Miami-based Flomio closes on $525,000 in seed funding

I am admittedly late on posting this news, but Miami-based Flomio, maker of a platform for building NFC and RFID enabled applications, closed a seed round of $525,000, led by RMR Capital, and included participation from TechStars, the Cloud Power Fund, Matthew Lally (Augme, Pickflair), and Clint Watson (FASO), TechCrunch reported on Friday.

Flomio, founded by Richard Grundy,  was recently accepted into TechStars Cloud, the cloud computing-focused incubator. Read more about its technology here.

So last week was a good week for South Florida tech startups getting funding. What will this month bring?

Back-to-back tech events coming in August

Forget about sleeping in. Two back-to-back weekend-long events for tech entrepreneurs and developers are coming to Miami in August.

The free AT&T Mobile App Hackathon, coming Aug. 10-12 , is the place to build apps, compete for prizes, network and scout for teammates to work on new or current projects.

 It all begins at 6 p.m. Friday night, where attendees will do so “developer dating” at a networker, hear some speakers, then form teams and come up with app ideas. All day Saturday and through Sunday afternoon, the teams work on their apps and senior leaders and developers from the South Florida tech community and AT&T will be onhand to help throughout the day, said Milana Kuznetsova, CEO of ESENEM and one of the key organizers of the hackathon.

 Sunday at 4 p.m. the teams begin giving 3-minute pitches for their products, and at least $5,000 (updated) in prizes will be awarded in several categories, Kuznetsova said.

The venue for the event will be the University of Miami Life Sciences and Technology Park, 1951 NW 7th Ave., Miami. Expected attendance is about 150, Kuznetsova said; already more than 280 people (updated) have signed up.

 “This will be the largest event of its kind in the Miami history and is organized in a fashion to promote and enable creativity, team building and leadership,” Kuznetsova said.  “Collaboration is key -- just as we have collaborated with a number of local movers and shakers to glue this event together and as the attendees will collaborate with local talent to build out products, we hope the community’s response will be one of a collaborative effort to encourage and support a local startup environment.”

More information can be found at http://mobileappmiami.eventbrite.com and on #backinhack.

The following week, Aug. 17-19, Lean Startup Machine Miami is coming to town for the first time. So far, the company has trained entrepreneurs in 50 cities around the globe.

Unlike hackathons or startup weekends, this event is focused on teaching and having attendees experience the “Lean Startup” process, as popularized by Eric Ries and his book, The Lean Startup, explained Jefrey Bulla, head organizer of the event. “Our goal is to make better entrepreneurs — faster and more efficient. Our intensive three-day workshop is focus on validating business ideas using Lean Startup and Customer Development methodologies,” Bulla said. As part of the process, participants "get out of the building" to talk to potential customers during the weekend. Event participation is limited to 50 people.

Tickets for Lean Startup Machine are $299 general admission; early-bird promotional rates were previously available. It is will be at The Launch Pad (downtown), 50 NE 9th St., Miami. South Florida tech experts are serving as mentors and organizers also. More information can be found at http://leanstartupmachine.com/events/miami/ 

In between the weekends, before and after, South Florida offer plenty of other meetups and events. For a list, check out miamitechevents.com put together by Refresh Miami, South Florida's biggest tech meetup group.

Update: Here's a short video provided by CVOX Group  on why to go to a hackathon, filmed during the Refresh Miami event. One of the entrepreneurs interviewed in the video, Juan Bermudez of Nightpro.co, came up with a nightclub-related app during HackDay Miami last fall. In the months after the hackathon, he kept working on nightclub-related solutions and came up with software to help nightclubs and promoters manage their businesses. His company demonstrated the product at the Refresh event. He told me he plans to attend the AT&T Mobile App Hackathon as well.  

 

News: Open English secures $43 million in funding

Miami-based Open English, an online English language school that has been expanding quickly in Latin America,  has secured $43 million in its latest round of financing led by New York-based Insight Venture Partners.

