Dear reader, Starting Gate has been providing and archiving South Florida startup and tech community news, views and resources since 2012. New to the Miami area? Thinking about relocating here? Just want to keep up with news, events and opportunities? We're there for you.
How to use Starting Gate: Besides scrolling the blog for the latest entries, you can access news and views by category. The "Funding" category will capture venture capital and angel funding news of individual startups as well as stories about funders. The startup categories chronicle news and my regular "Spotlights," and in Q&As you'll find interviews with CEOs and leaders in the entrepreneurship ecosystem. There are also categories for guest posts, views, accelerators/incubators, resources, events and more.
Homegrown venture funds continue to take root and strengthen in South Florida.
The latest news: Las OIas Venture Capital announced on Thursday the closing of its inaugural venture capital investment fund, Las Olas VC I LP, at $28.5 million.
The fund has already been making a mark in South Florida: South Florida startups Plum, the maker of an innovative wine appliance, digital health company CarePredict, which tracks health of the elderly, and real estate-tech company Reloquest, a temporary housing platform, are portfolio companies. "We are aiming to be extremely active - ideally we want to find four to six great deals every year," said Mark Volchek, one of LOVC's founding partners.
The fund invests in seed and Series A-stage B2B startups in areas such as enterprise software, tech-enabled business services, financial technology and education technology, among others. The fund seeks to deploy up to $1 million investments and reserves up to an additional $2 million per company for follow-on rounds.
"We are incredibly pleased that the market has been so receptive to early stage venture capital here in Florida. There has historically been a gap at this stage where we invest, companies looking for $1-3 million funding rounds, and many excellent companies have had to relocate to established venture capital sources like Silicon Valley to receive funding," Volchek said in a news release. "We at LOVC believe there is huge untapped opportunity investing in companies outside of those established ecosystems."
In a surprise to almost no one in Miami’s startup scene, 500 Startups is putting down deeper roots in the Magic City.
If you’ve been reading Starting Gate, you know that 500 Startups has been holding programs and events here, including a Series A accelerator and a PreMoney conference. The Silicon Valley company, which has invested in more than 2,000 startups in 60 countries, is an investor in a number of South Florida startups, including (at the risk of leaving some out) Home61, FIGS, Court Buddy, Alta5 and Senzari.
Now the venture fund and accelerator company is opening a large office in Miami, where it will host an expanded menu of programs and serve as its base for South Florida, Latin America and other markets in the eastern U.S., Managing Partner Bedy Yang told Bloomberg in its report Tuesday. 500 Startups has about $400 million under management in multiple funds, said Yang, who has been a speaker at several Miami area events.
“Today, we believe the Miami entrepreneurial ecosystem is at an inflection point, with more high-potential founders launching locally than ever before. Further, we believe the city is uniquely poised to become a global hub for entrepreneurship and innovation that will hopefully connect South Florida with Silicon Valley, the East Coast, Latin America, Europe, Africa and beyond,” wrote Ana Paula Gonzalez, who has been on the ground for more than a year leading the efforts to establish a larger presence here, in a blog post announcing the news today.
CEO Christine Tsai said in a statement: “We believe Miami is a key market for us to double down on and continue to serve all three parts of that mission,” Tsai took over the reins of the company after Dave McClure resigned when his sexual misconduct toward women was brought to light.
Helping to fund the Miami endeavor is the Miami Downtown Development Authority, the John S. and James L. Knight Foundation and Visa.
500 Startup Miami’s offices will be in downtown Miami at Mindwarehouse, where it will have about 7,200 square feet. Programs will include founder bootcamps, accelerator programs, corporate innovation programs, demo days and more. Learn more about 500 Startups Miami here.
Welcome (officially) to Miami, 500 Startups.
Follow @ndahlberg on Twitter.
UPDATE: Read more in the Miami Herald's report here.
Need more time back in your day? This Miami startup makes sure your car is fueled up so it’s one less thing to worry about.
Neighborhood Fuel, which provides an app-driven, on-demand service that fuels up your car while you are at work or at home in your condo, on Monday announced it received a fill-up too: a $2 million Series A round of financing.
