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.

May 05, 2016

FIGS receives $5 million in Series A funding led by Campfire Capital

 

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Tina Spear, co-founder of FIGS, delivers medical apparel as part of its Threads For Threads philanthropic program.

By Nancy Dahlberg / ndahlberg@miamiherald.com

FIGS, a medical apparel startup in South Florida, received $5 million in Series A funding. The round of financing was led by  Campfire Capital, a Vancouver-based venture capital group that funds companies that combine retail and technology in their innovations.

 Founded in 2013 by Heather Hasson and Trina Spear, FIGS identified a need for alternatives to currently available products in the medical scrubs industry, the bulk of which were made up of low-quality, uncomfortable styles. Its fashion-forward designs are antimicrobial, wrinkle resistant and made from lightweight, breathable fabric. FIGS' philanthropic 1-for-1 program, Threads for Threads, has donated 75,000 scrubs to in-need health care professionals across 26 countries. FIGS, an Endeavor company selected out of Miami last year, has operations in South Florida, where Spear is based, and Los Angeles.

FIGS has raised $10 million in funding to date. The new capital will be used to increase inventory to meet demand, explore and expand new product categories, and scale its team. About Campfire Capital, Spear said, “It's been wonderful to align with a group who brings not only capital, but shares an unparalleled breadth of industry expertise and networks.”

FIGS will join Campfire’s growing list of portfolio companies, including Montreal-based menswear retailer Frank & Oak and San Francisco-based food tech startup Juicero.

 Christine Day, partner at Campfire, current CEO of Luvo and ex-CEO of lululemon, said: “In addition to capital, what entrepreneurs really need is access to the broad expertise required to build a successful retail business. We see a tremendous opportunity to leverage Campfire's collective experience and relationships to further brand and scale FIGS to transform this $9 billion unbranded industry.”

Read more: FIGS, SkyPatrol chosen for Endeavor network

Read more: Four healthcare startups in the spotlight

 

May 04, 2016

LiveNinja closes $2 million round of financing, launching messaging tool for businesses

Liveninja

LiveNinja co-founders: Will Weinraub, CEO, center. Emilio Cueto, CTO, left, and Alfonso Martinez, CCO. File Photo by CW Griffin of the Miami Herald.

By Nancy Dahlberg / ndahlberg@miamiherald.com

LiveNinja, a Miami-based technology company that provides communications tools for businesses, announced Wednesday that it has closed a $2 million round of financing, bringing its total funding to $3.5 million.

The bridge funding is from Scout Ventures, Anzu Partners, Comcast Ventures Catalyst Fund, Citi Ventures, Accelerated Growth Partners and SeedInvest.  LiveNinja will use the funding to build out its product line and expand its sales and marketing team. LiveNinja, founded in 2012, is a team of 19 people.

Along with the funding, LiveNinja announced a new product, LiveNinja Messenger, to make it easier for businesses to manage conversations, no matter where or how the customer chooses to engage. This differentiates it from the pack of applications out there, including Facebook Messenger, Twitter, Skype and others, which can’t be embedded on a company website.

LiveNinja CEO and co-founder Will Weinraub gave a demo of its newest tool at a recent weekly Waffle Wednesdays networking event that the company puts on each week at its Wynwood offices free for the tech community, most days for breakfast and one Wednesday a month after work.

“We’re entering a new era for business-to-customer communication but to do it right, we have to think about what businesses really need to make messaging work for them,” said Weinraub in the announcement. “Most messaging apps are walled-gardens that operate in a separate environment. We built LiveNinja to be more flexible. You can use it as a standalone messaging application, but you could also embed it within your existing website and share it on other channels as well.”

He showed the crowd that using LiveNinja Messenger, brands can not only start conversations on their website, but also on social media and other apps with an easy to share link. Instead of one-off conversations that frustrate customers, each of these conversations can be easily managed in one seamless thread, giving both the customer and the brand the ability to scroll up to view what they spoke about last. An iOS application makes it easy for businesses to maintain customer conversations on-the-go, he said. Part of the new funding will be used to build out new features for the tool.

Weinraub said anyone can sign up at www.liveninja.com to try LiveNinja Messenger for free for a limited time, and he encouraged feedback. In time, it will evolve into a "pay as you grow" model where brands will only pay on a per-customer engagement.