The company, which has received several previous rounds of investment, offers a 12-month program that helps students attain fluency in the English language. It provides the flexibility of live online classes with native English-speaking teachers; students can take as many live classes as they want over the course of the year and have access to advisers. Open English plans to invest in expansion in its core Latin America markets, particularly Brazil.

“Latin America is obviously booming,” said Andres Moreno, co-founder and CEO of Open English. With a burgeoning emerging middle class hungry to learn English, “the traditional brick and mortar schools can’t keep up with the demand. We can.”  The company grew 350 percent last year and is poised to grow 300 percent this year, he added.

Open English was founded in Venezuela in 2006 and moved to Miami in 2007. The company began launching its service commercially in 2008. In November of last year, it launched in Brazil and already it is its largest market, Moreno said. 

The company, with offices in Miami, Caracas, Bogotá, São Paulo and Panamá, employs 1,000 people (about 40 in its Miami headquarters) and serves more than 50,000 students in 20 countries. Its goal is to serve 80,000 students by the end of the year, Moreno said.

Open English presented and won at Florida International University's inaugural Americas Venture Capital Conference in 2010.

This latest round of investment was led by New York-based Insight Venture Partners, with the participation of California-based Redpoint Ventures and existing investors including Flybridge and Kaszek.

 

(Photo is of Open English CEO Andres Moreno)

South Florida entrepreneur challenges PayPal co-founder Peter Thiel to million-dollar game of chess

A.J. Steigman is used to being the scrappy startup sort. He launched his company in the Parkland home of his parents, who would feed his team and sometimes let the group crash overnight. He's now raised an impressive $550,000 in capital, but that's far short of the millions he believes he needs to grow his business.

So the 27-year-old entrepreneur put on his best game face for his next move.

Last week, Steigman, who founded Soletron,  an ecommerce and social networking site for street wear, challenged PayPal co-founder and billionaire venture capitalist Peter Thiel to a game of chess. Both are chess "lifetime masters" at the game, rated nearly identically in the top 1 percent of the U.S., Steigman says.

The stakes? As Steigman proposes, if Steigman wins, Thiel would invest a cool million of Series A funding in his company. If Steigman loses, he would give Thiel a stake in Soletron -- the size to be negotiated.

"I have the utmost respect for Peter, both on and off the board. I think this could be a postive, fun, entertaining event and I hope he accepts," Steigman says.

No word yet from Thiel, but either way, the publicity received from Steigman's chess challenge, picked up by dozens of entrepreneurship and chess blogs and blasted on social media, is already a win. And it illustrates the creativity some entrepreneurs are deploying to seek the all-important funding for their companies.

Steigman grew up in Coral Springs and attended The University School at Nova Southeastern since kindergarten. After graduating from Emory University he worked as an investment banker at Merrill Lynch in New York for awhile. But the itch to run his own business proved too strong, so he founded and ran a sneaker store at the Seminole Hard Rock Casino in Hollywood -- one of the top performing stores for Nike accounts, he said. There he also saw the limitations of that concept. Designers would come in to pitch cool new brands and he had no room to promote or display them. That's when he had the idea for Soletron, an Etsy for street wear, sneakers and skateboards.

He soon sold his store to focus "150 percent" on Soletron, which he launched in 2010. "We're a platform for designers without holding inventory," he says. Shane Robinson, another investment banker he had become friends with at Merrill Lynch, would become his co-founder, and Soletron quickly gained customers in its key demographic, males aged 15 to 25. Today, Soletron's site includes 100 brands and about 2,000 products, Steigman says. 

Along the way he has added an impressive board of advisors, including  professional football player and Superbowl MVP Santonio Holmes, Tom Austin, the co-founder of AND1 basketball, Bruce Chizen, former CEO of Adobe, John Friedman, founder of Easton Capital, and Bob Rice, founder of Tangent Capital. (Photo shows Steigman with Holmes)

"Starting a business is kind of like a step-level video game," says Steigman, explaining that the co-founders had to first prove why two non-tech investment bankers could start this company and then prove themselves at every step by reaching milestones.  "You have to believe in yourself and your concept."