Venture firm Softbank Capital NY led the investment round with participation from Lerer Hippeau, a New York-based fund focused on early-stage companies. The $2 million investment will help accelerate the company’s expansion plans to businesses, corporate campuses and residential complexes throughout South Florida -- and beyond.
“Our vision is simple, to give people time back in their day. Peace of mind is getting into your car and not worrying about whether you have enough gas or dealing with the time and traffic it takes to get to the pump,” said Neighborhood Fuel CEO and founder Jorge Camaraza. formerly CEO of Vertical Textiles and international marketer for Universal Music Group. “We view the process of filling your tank as a benefit businesses can offer employees and an amenity residential complexes can offer residents.”
Founded in 2014, Neighborhood Fuel partners with businesses and residential complexes to deliver gasoline directly to company fleets, employees and residents’ vehicles onsite, rather than direct to consumer. Its clients simply download the Neighborhood Fuel app, set up payment and then select the schedule that best works for them. Prices are the same as at the pump, the company said.
Neighborhood Fuel already services clients such as Royal Caribbean, Carnival Cruise Lines, Perry Ellis, Southern Wine and Spirits, University of Miami Health, Enterprise, Sixt and Alamo, the company said in a news release. It is currently expanding into Broward and Palm Beach Counties.
“They are truly applying technology, from logistics to the mobile app, to solving an issue most consumers encounter several times a week,” said Jordan Levy, partner at Softbank Capital NY, which manages $600 million across four funds. “Neighborhood Fuel’s offering is well-timed with the rapidly increasing need for on-demand solutions. We believe Neighborhood Fuel is a powerful solution for the industry and we are excited to collaborate with and support them as they work to build a great company in an exciting category.”
Magic Leap, the Plantation-based mixed-reality startup, announced Wednesday that it has raised $461 million from the Kingdom of Saudi Arabia’s investment arm, The Public Investment Fund. Magic Leap has raised more than $2.3 billion in funding to date.
The additional Series D funding is in addition to a previously reported $502 million funding round led by Singapore’s Temasek in October. The Series D funding now stands at $963 million, the company says.
“The Magic Leap team and I are happy to welcome The Public Investment Fund and the other new investors to the Magic Leap family. We look forward to having them join us on our journey to build an amazing future,” CEO Rony Abovitz said in a statement.
Magic Leap’s “mixed reality” glasses feature its digital lightfield technology. In December, it unveiled some more details of its first product in development, Magic Leap One, which will be available first to selected developers and designers. '
Magic Leap, founded in 2011 by Abovitz, is based in the former Motorola plant space in Plantation. Greater Fort Lauderdale Alliance president and CEO Bob Swindell told the Sun Sentinel that the company already is outgrowing the space and the economic development agency is working with Magic Leap on options.
Davon Reed, a former University of Miami basketball star who is now a shooting guard for the Phoenix Suns, jumped at the opportunity to invest in a young Miami startup.
MyRentHero is a real estate-technology startup focused on simplifying the off-campus housing process for students, parents, and landlords. With Reed as a shareholder, MyRentHero is now launching now on the campuses of UM and the University of South Florida.
The startup received a big assist from LAB.Ventures, the venture building arm of Wynwood's The LAB Miami. “We are very excited to be launching LAB.Ventures' first internally developed business MyRentHero, which goes live today at UM and USF,” said Thomas “Tigre" Wenrich, CEO of The LAB Miami and LAB.Ventures.
Wenrich is an active angel investor and startup mentor who helped Open English, a online English language education company, raise over $120 million in venture capital funding while serving as its founding CFO/COO. Prior to Open English, he was a partner at The Boston Consulting Group. He is also on the board of Miami Angels.
MyRentHero allows students and parents to easily find pre-screened housing that best meets their needs – including price, distance, and amenities – and to apply online or through a mobile app, which can be downloaded from the App Store here.
The startup (team pictured below) plans to add another six markets by the end of the year while building awareness and gaining student feedback, said CEO and co-founder Greg Rothman, who worked with Wenrich, a former VP of strategy at Open English who had been itching to build his own startup.
