August 17, 2016

Fintech company Nymbus closes $12 million financing round

By Nancy Dahlberg / ndahlberg@miamiherald.com 

On the heels of a summer acquisition spree, Nymbus, a Miami-based financial technology company, announced this week that the company has completed a $12 million financing round led by major shareholders of Vensure Enterprises.

Nymbus, founded in 2015 and now with about 150 employees, provides mission-critical core technology for financial institutions that not only drives day-to-day operations, but also serves as the institution’s backbone for new capabilities and growth. 

With the funding, Nymbus will accelerate product deployment and infrastructure teams to support the company’s SmartCore platform, as financial institutions of all sizes attempt to transform their technology for the new digital economy.

"Nymbus is here to help the 12,500 financial institutions encumbered by some of the oldest enterprise technology still in use, many developed as long as 30 to 40 years ago,” said Scott Killoh, Nymbus’ executive chairman. “This additional funding will help us rapidly convert the already high demand for our SmartCore platform." 

This summer, the company announced a trio of acquisitions: KMR, a provider of software services and products to credit unions; R.C. Olmstead, which serviced credit unions in the Midwest; and Sharp BancSsystems, a Texas-based financial software provider. With the Sharp acquisition, the company acquired $200 million of intellectual property, running software that has been tried and tested in publicly-traded financial institutions, Nymbus said.

At least two executives on the Nymbus team, Killoh and Harry Flood, were recently listed as directors in Miami Beach-based Vensure Enterprises.

 

August 12, 2016

Fort Lauderdale biotech company receives small-business research grant

By Marcia Heroux Pounds / Sun Sentinel

Fort Lauderdale-based Vigilant Biosciences announced Thursday it has received a Small Business Innovation Research grant for more than $200,000 from the National Institute of Dental and Craniofacial Research. The 15-month grant will finance research to develop a diagnostic test that utilizes optical imaging in combination with an oral rinse to detect a tumor-initiating biomarker for oral cancer, the company said. 

Vigilant Biosciences, founded in 2011 by Matthew Kim, has developed an oral rinse test for use by dentists for the early detection of oral cancer. Kim was inspired by his family history of oral and other cancers to start the company. In May, Vigilant Biosciences made its oral rinse test available to dentists in the United States. Earlier that month, Vigilant announced it had received European Commission approval to market its oral cancer test. The company has raised $12.5 million from investors to develop its product line.

Read more: Vigilant Biosciences raises $5 million to take oral cancer detection products to market

August 09, 2016

Hollywood-based Woundtech raises $40M in private equity

 Woundtech, a South Florida wound management technology company, announced Tuesday that it has closed a $40 million Series A investment by Aldrich Capital Partners.

Woundtech, based in Hollywood, provides comprehensive wound care, via a telehealth-based platform, to patients in over 35 major health plans and over 250 Managed Services Organizations, Independent Practice Associations  and large medical groups representing over 4 million insured patients in the U.S. and Puerto Rico, the company said in a news release.

"This investment highlights our view that wound management services is a rapidly growing $50 billion a year industry in the U.S. and expected to grow to over $200 billion in the next several years," said Mirza Baig, a partner at Aldrich, a private equity firm focused on the healthcare IT, fintech, business services and enterprise software sectors. "Like other telemedicine and analytical platforms from the last decade, Woundtech is bringing a new level of service and management to an industry still reliant on misaligned hospital-based programs and expensive and inappropriate therapies.”

Dr. Jeffrey Galitz, CEO and founder of Woundtech, said Aldrich's investment will allow Woundtech to expand its footprint within and outside the U.S., aas well as add related service lines. Employing physicians podiatrists, nurse practitioners and physician assistants, Woundtech brings the wound care center to the patient utilizing its wound care specialists on the ground along with a telemedicine platform and proprietary analytics and software.

"Woundtech has lowered direct costs to healthcare payers by an average of 70 percent, reduced wound related hospitalizations by 95 percent and reduced expensive unproven treatment modalities by over 95 percent," Galitz said.  "We do all of this while increasing access to care for patients by treating patients where ever they reside such as in the comfort of their own home.”

August 08, 2016

Transition at the top as AGP angel network enters 3rd year

By Nancy Dahlberg, ndahlberg@MiamiHerald.com

AGP, the homegrown Miami-based angel network, is headed into its third year with a surge in investment activity and new leadership at the top.

