The Miami Herald highlights the advent of entrepreneurship in Miami. “The willingness, desire and drive are here,” said Adriana Cisneros, CEO of the Cisneros Group and co-chair of Endeavor Miami. “VC and angel investors are entering the scene every day. It’s only a matter of time until we see some major inroads in this regard. Raising the awareness will be our best ally.” October, 2014

1. To nurture a tech ecosystem, bring on the money BY NANCY DAHLBERG
INVESTING IN THE FUTURE: Thesis Ventures is a new venture funder. Some of the companies it has invested in are represented here. From lower left: Nestor Villalobos, Tudor Ice; Umut Tekin, Park Jockey; from upper left: Cindy Diffenderfer, Smart Wine; Nathan Heber, Boat Yard; and Nicholas Bowers, Klink. Thesis also provides residency for its portfolio companies in its studio in Fort Lauderdale, shown here.CHARLES TRAINOR JR/MIAMI HERALD STAFF It took New York venture capitalist Brad Harrison only two days in South Florida to validate his belief Miami was the right place to open his fund’s first office outside of the Big Apple. Scout Ventures, which invests in early stage companies and has a track record of success, is already beginning to look at local companies. “All the elements are here,” said Harrison, citing Miami’s creative culture, its position as the gateway to Latin America, and a growing ecosystem of entrepreneurs. “There’s energy here, and we want to be a part of it.” That’s what the South Florida’s tech-entrepreneurship community wants to hear as efforts to try to establish the area as a technology hub develop. The past year has brought some major milestones — eMerge Americas’ first conference in May, the nonprofit Endeavor opening its Miami office one year ago, the John S. and James L. Knight Foundation surpassing 90 investments in the entrepreneurial community and university programs growing and expanding are just a few of them. Arguably,

2. the biggest missing element has been a strong funding network for entrepreneurs, particularly startups. That may be starting to change. Scout’s announcement last weekmarks the most recent of a string of developments in the early-stage investment arena. New funds and investment networks are launching, angel organizations are regrouping and becoming more active, and serial entrepreneurs here are jumping into the investing arena. Some local startups are already beginning to reap the benefits. “I can name at least five new early-stage investment funds that have launched within the last six months and are actively making local investments. A stronger investor network is already happening — the money is here and growing,” said Melissa Krinzman, managing partner of Krillion Ventures, one of the new funding organizations. Through a $50 million fund, Krillion invests at the seed and venture stages across multiple sectors. Since it launched in January, Krillion already has made six investments, including two with local roots, Everypostand Cohealo.

3. Two of the most active new groups so far have been Thesis Ventures and the relaunched Accelerated Growth Partners. Thesis Ventures, located in a 15,000-square-foot loft-style studio in the New River area of Fort Lauderdale, opened just a few months ago and has already invested in local startups Tudor Ice, BoatYard, Smart Wine, ParkJockey and Klink. The venture fund, named after the goddess of creation, makes investments ranging from $250,000 to $750,000 in consumer-facing companies in areas like travel and leisure, entertainment and technology, because that’s where its five partners have deep expertise. The hands-on Thesis also offers its portfolio companies free workspace in its studio, allowing easy access to conference rooms, mentorship and collaboration as well as shared services such as design, PR, legal and accounting. Managing Director Richard Lent, who founded AgencyNet and other companies, said finding quality startups to invest in has not been a problem. “We're really bullish on the quality of our deal flow. We've received an incredible amount of inbound pitches from thoughtful, inspiring entrepreneurs with very interesting businesses. We've led funding rounds on six investments over the last quarter, five of which are local and currently in-residence at our studio. They're an amazing set of folks, with experienced teams and solid market traction,” said Lent, who considered starting the fund in Austin, Texas, or Silicon Valley before putting down roots here. Accelerated Growth Partners, a Miami-based angel investment group, relaunched in June to create a more organized network of early-stage investors in South Florida. AGP screens and then invites selected entrepreneurs seeking funding to pitch their businesses, and members can decide individually whether to fund them. Several Miami startups have received substantial seed funding from AGP investors over the years, including LiveNinja, Kairos and Mela Artisans. Since its reorganization and relaunch, which was funded by the Knight Foundation, membership has grown to 48 and members have made five commitments totaling