“Davon is not that far removed from knowing first-hand how hard it is to find the right place off campus,” Rothman said of Reed, who signed with the Suns out of the 2017 NBA draft. “Davon is a very smart guy who is going to help us with strategy and marketing as we prepare to roll out MyRentHero across the nation.”
Wenrich said the idea for MyRentHero came out of a discussion with people working in the shared economy, including Parker Stanberry from Oasis Collections who has become an advisor to the business. Rothman came aboard in November, and since then LAB.Ventures and the MyRentHero team has been developing the business full speed ahead.
LAB.Ventures has built out an internal staff to take ideas further before bringing in a full time team, Wenrich said. It is currently also building a product in the food delivery space and another in the B2B marketplace. "In both cases, we have a number of potential corporate partners lined up, and this is still the model we believe in for successful company building," Wenrich said. "This is our point of differentiation: If we work collaboratively with industry leaders to solve real world problems from the outset we will be able to move much faster to revenue traction."
This time, Magic Leap investment dollars may come from Saudi Arabia government wealth fund
By Nancy Dahlberg / email@example.com
A half billion here, a half billion there, and another potentially huge leap for South Florida’s secretive startup.
The latest news: Magic Leap, the mixed-reality technology company based in Plantation, is in talks for a $400 million investment from Saudi Arabia’s Public Investment Fund, the Financial Times reported on Friday. That would bring Magic Leap’s funding to $2.3 billion, unprecedented for a company that hasn’t yet launched its first product.
According to the FT, the deal is expected to be announced in the coming weeks, said the report, which cited sources close to the deal.
While Magic Leap and the Saudi wealth fund would not confirm the news, if true it follows a pattern. In October, just a month after Bloomberg revealed a half billion mega-deal was in the works, Magic Leap announced it had raised $502 million in a funding round led by Singapore government-owned investment firm Temasek Holdings TEM.UL and began dropping more hints the technology will be revealed soon.
The new funding is an extension of the $502 million round and would be at the same $6 billion valuation, the FT said. If completed, the FT said it would be the second high-profile U.S. tech investment for the $230 billion Saudi government fund. In 2016, the fund invested $3.5 billion into Uber.
The internationalization of Magic Leap's funding follows a pattern too. Earlier Magic Leap raised a similar amount from Alibaba in China. Its other funders include Google, Fidelity, various studios and other Silicon Valley funders.
Magic Leap’s “mixed reality” glasses feature its digital lightfield technology. In December, it unveiled some more details of its first product in development, Magic Leap One, which will be available first to selected developers and designers. Founder Rony Abovitz has said the spatial computing technology will provide a more natural computing experience that could replace the phone.
"Rebecca has been an integral part of our team over the last year. We are incredibly excited to see her step into this new role and take our investment group to new heights," Moas said in a note to supporters.
Before coming aboard last year, Danta was an Operations Lead for General Assembly in New York City. She graduated from the University of Florida in public relations.
With a primary focus on South Florida, Miami Angels has recently began expanding its investment focus to include in other areas of the state, including Gainesville where it has made several investments, and in Latin America.
Miami Angels' most recent investment was in Caribu, an education platform that helps parents and extended families read and draw with kids when they're apart.
"Miami Angels has been a catalyst for Miami’s early-stage investing landscape, having invested $8 million across 24 companies since our launch in 2014," Danta said. "We'll continue to bring together exceptional entrepreneurs and investors as we look to expand our reach throughout the state and Latin America."
ChronWell, a Fort Lauderdale startup that is developing a technology-enabled platform company for the workers’ compensation insurance industry, raised $4.5 million in Series A funding, the company announced this week.
The investors were not disclosed.
ChronWell was launched in September 2017 by long-time veterans in the healthcare information technology and insurance industries. Dr. Joe Rubinsztain, ChronWell's CEO, and his brother Sam Rubinsztain, VP of Product Development, together founded Weston-based gMed in Weston in 1997, which was sold to Modernizing Medicine in 2015. ChronWell's president, Salomon Sredni, was formerly president and CEO of TradeStation, one of the largest online brokers in the U.S.
The company said that it aims to be the first line of care for injured workers, while getting them back to work faster and reducing costs.