Steigman has employed other creative tricks of the entrepreneur trade to make his limited resources go further. He has employed interns from several universities to work on code and develop apps for him. This summer, Steigman temporalily moved his company operations up to Philadelphia, where he is working with a team of interns from University of Pennsylvania's Wharton School. About five of his 10 employees went with him, where they are staying in a rented six-bedroom house, ala Facebook style, Steigman says.

He's even considering moving his company headquarters there, he said, because it is closer to his lawyers, board members and some of his team in New York City. Yet, he said he would always have a presence in South Florida and has local partnerships with the Opium nightclub at Hard Rock and others. "As long as I have my laptop I can be anywhere I need to be. It's not like goodbye Florida."

Steigman played in his first chess tournament at the age of 5, and he became a national master  at 13. If the game becomes a reality, Steigman says that all sponsorship  proceeds would go to charity.

Steigman  sees a lot of similarities between the game of chess and entrepreneurship. "Chess takes a great deal of mental focus... You can be in a very bad position for a long period of time... You can also be overconfident and blow the game. ... It's a game of persistence, absolutely. And you have to think moves ahead." 

  (Photos above, all from A.J. Steigman, show some of Soletron's products, and a young A.J. Steigman with former World Chess Champion Gary Kasparov in New York City in 1995 at the Intel Grand Prix and playing chess with former World Chess Champion Anatoly Karpov  in 1995 at the World Youth Chess Championships in San Lorenzo, Brazil)

 

News: New dean at FIU College of Business chosen

David R. Klock, Ph.D., has been appointed dean of Florida International University's College of Business and Ryder Eminent Scholar in Business after a national search, FIU announced Tuesday. He will start at FIU on Oct. 1, succeeding Joyce J. Elam, who has served as dean since 1998.

Elam, who grew the business school and launched pioneering online programs during her tenure, will continue her role as dean of University College, overseeing FIU Online and the university’s market rate and continuing education programs, FIU said.

Klock is dean of the School of Business at the University of Alabama-Birmingham and serves as the university’s Wells Fargo Chair of Business Administration. He has also been dean of the College of Business Administration at Cal Poly Pomona, has held faculty positions at Virginia Tech, University of Florida, Texas Tech, and the University of Central Florida, and was professor and chair of the Department of Finance at UCF.

Klock also spent 15 years as president, chief executive officer and then chairman of CompBenefits Corp., which was sold to Humana in 2006. During his tenure there, CompBenefits’ revenue rose from less than $20 million to more than $350 million.

Klock earned his bachelor’s degree in finance from Northeastern University in Boston, and his master’s degree and doctorate in finance from the University of Illinois in Champaign-Urbana.

At UAB, Klock has helped lead efforts to commercialize intellectual property stemming from UAB’s over $450 million of annual sponsored research, and facilitated cooperation between business, engineering, and medical schools to partner on cross-disciplinary, market-driven academic programs and expanded research, FIU said.

 

What does healthcare reform mean for small business?

This is a recent column from The Miami Herald's Business Monday section, which will be of interest to owners of small and mid-sized businesses.

By James S. Cassel

 With all the debate surrounding the Affordable Care Act, one could easily get lost in the rhetoric and lose sight of the issue that’s important now: The law is here, whether you like it or not. Clearly, the new or expanded coverage slated for millions of additional people will bring more costs – whether in the form of a tax or penalty. No matter how you feel about that fact, it’s time to set aside politics and take an objective look at the implications of this new law for your business.

One of the most frustrating challenges that middle-market business owners will likely soon face is continued uncertainty. While some people say that the Affordable Healthcare Act will save a substantial amount of money over time and others say it will do just the opposite, nobody knows the
ultimate implications because this law is still new. Even the threats ranging from slight modification to repeal of this law will probably remain unknown until after the November election and beyond.

Although it’s impossible to predict the future, we know at least one thing is certain: Because some provisions have already gone into effect and other provisions will be phased in during the next three years, companies will have to redesign their current plans and/or offer new plans to employees.