4. $800,000, said Nico Berardi, the group’s new managing director. Everypost, Webee and Videoo received investments, and the other two investments are nearing close. Beyond writing checks, AGP is focusing on expanding its network of active angel investors and adding investor-education workshops aimed at broadening the pool of investors interested in early-stage ventures. It has already organized three panels to engage family offices and an educational series with Kellogg School of Management. “For Miami, this is a new asset class and one that entails a great deal of know-how. Without it, most investors are not going to allocate capital towards early-stage companies.” said Berardi, who acts as a connector between entrepreneurs and prospective investors. He has already been building relationships with groups such as Endeavor Miami, Tamiami Fund, New World Angels, Krillion Ventures and the Enterprise Development Corporation, he said. Interest is building. When the Gold Coast Venture Capital Association held a monthly event in Boca Raton in August called “Meet the Angels,” organizers expected a couple hundred, not the 500 that attended. Eighteen Florida angel groups participated in panel discussions and networked with entrepreneurs that evening. A month earlier, a Refresh Miami event with a panel on fund-raising attracted a similar number of people, mostly entrepreneurs and technologists. “I am also seeing an increasing interest from non-Florida early stage VCs regularly coming to our region, requesting to see our best startups,” said Rob Strandberg, president of the Enterprise Development Corporation, a nonprofit that mentors startups in strategy and capital raising. Meanwhile, Keiretsu Forum, which says it is the largest worldwide angel network, opened a chapter in Miami on July 1, with the support of the Holland & Knight law firm. The chapter, now with about 20 founding members, has already invested about $500,000 in deals brought forth in the forum’s Mid-Atlantic region, but in no locally based companies yet. However, John Inman, a commercial real estate executive and investor who is leading the Miami chapter, said the group is

5. starting to look at South Florida opportunities now and is “very impressed with the deal flow.” Keiretsu Forum was founded in 2000 in the San Francisco Bay Area, and now has 34 chapters and more than 1,100 accredited investor members. Keiretsu Forum members around the globe typically provide capital in the $250,000 to $2 million range in early-stage companies. Members collaborate in the due-diligence, but make their own investment decisions. South Florida’s members come from a variety of industries, including tech, Inman said. To be sure, there is much more work to do on the funding front in South Florida, investors, entrepreneurs and service providers interviewed for this article said. And the numbers don’t paint a good picture. Miami-Dade, Broward and Palm Beach counties, the eighth-largest metropolitan area in the U.S., reaped just one third of 1 percent of the U.S. venture capital pie in the first half of this year. Florida, the fourth-largest state, ranked 14th for venture capital in the same time period. Overwhelmingly, entrepreneurs and some service providers said the fund-raising environment is fragmented and tough to navigate. Some said there is a shortage of “serious local investors” for early-stage ventures and told of investors who don’t know how to value startups and misrepresent themselves as experienced investors. Others said that many funding groups here take a very long time to make decisions, leaving the startups hanging. Nearly all the entrepreneurs said raising funding in South Florida is more difficult than it needs to be — even some who have received funding. Take Fernando Cuscuela of Everypost. Everypost recently raised an $850,000 seed round led by Krillion and including angel investor Mark Kingdon, who recently moved here from New York, Carlos García, the CEO of Miami-based Nobox, and Alexandre Hohagen of Facebook. Still, Cuscuela said raising capital locally was the most challenging aspect of growing his social media publishing business in South Florida. “It took a while to be