Raul Moas (c) (1) croppedNico Berardi, who has led the relaunch of AGP (Accelerated Growth Partners) since 2014, is headed to Harvard Business School this month. Taking his place at the helm will be Raul Moas (pictured here), who for the last four years was executive director of the nonprofit Roots of Hope, an international network focused on youth empowerment in Cuba.

To ensure a smooth transition, Berardi and Moas have been working together for about five weeks. Berardi will also be visiting frequently and continue his involvement in AGP as a member of its board.

Moas said he wants to continue to help make AGP "the go-to angel network in South Florida" for the most promising startups in his hometown. Before Roots of Hope, Moas worked at Ernst & Young as a CPA in its international tax practice.

Berardi, who also came from the nonprofit world as a leader in Techo, said about 50 candidates applied for the leadership job at AGP. Autonomy  and the ability and desire to learn were traits AGP looked for in a leader, Berardi said.

It has been two years since its 2014 relaunch [AGP existed as a much smaller and less active angel group for a few years], which was supported by the John S. and James L. Knight Foundation. Since then, the angel network has made 21 investments in 17 South Florida companies, totaling about $4.6 million.

Recent AGP investments have included media company Whereby.us, publisher of The New Tropic, Papatel, a fintech company focused on alternatives to remittances, and a follow-on investment for Nearpod, an education technology company.

NicoCurrently, AGP has about 80 active investors. "We got off to a very quick start. In the first two years we proved out AGP as an MVP [minimal viable product], and now with the transition we want to focus on building the 2.0," said Berardi (pictured here).

Going forward, Moas and Berardi said AGP will be focused on leveraging the AGP network to help the companies post-investment and on more community engagement, with resources like angel office hours.

"We’ve proved there is a critical mass of really good companies and a critical mass of value-add angels and that we can have a process that is efficient and entrepreneur-friendly. That is what sets us apart – we’re quick efficient and we give out good term sheets. ... The goal is to keep on onboarding investors that will write more checks and larger checks," said Berardi, noting the average check size right now is about $250,000. Angel education efforts, such as AGP's seminars it has been producing with Kellogg School of Management and other partners, are helping.  

While growing the base of angels and securing follow-on investments are challenges, Berardi said AGP is seeing more quality deals. He said the arrival of programs like startupbootcamp and 500 Startups' Growth Marketing program and new funds such as Las Olas Ventures are good signs of a maturing ecosystem. "But it's a long game. ... Slowly but surely we are getting there; the right things are happening," Berardi said.

Moas added, "I would love to see AGP continue to be a thought leader in the space. We want to be the go-to angel group in South Florida for the most promising startups in the area. We want to make sure we are accessible, that our members are reachable, and to be more engaged in the community. We’ve proven the concept, we know we are onto something and now it is about fine-tuning and growing."

South Florida startups can contact AGP at agpmiami.com.

Read more: Q&A with Nico Berardi

Follow Nancy Dahlberg on Twitter @ndahlberg

 

July 15, 2016

Uber, Snapchat drive national venture capital higher in Q2; Florida funding plunges

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By Nancy Dahlberg / ndahlberg@miamiherald.com

While mega-investments in Uber and Snapchat drove venture capital higher in the second quarter, it was back to reality for Florida.

According to a new report released Friday, 20 Florida companies attracted $100.6 million in 20 deals in the second quarter, plunging from $855.1 million in the first quarter dominated by Magic Leap’s $793.5 million round from Chinese e-commerce giant Alibaba Group and other investors. The second quarter total was also down 51 percent from a year ago, when 18 Florida companies took in $152 million of venture funding. The top deal in the second quarter was Reliaquest, an IT security company from Tampa, which received $30 million in funding, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association released on Friday.

South Florida companies receiving the most funding in the second quarter were electronic health records software provider CareCloud of Miami, $15 million; education-technology software startup Nearpod of Hallandale, $9.2 million; digital freight services provider iContainers of Miami, $6.7 million; and cloud-based software company Applicor Technologies of Boca Raton, $2.4 million. Other local companies receiving funding included ClassWallet, Videoo, Orthosensor and Kairos. In all, South Florida companies attracted $39.5 million in the second quarter, according to MoneyTree, based on Thomson Reuters data.