The time to begin studying this is now. If not managed properly, the issues associated with this law could hurt the bottom line for businesses. For example, automatic enrollment provisions for businesses with more than 200 employees make it critical for businesses to gauge how many of their employees are likely to opt out and to develop appropriate strategies.

Some key points to keep in mind:

Many businesses that currently provide employee group coverage at reduced premiums may face higher costs. If this happens, some business owners might feel motivated to simply pay the penalties for not offering health insurance to their employees, which was not the intended effect of this law. On the other hand, some believe that insurers may end up competing for your business, bringing down premiums (although this seems highly unlikely).

Businesses that provide the top-tier plans for certain employees may face higher costs with a 40 percent excise tax tagged onto those “Cadillac” plans if the values of those plans exceed $10,200 for individuals or $27,500 for family coverage. To help prevent this from happening, you should examine your current policies and determine if you will be subject to the new tax. If so, you might want to modify the benefits.

Another issue facing the business community: the non-discrimination provision in the new law. Businesses will not be able to continue to offer top-tier “Cadillac” plans to some employees while offering others more basic coverage. Offering the same coverage to all employees can be a costly proposition for many business owners. Some small-business owners who cannot afford to offer the same high-quality coverage to all employees worry that this could motivate senior talent to look for jobs at bigger companies that offer better coverage. It is possible that supplemental coverage will be available.

Owners of some smaller businesses may benefit from tax credits aimed at helping to reduce the costs of providing insurance. However, make sure to understand the fine print, as there will be certain restrictions based on income and other criteria. For example, businesses with 25 or fewer employees who pay average annual wages of less than $50,000 and provide health insurance may qualify for a small business tax credit of up to 35 percent (up to 25 percent for nonprofits) of the costs of
their premiums. Starting in 2014, some small businesses could qualify for tax credits as high as 50 percent. This might sound good, but how many businesses will actually qualify?

Businesses with employer-based health insurance plans that cover retirees between 55 and 64 years of age can now obtain financial help through the Early Retiree Reinsurance Program.

It’s said that businesses with fewer than 100 employees may be able to shop for insurance in an Affordable Insurance Exchange, a new “marketplace” where individuals and small businesses may look for affordable health benefit plans. Employers with fewer than 50 employees are said to be exempt from new employer responsibility policies and don’t have to pay an assessment if their employees get tax credits through an Affordable Insurance Exchange. There are still unanswered questions, however, about if and how these exchanges will be established.

Some additional key points relevant to coverage:

The new law makes it easier to obtain insurance for children and adults with pre-existing conditions, many of whom have historically been unable to afford or obtain coverage. It also requires insurance companies to cover certain types of preventive care, including things like screenings and immunizations, without requiring you to make co-payments or co-insurance or meet your deductibles. Starting Jan. 1, 2014, the new law will do away with the dollar limits on benefits that had been previously imposed by many health plans, meaning that health plans can no longer cap their yearly or lifetime spending for your covered benefits.

Again, it’s difficult to know with any certainty either how the new law will affect middle-market business owners or how middle-market business owners will respond. For example, this new law could motivate some businesses owners to do more outsourcing or use temporary labor through third-party
providers. Companies in medical and biotech industries, for example, could benefit from provisions in the law that allow for intellectual property protection.

The bill is highly complex and exceeds 2,000 pages. The bottom line: every business has unique needs, and it’s important to consult with qualified insurance professionals who can provide a detailed analysis of all the implications of this law to your business and help you consider all your options. Making the right choices now could go a long way toward protecting your bottom line later.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle-market companies. www.casselsalpeter.com

 

Tools: Free seminar on exporting offers access to industry experts

Customized for food and agriculture businesses but open to all small businesses, a free seminar called Explore Exporting will give companies inside access to industry experts who will shed light on why and how to export.

The seminar is Tuesday, July 24, from 8 a.m. to noon at Miami Dade College North Campus, “A” Building - Room A-117, 11380 N.W. 27th Ave., Miami. Walk-ins are welcome, organizers say.