6. finally recognized and get the attention that our team and project deserve,” he said. “But we got it and that is a good sign, too.” Rodolfo Saccoman, CEO of AdMobilize who is based at Rokk3r Labs in Miami Beach, raised $2.2 million this spring for his Series A round from a combination of local and foreign angels, a Rokk3r fund and a couple of smaller Florida VC firms. “For Series B, we are going to California to raise the funds,” said Saccoman. “The real challenge — and the elephant in the room — is that the best entrepreneurs are constantly tempted to move their tech startups to more fertile ecosystems,” said Garcia of Nobox, who mentors and invests in South Florida tech companies. “We need real incentives for the best entrepreneurs, the smartest money and the supporting brain-trust to stay or come here.” Garcia suggests a state or local government program that matches 20 percent of the funds that accredited investors and institutional VCs invest in startups that stay headquartered in South Florida would create that real incentive and accelerate the success of a tech hub. More success stories will help, too, everyone seems to agree. And there have been a few of those in the past year: the $1.65 billion sale of Mako Surgical in Davie and the $100 million-plus exits for Miami-based .CO Internet and New Wave Surgical of Pompano Beach, to name a few. Those founders and other serial entrepreneurs are investing in the next generation. And there have been a number of companies that have raised tens of millions in venture funding in the past year, including MagicLeap, CareCloud, Modernizing Medicine and MDLIVE. “Exciting, diverse, better than I expected,” is how Kingdon, an early investor in Twitter, describes the quality of startup companies he’s seen since moving here in April. “Longer term, we need a fund or two that can lead significant Series A rounds. When that's happened, we'll know we've arrived.” Early-stage funding can also come from accelerators — Venture Hive provides $25,000 grants and free office space to its companies. South Florida needs more

7. accelerators writing checks, several entrepreneurs and investors interviewed for this article said. At least one is on the horizon. Joe Morgan, a serial entrepreneur who headed several education-tech ventures including Noodle Education and Colloquy as well as retail businesses, is in the early stages of developing MaverixLab, a Miami- based business accelerator, education center and gathering place for entrepreneurs. MaverixLab will also have an early-stage investment fund. While Morgan and his team are looking for spaces, in discussions with education providers and raising money for their fund, they have already started self-funding South Florida tech companies, including ClassWallet.com of Miami and Good World Games of Fort Lauderdale. Several others are going through due diligence, he said. “We strongly believe the first investments we make should be Miami companies,” said Morgan, who grew up in South Florida, spent most of his career in New York but was watching Miami’s evolution from afar, and moved back two years ago. “I hate using cliches but Miami is at an inflection point. … We think we can assist bootstrapping a city into a new industry, and we think that Miami is primed to become a gateway city in technology,” While investors like Morgan are entering the South Florida market, established angel groups are stepping up their game. The New World Angels recently closed its fifth transaction in 2014 and has provided nearly $3 million of equity funding to Florida companies since the start of the year. Three more investments are in negotiations. “There has been a greater degree of communication, collaboration and co- investment between and among structured angel groups, individual angel investors and institutional investors,” said Rhys Williams, who co-founded NWA in 2003. “Nonprofits and universities have also stepped up in a major way to provide funding, staffing, infrastructure, entrepreneur coaching, and/or connectivity, all of which empowers angel groups to better focus on conducting due diligence on deal opportunities and do their check-writing thing.”

8. One of those nonprofits is the Florida Institute for Commercialization of Public Research, which works with Florida universities and research institutions to create new companies and jobs. “The Institute for Commercialization of Public Research and its investment fund, the Florida Technology Seed Capital Fund, have established an equity investment matching fund program for early-stage university spin-outs, and is working to connect the angel investment community in meaningful ways,” said Jonathan Cole, an attorney with Edwards Wildman and a founding member of New World Angels. In the past 18 months, the institute has funded RxMP, Biscayne Pharmaceuticals, Vigilant Biosciences and Integene International, all based on technology coming out of the University of Miami, said Jane Teague, the institute’s COO. The institute typically makes investments up to $300,000 in equity or debt, and there’s always a pipeline. “We work really early on to get these companies investor ready,” she said. According to the institute, Florida universities produce more $2 billion a year in research, with a large percentage generated in South Florida. The institute works with technology licensing offices at universities and institutions to create viable companies primed for investment. It offers both company building and company funding programs for promising startups. The Institute also launched a “Doing Well While Doing Good” seminar series to educate participants on the power of angel investing, with support from the Knight Foundation. “The willingness, desire and drive are here,” said Adriana Cisneros, CEO of the Cisneros Group and co-chair of Endeavor Miami. “VC and angel investors are entering the scene every day. It’s only a matter of time until we see some major inroads in this regard. Raising the awareness will be our best ally.”
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