“Our mission is to use technology to bridge the gap between employee, employer and insurance company,” said Joe Rubinsztain. “In making the process more efficient, we will improve outcomes and help injured workers receive the care they deserve. Everyone agrees the workers’ compensation market is long overdue for disruption, and this is the right time to do it.”
The funding will support the first phase of the company’s innovative platform, which covers triage, on-site care, care coordination and personalized assistance service, the company said. When an employee is injured on the job, a ChronWell healthcare professional backed by Artificial Intelligence will determine the best course of action by recommending self-care, on-site care or a health care facility. The service provides follow-up with the worker and manages the claim.
“The current workers’ comp system is broken,” said Sredni. “We strongly believe in bringing compassion and empathy back into a system that is failing to serve those most in need.”
New World Angels jumped out of the gate with its first transaction of 2018. This follows a record year in 2017 when the Boca Raton-based structured angel group made seven investments in seven companies totaling $4.4 million.
The first investment of the year is a $1.3 million investment into Clarke Industrial Engineering’s $10MM Series B Preferred Stock offering. Miami and Rhode Island based Clarke is the manufacturer of the Shuttervalve, which is innovating the $84 billion valve industry with new performance features at lower costs. With this fifth investment in Clarke, NWA has invested over $4.1 million in the company. The Series B round was led by Saudi Aramco Energy Ventures and Chevron-Texaco Technology Ventures.
“We are very pleased that the venture capital arms of industry leaders Saudi Aramco and Chevron also recognize Clarke’s potential in this $84 billion market,” said Steve O’Hara, president of NWA, in a press release. “We remain committed to helping Clarke achieve its lofty goals.”
In 2017, NWA added four new companies and invested in three existing portfolio companies. In Q1, NWA invested a total of $1,487,500 in existing portfolio companies Tao Connect, a Tampa-based online counseling solution for universities and private payers, and Clarke’s A-3 round. In Q2, NWA invested a total of $1,985,000 in RecordGram, a Miami based innovative software solution provider allowing artists and musicians to collaborate on-line to provide greater opportunity to starting performers; Source Molecular, a Miami-based DNA-based water analysis company helping municipalities and utilities test and understand water pollution challenges; and Rewired Solutions, a Sarasota-based human resource solution provider for large employers seeking to identify potential new hires. Also in Q2, NWA invested another $347,500 into its portfolio company Kairos, a Miami-based software as a service human analytics platform. In Q4, NWA funded Switchboard Live with $557,500, an Orlando-based company providing a live broadcast streaming alternative for publishers.
O’Hara said nearly all of NWA’s 65 members participated in at least one due diligence team in 2017. “Our not so secret sauce is our diverse collection of members ranging from doctors to CEOs, lawyers to entrepreneurs, and technology to old school manufacturers, which provides us with a stable of talent we can offer our portfolio entrepreneurs to call on for advice and counsel.”
Since 2014, NWA has invested $14 million in companies that either are based in Florida or have a strong presence in the state. NWA has chapters on both in South Florida and on the state’s west coast.
All about extraordinary exits and the journey to them: Ryan Cohen, CEO of Chewy.com, and angel investor Jason Calacanis share views at two separate events.
Angel investor and author Jason Calacanis and Melissa Krinzman, co-founder of Miami's Krillion Ventures, discuss investing in startups at Refresh Miami's event Jan. 30. Earlier in the day, Ryan Cohen, CEO of Chewy, and David Coddington, VP at the Greater Fort Lauderdale Alliance, shown below, discuss the startup journey at the Florida Venture Capital Conference in Fort Lauderdale.
One day in South Florida, two separate conversations, priceless insight.
Last Tuesday, during the day, Ryan Cohen, co-founder and CEO of Chewy.com, took the stage as the keynote speaker at the Florida Venture Forum's Florida Venture Capital Conference in Fort Lauderdale, for a couple hundred investors, entrepreneurs and service providers from around the state. In the evening, angel investor extraordinaire Jason Calacanis gave an entertaining, but insightful interview in front of 350 from the tech community at Refresh Miami’s monthly event.
Cohen sold his Dania Beach-based e-commerce company for $3.35 billion to PetSmart last year; it was the largest ecommerce deal in history and the biggest exit in South Florida. The pet supplies retailer is a homegrown success story, and as he relayed the Chewy story in an on-stage discussion with David Coddington, VP of business development at the Greater Fort Lauderdale Alliance, it was clear the journey was anything but easy.