 Participating in the seminar will be representatives from the Southern United States Trade Association (SUSTA), the U.S. Department of Agriculture – Foreign Agricultural Service, Florida Department of Agriculture, Export-Import Bank of the United States, U.S. Department of Commerce and the U.S. Small Business Administration.

 Some of the topics to be addressed will be: Reasons for exporting; selecting countries; protecting yourself from non-payment; getting access to capital to grow your export business; and resource programs available.

More information: Contact Kristin Core, Southern U.S. Trade Association, 504-568-5986 or [email protected]

 

 

News: VC funding falls from year ago, but up in Florida

By BARBARA ORTUTAY

Associated Press

NEW YORK  — Funding for startups fell 12 percent in the April-June period as U.S. venture capitalists poured less money into fewer deals than a year earlier. But the number of companies getting funded in the earliest stages of development reached the highest level in more than a decade -- a hopeful sign for the broader economy and an indication that investors are willing to wait for returns.

A report  out Friday says startup investments slipped to $7 billion in the second quarter, down from $8 billion in the same period a year earlier. The companies getting funded were mainly in the software, Internet, industrial, and energy sectors. There were 898 deals completed during the quarter, down 15 percent from 1,057 a year earlier.

In Florida, the news was better. In the 2nd quarter, venture funding reached $94,762,200 through 11 deals. That's up from $86,555,900 -- also 11 deals -- a year ago. It's up considerably from the three deals worth $36,048,000 last quarter. Florida ranked ninth overall in quarterly funding.

The MoneyTree study was conducted by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. The study tracked four stages of venture capital funding. Depending on how far along companies are in development, they received either “seed”, “early”, “expansion” or “later-stage” funding.

Compared with the first quarter, both the amount of VC money and the number of overall deals increased. The April-June quarter saw most early-stage deals completed since the first quarter of 2001, with $2.1 billion going into 410 deals.

“That’s really the bread and butter for VCs and hopefully a harbinger for good economic news for the country overall,” said Mark Heesen, president of the NVCA. “If we’re investing in early stage, that means we have some time and money that we didn’t have in the recent past.”

Many early-stage companies don’t make it. Those that do become big job creators, he added.

Still, there are concerns among venture capitalists. Investments in the life sciences are falling. In the second quarter, venture capital firms poured $696.8 million into biotech startups, less than half of the $1.44 billion they invested a year earlier. Heesen explained that the time it takes a drug to get to market in the U.S. is getting longer –often more than 10 years. That makes funding difficult, even for patient investors.

Among the study’s other notable items:

– Internet companies received the second-highest level of investment in more than a decade, with $1.8 billion going into 261 deals.

– Seed-stage companies received less than half of the funding that they did a year ago, with $199.4 million going into 63 deals. That’s down from $422.8 million going into 130 deals.

– Three of top four deals were in the industrial and energy sectors. Electric car maker Fisker Automotive received $147.6 million, Harvest Power, a provider of organic waste management services, got $112 million and fuel cell technology company Bloom Energy, which develops small, natural-gas power generators for offices and factories, received $100 million.

– Pinterest Inc., the popular image-sharing website, tied for third place with $100 million in funding.

– Startups in the expansion stage received a total of $2.62 billion going into 232 deals, down from 272 deals and $2.38 billion a year ago.

– There were 193 later-stage deals during the quarter, totaling $2.09 billion. That’s down from 274 deals and $2.97 billion in the second quarter of 2011.

Survey results can be found here. 

 The detailed report is due out July 30. We'll report back.

 

 

View: What does it take to be an entrepreneur?

What does it takes for someone to say, "I'm going to own my own business"? My guest blogger today, Brad Tuckman of KSC Kreate, decided to go out on his own soon after graduating from Rochester Institute of Technology because it was “in him.”  Today, KSC Kreate caters to major retailers and has grown 1,200 percent in the past five years, the company says. Here is Tuckman's guest post on what it takes to be an entrepreneur.