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April 17, 2016

ClassWallet raises $1.5 million from Idea Bulb Ventures, others

ClassWallet, a platform for school funds disbursement and tracking, has closed a $1.5 million round of seed financing, bringing total fundingto date to $4.03 million, the company announced Sunday. 
 
The priced round was led by Idea Bulb Ventures, a U.S. based Investment company working with China’s Innovation Works, an early stage venture capital firm established by the founding President of Google China Dr. Kai-Fu Lee. Other investors include Techstars Ventures and William Guttman, as well as several education and financial technology angel investors.

“We have a number of investments in the education technology sector and we love what ClassWallet is doing,” says Chris Evdemon, partner at Idea Bulb. "We are excited by ClassWallet’s traction in K12 education and see universal application for its technology.”

ClassWallet’s patent-pending technology combines a virtual wallet with an online marketplace, the company aid. Partners such as Amazon, Office Depot, School Specialty, Scholastic, Nearpod and others in the ClassWallet marketplace accept ClassWallet as form for payment.

ClassWallet partners return SKU-level data to ClassWallet, affording school administration and funders with detailed reporting and pre-approval permissions on every item purchased, otherwise obtained through paper receipts or laborious purchase order processes.  In addition, DiscoverCard and Marqeta, the program manager behind Facebook and eBay’s card platforms, joined forces with ClassWallet to power the ClassWallet debit card for offline purchases such as professional development, field trips and more.  

Founder and CEO Jamie Rosenberg said ClassWallet’s  user base grew over 400 percent last year "and the company has already booked customers to exceed 400 percent growth in 2016.” Customers include some of the largest school districts across the United States including Chicago, Newark, and Broward.


April 15, 2016

Magic Leap puts Florida's VC on the map -- for one quarter, anyway

By Nancy Dahlberg / ndahlberg@miamiherald.com

Florida companies attracted nearly twice as much venture capital in the first quarter as in all of 2015. The haul, $855.1 million, was the highest quarterly total since the heady days of 2000. For one quarter, at least, Florida is on the venture map; the state grabbed 7.3 percent of the national venture capital pie, instead of the more typical less than 1 percent.

But there is just one company to thank for that: Magic Leap and its previously reported $793.5 million mega-round from Chinese e-commerce giant Alibaba Group and other investors. The secretive company that is developing “mixed-reality” technology and employing hundreds is headquartered in Dania but moving into a 260,000-square-foot campus in Plantation. Its war chest for growth is nearly 1.4 billion.

In addition to Magic Leap, other South Florida companies receiving funding in the first quarter were financial-services firm Tienda Pago Management of Hallandale, receiving $10 million from Accion International, medical device-maker Vigilant Biosciences of Fort Lauderdale ($3.25 million) and Meetoou, a Miami-based video-chat marketplace ($2.58 million). In all, with the Magic Leap effect, South Florida firms received $819.3 million in venture funding in the first quarter and 96 percent of the state’s total, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association released on Friday.

Nationally, venture capitalists invested $12.1 billion in 969 deals in the first quarter of 2016, and $5.1 billion of that went into the software industry, according to the report, based on data provided by Thomson Reuters. Total venture dollars deployed to startup companies for the quarter remained flat and total deal count was down 5 percent, compared with the fourth quarter when $12.0 billion was invested in 1,021 deals. Compared with Q1 2015, dollars and deals are both down 11 percent. This is the ninth consecutive quarter of more than $10 billion in venture capital invested in a single quarter.

Dollars invested in seed stage companies declined 10 percent during the first quarter. For companies receiving venture capital for the first time, dollars decreased 31 percent to $1.7 billion in the first quarter as the number of deals declined by 16 percent.

“The first quarter appears to tell us that investors still have faith in the venture ecosystem,” said Tom Ciccolella, U.S. Venture Capital Market Leader at PwC. “However, the increase in expansion and later-stage financing, combined with the drop in first-time financing, suggests a shift towards relatively mature startups.”

The top 10 deals nationally accounted for 25 percent of total dollars invested in the first quarter. Magic Leap was the No. 2 deal in the U.S., following ride-sharing service Lyft’s $1 billion raise that included GM as an investor.