Nationally, Venture capitalists invested $15.3 billion in 961 deals in the second quarter, according to MoneyTree. Ride-hailing company Uber attracted $3.5 billion, and messaging company Snapchat received more than $1.7 billion, together attracting 31 percent of the total.

Total venture dollars deployed to startup companies for the quarter increased 20 percent and total deal count was down 5 percent, compared with the first quarter when $12.7 billion was invested in 1,011 deals. Compared with the second quarter of 2015, dollars and deals are down 12 and 22 percent, respectively, While mega-investments in Uber and Snapchat drove venture capital higher in the second quarter, It was back to reality for Florida.

Florida drew just two-thirds of 1 percent of the national venture capital total in the second quarter, the lowest total since 2012. The state typically draws less than 1 percent, but in the first quarter, because of Plantation-based Magic Leap’s mega-round, the state was on the venture map, drawing 7 percent of the national pie. In 2015, the state attracted $459.6 million.

Nancy Dahlberg: @ndahlberg

July 07, 2016

Big data startup Candidate.Guru raises $600K on way to $950K round

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Candidate.Guru CEO Chris Daniels with co-founder Steve Carter 

By Nancy Dahlberg / ndahlberg@miamiherald.com

Big data startup Candidate.Guru has raised $600,000 in funding led by The Fan Fund, an Orlando-based, early-stage fund that invests in technology and life science companies.

Candidate.Guru, winner of the Miami Herald Business Plan Challenge this year, uses data analytics to analyze whether job candidates are a good cultural fit with a potential boss or team, and it is led by CEO Chris Daniels. The company, now with nine full- or part-time employees, launched earlier this year, is generating revenue and previously raised $475,000 in angel funding.

In addition to the $600,000 in funding, Candidate.Guru is close to closing an additional $200,000, Daniels said, and the company hopes to close out its $950,000 round this month. The company plans to use the funding for primarily for sales and marketing, but also some product development related to integrations with larger HR systems.

Research has shown that 75 percent of voluntary job resignations are due to a poor fit between the employee and the manager resulting in significant productivity loss as well as replacement cost.  Candidate.Guru’s proprietary software uses objective big data methods to rank the entire candidate pool for cultural fit, and can be used either at the early stage of the recruiting process to streamline recruiters’ work process, or at the late stage of the process to minimize chances of costly hiring errors.

“Our decision to invest in Candidate.Guru was supported by the qualities of the management team: business and domain experience, commitment to the business, a working and innovative technological approach, and the drive to succeed,” said Mitchel Laskey, managing director of FAN Fund.

This investment is the sixth for the FAN Fund since launching operations on Nov. 1, 2015. In the initial eight months, the FAN Fund deployed $1.55 million in financing rounds that totaled approximately $7 million.

In addition to winning the Miami Herald Business Plan Challenge in May, Candidate.Guru won first place and $100,000 in funding in the Florida Venture Forum Early Stage Capital Conference's startup business competition.

Candidate.Guru was selected in 2015 for Florida Atlantic University's Tech Runway startup accelerator program in Boca Raton.

Read profile of Candidate.Guru here.

June 22, 2016

SPC Cyber Security launches with multi-year investment from South Florida company

By Nancy Dahlberg / ndahlberg@miamiherald.com

With funding from a large, established South Florida security services company, a team of cyber solution consultants have formed SPC Cyber Security to assist companies of all sizes with the growing threat of cyberattacks, offering services aimed at detecting a threat, and educating companies, before a potential attack occurs.

Kent Services made a multi-year investment in SPC Cyber Security, beginning with $225,000 for year one. Kent Services oversees several brands – Kent Technologies, Kent Facial Recognition and Kent Remote Monitoring, with full-service offices in New York City, Atlanta, Houston, Dallas, Minneapolis, Portland and Seattle.

A recent survey by Gartner estimates that $77 billion in IT security was spent in 2015 with $101 billion predicted to be spent annually by 2018.  “Cyber crime is occurring online at an alarming rate especially to small and medium sized companies, with and without their knowledge,” said Regan Marock, CEO of SPC Cyber Security, adding that the SPC team is comprised of former U.S. and Israeli government agents. “The keys to detecting and avoiding these data breaches and cyber threats are to proactively assess systems and areas of vulnerability, educate employees and constantly monitor network data.”