By Brad Tuckman

I believe becoming an entrepreneur is instinctual.  There is no deciding factor, except a moment worth exploring. It journeys from an idea to action.  From the conceptual moment, through developing and launching your business, your business idea is what you will sell. 

Should you go out on your own?  Is it the right time or place to own your business? What are the risks? 

Start your strategy with a business plan.  This will map out your idea onto paper.  It can include financials, forecasts, organization plan, marketing tactics, etc. However the plan may look like, it will give you a definitive answer if being your own boss is your calling.  Going out on your own may not be for everyone. It takes a lot of discipline and confidence to take the huge leap.  Is your idea marketable?  There is a risk in putting your idea out there to the world and not be noticed.  Be sure it offers a valuable service.

 It’s important to be a practical idealist and not have your head in the clouds.  There are various risks that need to be recognized. Will you sink or swim?  I believe the following core factors helps in being a successful entrepreneur:

•  Good process. Staying genuine results in long and lasting relationships.  Think of what you can do for your clients and not the other way around.  In the long run, it will benefit both parties.
• Leadership. Give a welcoming demeanor.  Be real.  Clients can see right through if not.  What you see is what you get.  Anticipate what’s next.  Never be satisfied in being mediocre. 
• Impeccable service. Be flexible through changing times. Stay reliable.  Remain knowledgeable in your field.  Never say no.  No matter the challenge, find the means to get what the client wants.
• Being good at what you are selling. Educate the public in providing the essentials in operating your business. This will capture your clients’ attention.  It displays trust. 
• Love what you do. Simply put, do what makes you happy.  Is coming to work everyday fun?  I started as a photographer and continuously surround myself with creative people.  I love what I do. It’s important to stay humble about your success.

 

Brad Tuckman founded KSC Kreate in 2001.  With more than 17 years experience as a business leader, Tuckman has helped KSC Kreate grow from a retail and catalogue photography business to a leading provider of visual content and software for the nation’s top retailers and consumer products groups.  To learn more about KSC Kreate, visit www.ksckreate.com.

(The photograph of Brad Tuckman is by Al Diaz of the Miami Herald staff)

 

 

 

Knight Foundation adds focus on Miami entrepreneurship

Much like Miami’s arts community has blossomed, so can the startup ecosystem with the right nurturing, believes The John S. and James L. Knight Foundation. That’s why the foundation is adding entreprenueurship as one of its new areas of focus in South Florida, said Miami Program Director Matt Haggman.

The mission will be to strengthen the entrepreneurial ecosystem and connect it to the broader community, Haggman said.

When the foundation looked at places where it could make an impact, entrepreneurship seemed like a natural area. A decade ago that would not be the case, but recent advances by South Florida’s universities and the urbanization of Miami’s core now make South Florida more attractive to entrepreneurs. Yet, while Miami’s startup community is developing, it’s still fragmented.

 “There is a 'there' there,” Haggman said, “We can help foster the sense that Miami is a place where ideas are built.”

While the program is still in its infancy, the foundation plans to make grants in six areas: space, or places where entrepreneurs would gather such as co-working spaces and accelerators; mentorship and training; regular gatherings; annual gatherings (think signature events such as what Art Basel is to the arts community); communications, such as ways to get the success stories out; and funding, which continues to be a major challenge for South Florida entrepreneurs. These foundation grants could help fund organizations, major conferences or events, contests and other initiatives to foster innovation, Haggman said, stressing that no decisions have been made.

While the entrepreneurship umbrella can encompass all types of innovation, including artistic and social entrepreneurship endeavors, the foundation would likely focus most on nurturing an ecosystem for technology startups to launch and thrive.  A byproduct of a strong ecosystem is talent retention, or reversal of the brain drain, added Haggman.

The foundation may use its recent work in the arts -- which includes its annual Knight Arts Challenge and millions in grants to major cultural institutions -- as a model for the entrepreneurship program. But it would be in addition to the work it does in the arts, which would continue.

“Our commitment to the arts is as strong as ever,” said Haggman. “This is a way of building on that. All of it is part of our effort to create a more informed and engaged Miami.”