Miami, which promotes green-oriented manufacturing, says South Florida is “ground zero for climate change,” which makes it a key place for green innovation. There’s also tremendous opportunity in human capital, she says. “You have people who are really hungry and tenacious to learn new things.” One of the roles of EcoTech Visions is to provide training so blue-collar workers can transition into green-collar workers, Gibson says.
One example of the companies at EcoTech Visions is EarthWare, which develops utensils that are 95 percent made out of potatoes and 5 percent soy.
Panelist Juan Pablo Cappello, co-founder of Lab Miami, a co-working and collaborative workplace in Wynwood, and Private Advising Group, a Miami law firm, says 40 percent of his firm’s clients are technology companies or funds or businesses that operate in the venture capital and private equity/hedge fund arena. Miami is already a big tech hub because many Latin American companies came here during the tech boom, he says.
Cappello addressed two critiques about South Florida: The region has talent and funding gaps. “My view is a lot people don’t want to wake up in the morning to Minneapolis-St. Paul or Oklahoma City, which are trying to position themselves as tech hubs,” he says. They would rather be here.
Instead of worrying about the dearth of top 200 venture capital firms in the region, startups should engage with the 150 companies that have their Latin American headquarters here, he says. “We need to fill up the room with the people who are here – all the corporates –
rather than bitching about the people who aren’t here.”
Two Startups at Sup-X
BDEX (bdex.com), founded by David Finkelstein (left) and Michael Aronov, uses more than 70 data vendors and loads more than 20 billion data sets on U.S. consumers monthly. This allows businesses to target particular demographic groups or find their own customers online.
GasNinjas (gasninjas.com), founded by Barret Hammond and Brandon Timinsky, is an on-demand fuel delivery service likened to an “Uber for gas.” The app-based service focuses on dense clusters of users, such as condo buildings and business parks, and promises prices that are the same as at the pump.