VENTURE CAPITAL

Victory in VC Land

Venture capital ecosystem continues to gain momentum in South Florida

BY KEVIN GALE
The expansion of Athenian Venture Partners into South Florida
shows how the region is building a venture capital ecosystem,
although its a long way from being Boston or Austin.
Karl Elderkin, Athenian founder and managing partner, has had
a South Florida home for 16 years, but initially never did business
here. After his controller moved to the area about 10 years ago,
he started spending more time at the Fort Lauderdale office and
eventually built up the contacts to start looking for deals. The last
fund Athenian raised did due diligence on a half-dozen companies
around the state and ended up investing in Prioria Robotics, whose
composite drones feature technology developed at the University
of Florida; the U.S. military is among its customers.
We are seeing a lot of opportunity in Florida and we are
expecting some Florida deals and South Florida deals, he says.
January is a key month in VC throughout the state with the
Florida Venture Forums annual capital conference. To get a pulse
on the general state of VC, SFBW talked with Kevin Burgoyne,
president of the Florida Venture Forum; David Bates, chairman
of the Gold Coast Venture Capital Association (GCVCA); and
Bob White, who is co-chairman of the technologies and emerging
companies practice for the Gunster law firm.
While White sees a lot of improvement in the local VC scene,
one of his concerns is investors looking for larger deals. An
investment of $6 million would be typical, but, What if you
and I are starting a company and need $1 million? he posits.
One possible solution is tapping into the connections and
expertise of the regions wealthy residents or executives. The
most prominent example is John Sculley, former CEO of Apple

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and Pepsi, who is chairman of 3Cinteractive in Boca Raton and

vice chairman of MDLive in Sunrise, which raised $50 million
in June. We are starting to be able to tap that money, but its not
able to fill the whole bill, White says. We have to make the
connections or people will move to California, Boston or Austin.
The region is getting more attention from VCs nationally
with the success of companies like Modernizing Medicine,
which announced raising $38 million in a Series E financing
in September, Bates notes. IBM helped fund $20 million in a
Series D financing announced by Modernizing Medicine in
March. IBM wants to use its Watson technology to help improve
Modernizing Medicines electronic medical records system.
Bates, who is also co-chairman of the entrepreneurial and
emerging companies practice at Gunster, notes that Bidtellect
of Delray Beach raised $22.35 million; the company is in the
hot space of native programmatic advertising, which makes
advertising that seems like a natural fit to viewers. He adds that
Sonavation, a Palm Beach Gardens company that has developed
biometric fingerprint sensor technology, raised $6 million in the
third quarter, according to the MoneyTree Report.
When VCs come down to see the companies they have funded,
they also visit other companies, Bates says. That also allows you
to tell the story that you dont want to miss the next Modernizing
Medicine. For clients, its a great time to be raising money. We are
seeing more people wanting to invest in deals in South Florida.
The GCVCA recently had several hundred attendees for its
annual Meet the Angels investors event. As we increase the
concentration of investable companies, venture capitalists will

VENTURE CAPITAL
spend more time down here and open more offices, Bates says.
As you see more and more companies in the Boca Raton area,
West Palm Beach and Broward County get funded, there are
more reasons for them to come down here.
The GCVCAs annual expo for entrepreneurs looking for
capital has been rebranded into Sup-X: The StartUp Expo with
the goal of attracting more attendees nationally. The February
expo is being led by GCVCA President Bob Fitts, who is also
CEO of Trident Global LLC, which helps small- and middlemarket companies improve their performance.
Before that event, the Florida Venture Forum will have its
25th Venture Capital Conference in St. Petersburg. The 2015
event attracted more than 500 attendees. One of the key aspects
of the conference is to showcase 20 to 25 later-stage highgrowth companies before investors. The list of presenters will
be unveiled by early January. Presenting companies have raised
an estimated $3 billion over the course of the events history.
An invitation-only investor social will be held on the opening
night of the conference. Among the panel discussions this year
will be one featuring family offices, which are increasingly
important as direct investors and co-investors with VCs and as
limited partners in VC funds, Burgoyne says.
A second panel will look at strategic investors, which are
typically corporations that have arms that invest in venture
stage companies. Citrix Systems and Florida Blue will have
representatives.
Another panel will provide an overview of the state of the
VC industry. Were trying to include investors who are Floridabased or cover Florida from elsewhere, as well as some people
from Silicon Valley or the Northeast who may have one or two
Florida investments, Burgoyne says. We want to provide a
good view of what the trends are here and nationally.
Burgoyne, who has lived in Miami Beach since 1999, says the
state is doing a much better job of nurturing and providing an
ecosystem for startup companies, with facilities such as Venture
Hive and The LAB Miami. It wasnt too long ago that if you
were staring a company in South Florida, you were sitting at a
Starbucks by yourself. Now, there are so many places to got and
get world-class advisement, help and nurturing, he says.
The state has also improved its education system and done a
much better job of promoting success stories, Burgoyne says.
That increasingly has put South Florida and Florida in general
on the map of investors and young people who want to come
to a city and start a business. Once the machine starts going,
you get an influx of talent from other places that hear about
everything that is happening. The state is also doing a better
job of growing talent; for instance, universities are turning out
great programmers, he says.
Elderkin sees Florida going through the same sort of transition
that he saw in Ohio. (Athenian derived its name from starting out
in Athens, Ohio, and launched its first fund in 1997.) Back then,
Ohio didnt have much to offer and we were doing deals coast
to coast, he says. Athenian started doing deals in Ohio in 2000
and now thats one of its largest sources.
Elderkin is on the board of the Florida Institute of Research
and Commercialization, which helps bring concepts developed by
universities into the marketplace. Florida universities are much

Bob White

Karl Elderkin

David Bates

more engaged in the process than they were 15 years ago, he says.
Elderkin is happy to see more VCs in the market. Its hard to
be the only VC in the market, he says. You like to have partners
you can share deal flow and work on deal flow with.
Jeff Toewe, who is a principal with Athenian, expects to see
opportunities crop up around Scripps Florida and the Max Planck
Florida Institute for Neuroscience, which will further fuel the
ecosystem. Theres also a strong talent pool in the wireless field
stemming from Motorolas operations in Plantation, says Toewe,
who once worked for AT&T Wireless.
Modernizing Medicine and Miamis CareCloud, which has
raised $55 million in venture capital, are giving the market
visibility in the health care IT field. A lot of the capital for that
has been coming from out of state, Toewe says, But we plan to
fix that.

For More Information

Gold Coast Venture Capital Association: Helps

connect entrepreneurs, investors and service providers.
gcvca.org
Sup-X: The Startup Expo: Feb. 16-17 at the
Greater Fort Lauderdale-Broward County Convention
Center. sup-x.org
Florida Venture Forum: Helps entrepreneur
funding through education, partnering and networking;
its Venture Capital Conference is Jan. 28-29 in
St. Petersburg. venture.org
Athenian Venture Partners: An Ohio venture
capital rm that has a Fort Lauderdale ofce.
athenianvp.com

Growth Mode
The is the rst of three 2016 SFBW sections called
Growth Mode. A February section will focus on
Sup-X: The Start-Up Expo and a March section will
look at technology startups and the eMerge Americas
technology conference.