Cohen, who started his first business at 14 creating websites, said he started Chewy in 2011 to replicate the same great customer experience of a neighborhood store, but online. He used Zappos as a model and inspiration. When he needed capital to grow, he approached more than 100 investors – and they all passed. “But I thought there’s a chance … we are on to something genius. I just felt with scale we will prove them wrong,” said Cohen.
Challenges were setting up the company for hyper growth. The year 2014 was transformational, he said, because Chew went from having virtually no experience with operations to it becoming its core competency. “In order to scale to a billion dollar company we had to go through that, but it was very, very challenging. … Our management team was working 7 days a week 16 hours a day and everything that could go wrong went wrong.”
So what went right? Customer service was its differentiator.
“We are 100 percent customer obsessed. We want them to feel as though they would never dream of shopping anywhere else. We’re human we get it, and we really care about their pets,” said Cohen, who owns a teacup poodle. After all, this is the company where hand-written holiday cards writing is a massive department; 5 million Chewy customers received them last year.
Today, Chewy has more than 7,000 employees; about 1,500 in South Florida, including a giant new call center in Hollywood. It’s got six warehouses, including one recently opened in Ocala.
“I’m persistent, I’m obsessive, … I’m relentless, I’m a contrarian. When all these VCs passed I didn’t change our business plan at all,” said Cohen.
He said scaling a company is not for everybody.
"Scaling a business is going to test you physically and emotionally. ... It is a huge act of selflessness and dedication and if you are ready for it, it is going to be a crazy, crazy, crazy roller-coaster and it will be a the journey of a lifetime." If not, he said stick to your day job.
Calacanis would agree with that.
That evening, at the Refresh Miami event, Calacanis’ conversation with Melissa Krinzman, co-founder of Miami-based Krillion Ventures, gave a view from the other side of the table.
“Startups are a shitshow, they are a complete utter disaster,” the angel investor with a private syndicate, author and podcaster said. Calacanis hosts a popular podcast called “This Week in Startups,” has authored the new book, “Angel: How to Invest in Technology Startups” and created Launch Festival and Launch Scale and Launch Incubator, among other endeavors.
Just don’t get him started on ICOs. Uh-oh, Krinzman did.
“I have seen this movie before. It’s not going to end well,” said Calacanis. “It’s a giant scam right now, 90 percent are incompetent, criminal people. UPDATE: For his rant on ICOs, watch this just-published video below! (rant starts at about 12:30.)
But once he [sort of] got back on track, Krinzman asked Calacanis, an an early investor in Uber and scores of other startups) about the questions investors should ask themselves. Among them: Why have the founder chosen this business? Why is he/she doing this? How skilled are the founders and the team and what do their customers think?
His advice to entrepreneurs: Go big.
“We need to take big bold risks,” he said. “If something doesn’t have long odds, it’s not worth doing as an investor or an entrepreneur. Don’t do the easy things, do the hard things.”
For startups raising money (always), he said the stakes are higher.
“I want to see what you are capable of. …. It’s a different world than 10 years ago. You have to up your game. Traction speaks, show me your traction.”
Signals of a downward spiral”: If the founder stops sending you updates.
“I always know when I hear I am going to WebSummit or Summit at Sea, that is a really bad sign. I go, 'why don’t we summit revenue, why don’t we summit hiring a CTO?' ”
While a great entrepreneur can come from anywhere he thinks opening up an office and spending some time in Silicon Valley is a good thing. “You have to be cutthroat.”
For some practical advice he listened to three pitches by South Florida startups. Some of his advice, in no particular order:
Never read a script, it becomes robotic. Say it is your own words.
He’s not a fan of unpaid pilots. “You need to know if people are willing to pay for it, you need to get that piece of data.”
Always include an example of how your product or service would work and walk us through it.
The more reality you can give investors the better. Answer the questions crisply.
Get to the point sooner. When you have the nuts, you got a get to this immediately.
UPDATE: I can’t do his talk justice, so watch the show below, courtesy of Refresh Miami.