Miami startup Bvddy, a sports players' matchmaking app, closes $1.5 million in funding


BvddyuppngThe Bvddy iOS app matches up sports buddies; funding will help fuel national expansion.

By Nancy Dahlberg / @ndahlberg


Bvddy
, an iOS app that enables sports players to connect with sports partners, announced that it has closed $1.5 million in seed capital to expand into new cities. The funding is led by Latin American IDC Group and former BlueKite CEO and current PayPal executive Bobby Aitkenhead, Bvddy said.

Bvddy (formerly called SportsBuddy, which launched in January 2015) features proprietary Smart Matching algorithms that learn about players over time, including how often they play, location, actual skill level, punctuality, and competitive spirit, to  provide the most accurate matches. Prior to closing its seed round, the company said it raised $715,000 in angel financing to develop its technology and test the concept within the sports community.

“It’s a significant challenge for adult sports players to find other people to play the sports they love with, and it can be particularly hard to find others at the same level of skill and experience,” said Bvddy founder and CEO Pedro Ast, an avid tennis player, in the press release. “Bvddy was created to solve this problem.”

How Bvddy works: Once users have downloaded the app and created a profile, they can then search for other people to play specific sports with based on location, skill level, and other criteria. Users can communicate with other players, schedule times and locations to play, review skills, as well as find local venues. They also can discover activities, create public or private sporting events, and rate opponents.

Expansion plans include Bvddy’s launch on Android, as well as in San Francisco, Los Angeles and other major U.S. cities in 2016, Ast said.

June 10, 2016

Scout Ventures announces Chris Callahan as Venture Partner

Chris callahanChris Callahan, president and co-founder of Startup Palm Beach, has joined Scout Ventures as Venture Partner based in South Florida. Chris will be focused on connecting with entrepreneurial talent, generating deal flow and engaging investors across Florida.

“Chris’s deep connections within the entrepreneur and investor communities make him the perfect fit to lead our efforts in South Florida,” said Brad Harrison, managing partner of Scout Ventures

Callahan will remain active in Startup Palm Beach, leveraging the organization’s workshops, events and mentoring efforts to engage entrepreneurs and generate deal flow for Scout Ventures. In addition, Callahan will regularly host meetings for South Florida based investors in order to help raise capital for Scout Ventures Fund III, its latest fund. “The firm’s goal of working with smart and scrappy entrepreneurs who are disrupting established business models and creating products that matter aligns perfectly with the trajectory of the startup ecosystem across Miami-Dade, Broward and Palm Beach counties,” Callahan said.

 New York-based Scout Ventures opened its office in Miami in the fall of 2014 and made investments in local companies Rokk3r Labs, LiveNinja and Fitting Room Social in early 2015. To learn more about Scout Ventures, visit www.scoutventures.com

May 10, 2016

Raising money through a portal may be better route than crowdfunding

By Jason Stark

Jason starkWe know how difficult and time consuming capital raising is for a new startup, and South Florida is no exception.  It takes vital time from a founder’s schedule.  You of course should try the local investor groups like Endeavor, the Knight Foundation, AGP Miami, New World Angels and Tamiami Angels.  However, those efforts may not net you the vital funding you need.

What else can you do?  Give up?  Of course not.  In the glacial world of the securities laws, we now have CROWDFUNDING.  Well, that at least is the word on everyone’s mind.  I will help clarify distinction between Crowdfunding (which finally begins on May 16, 2016), and using Internet portals to raise through traditional accredited investor offerings.  You may find that you may be really interested in raising through an Internet portal, but not through Crowdfunding. 

Below I describe various pre-IPO fundraising options.  The Rule 506(c) offering may be the sweet spot for your capital raise.  Rule 506(c) permits general solicitation (advertising), which allows an Internet portal to communicate your offer to its accredited investor base, but without your company jumping through all the hoops required under Regulation Crowdfunding. 

By “Internet portal”, I mean an online marketplace that facilitates the sale of securities.  Examples include SeedInvest, Circle-up and Crowdfunder.  This differs from Kickstarter (which allows companies to fundraise through the pre-sale of a product or outright donations), by permitting the actual sale of stock through the Internet.    

