Venture capital abundant for good products, pros say
By April M. Havens
There's plenty of venture capital and angel funding in Miami-Dade County for entrepreneurs with the right product, experts say, but some products are more easily marketable than others.
"Based on what I'm seeing, growth areas include Internet-related ventures, especially in the social networking area," said Daniel H. Aronson, a partner at Bilzin Sumberg Baena Price & Axelrod LLP and co-chair of the corporate and securities group.
"I also see Spanish-focused media firms, both Internet and non-Internet, because we have Spanish angels looking for businesses with a Hispanic focus," he said. "It's closer to home, and it's what they know."
Biotechnology, Mr. Aronson said, is also emerging, although it is in its early stages and usually requires more start-up money to get off the ground, which additionally requires a specific sophisticated and knowledgeable investor.
Robert Macaulay, partner in the corporate law group Adorno & Yoss, finds that while there is "quite a bit of money available, the money is relatively conservative in that people want to sit out and wait for stuff that will work."
High-technology products designed to improve the efficiency of a product, method or process are especially popular, he said. Examples of products include "green" generators that create electricity without emissions, high-tech designs for building materials and steel, and fiber optic advancements.
"These are all companies based on innovation, and the investor has really scrutinized it," Mr. Macaulay said. "This is not the glory days of the '90s where anything Internet-related will work. These start-up companies really need to have something new."
Of course, Mr. Macaulay said, real estate development is at the top of the "do not fund" list in Miami. And while there is still high-tech software development going on, he hears less about it than eight to 10 years ago when it was in full bloom.
Many of his Miami investors are funding projects elsewhere, some internationally, and some local companies are being funded by outside investors, he said.
Carlos Garcia, co-founder and CEO of Coral Gables-based Scrapblog, found funding through Boston-based Longworth Venture Partners and Los Angeles-based Steamboat Ventures, an arm of The Walt Disney Company.
Scrapblog is a Web-based application that allows users to create electronic scrapbooks and multi-media photo slideshows for upload on popular social networking Web sites such as myspace.com and facebook.com.
Scrapblog has about 250,000 users, Mr. Garcia said, and is growing quickly, with 300,000 users expected within the next two weeks. Venture capital funding will be used to add new features to the service, he said, including printing projects that will be purchased and mailed to customers' homes and more online photo editing tools to give users more creative control over their projects.
Mr. Garcia began seeking funding on the West Coast and in the North because "there's really not a robust venture capital culture here, so we had to travel a lot to get venture capital," he said.
"We are fortunate, though, to have a good product, and in that sense it's easy to get the interest of investors," he said. "It just took going out of Florida to be able to do that."
In the future, Mr. Garcia said, "I'd hope they start looking at more Web start ups in South Florida, but a lot go under the radar because there isn't a vibrant venture capital culture in Miami. A lot of [businesses] are moving to the West Coast, but we have a very good team in Miami and were happy to live and work in Miami, so we resisted all the temptations."
Robin Kovaleski, executive director of the Florida Venture Forum, said 18 of the 24 companies that presented at its February 2007 conference in Boca Raton have been funded for $170.2 million, a number that does not include angel funding. These companies come from all over Florida and present ideas to about 1,300 potential investors from all over the world, she said.
Although the forum doesn't track the companies by county, she said about five of the 22 companies that will present during January's St. Petersburg conference are from South Florida.
"It's a very strong showing," she said, "And it's a wonderful time to be an entrepreneur in the state. We have a lot of interesting technologies and services, and the state is really coming into its own, attracting both early- and later-stage capital."
PricewaterhouseCoopers' latest MoneyTree Report data says 15 Florida companies received venture capital during the third-quarter of 2007, including three in Miami-Dade County. Those three companies are Scrapblog, Movida Communications Inc., and Valor Healthcare Inc.