A year ago, I had worked with clients on zero Internet portal deals.  Over the past few months, we’ve seen them more and more frequently.  Clients that were not able to find adequate funding elsewhere have found new life through small Rule 506 rounds using Internet portals. 

Pre-IPO Fundraising Options under the Securities Laws

Raising money through Internet portals requires compliance with the same securities laws as traditional fundraising.  Below is a brief description of the most commonly used exemptions, and a cost/benefit analysis of each. 

Rule 506(b) is the typical exemption used in venture capital deals that was available long before JOBS Act 506(c) and Regulation Crowdfunding.  It permits raising unlimited capital from accredited investors (generally, a person with $200k income ($300k with a spouse) or $1 million in assets, excluding the value of such person’s home).  Under this exemption, an issuer may sell its securities to accredited investors and up to thirty-five sophisticated non-accredited investors (however, if you have even one non-accredited investor, you will need to provide disclosure documents (i.e., now you must prepare an offering memorandum with financial statements and we’re looking at a more expensive round)).  

Rule 506(c) is similar to the traditional 506(b) accredited investor offering.  The major benefit to 506(c) is advertising the round (which allows an Internet portal to reach out to its investors).  The additional requirements compared to 506(b) are reasonable: a simple Form D must be filed 15 days in advance of the deal instead of after the deal; and accreditor investor status must be verified using records like W-2’s, tax returns and bank statements (under 506(b), you could rely on self-reporting by the investor).  The Internet portal should already have the procedures in place to verify accredited investor status, and therefore, if you are raising through an Internet portal, it should not be too much more difficult to conduct a 506(c) offering than a 506(b). 

Regulation Crowdfunding allows the sale of securities to almost anyone, and not just the small minority of accredited investors.  A major benefit.  However, there are significant new requirements not required for a 506 offering, including the following:

  • * Maximum of $1 million raised through crowdfunding in any 12-month period.
  • * Reporting and financial disclosure requirements (information regarding the offering, the company and its financials), for rounds over $100k, financial statements that in some cases are reviewed by an accountant and in others, audited, plus ongoing disclosure requirements.
  •  * Limits to the amount an investor may invest through Crowdfunding based on income.
  •  * Limited advertising (only may directing to the funding portal and limited factual terms).
  •  * The issuer must be a U.S. company.

 

Other Offerings.  There are a few other private offering methods that you might consider, but that are not available through Internet portals.  Regulation S may be used if the offering is made entirely to non-U.S. citizens/residents and the securities are offered outside the U.S.  Regulation A+ is often used for larger rounds, given that it requires certain offering documents and filings (somewhat like a mini-IPO – also expensive compared to 506 offers). 

For more specifics on these exemptions, check with your attorney.  See also: https://www.sec.gov/answers/rule506.htm regarding Regulation D, Rule 506(b) and 506(c); https://www.sec.gov/news/pressrelease/2015-249.html regarding Regulation Crowdfunding; and https://www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-accredited-investors for a description of accredited investors. 

Deciding whether to fund raising through an Internet Portal

When deciding whether to fund raise through an Internet portal, you must weigh the benefit of quicker access to investors and valuable time savings (locating and speaking with such investors, networking, meeting with Angel groups, etc.) against the associated fees (some combination of cash and equity).  An Internet portal develops its own database of accredited investors - a very helpful resource you could not hope to replicate.  Regarding services, some Internet portals are more involved and help run and champion the round, while others are more like LinkedIn for investors and just provide access.  Make sure to do your research on the Internet portal’s network of accredited investors, the services provided and the fees.

Summary

Internal portals can be a great way to raise money.  Certainly explore all your options, but using an Internet portal can save you quite a bit of your precious time and sanity, and that may well be worth the cost.  Don’t get caught up in the whole “Crowdfunding” concept.  Traditional offerings to accredited investors may well provide an easier fundraising avenue with significantly less hoops to jump through, and may be accomplished through an Internet portal, the same as for Crowdfunding.

Jason Stark is a partner at Private Advising Group, P.A., a law firm in Miami.  Jason is an attorney (and also is a non-practicing certified public accountant) who advises emerging and growth companies.  He can be reached at Jason@private-advising.comThe information in this article is provided for informational purposes only and does not constitute legal advice.  You should not act or rely on any information contained in this article without first seeking the advice of an attorney.