Florida Funders and Florida Angel Nexus Join Forces
Some things were just meant to be together: Batman and Robin, chocolate and strawberries, and investors and entrepreneurs. Two Florida investment firms have merged efforts and are committed to fueling innovation and commerce by providing entrepreneurs with access to capital, mentorship and opportunity while helping investors connect with high-potential companies
Blaire Martin, co-founder of Florida Angel Nexus (NEXUS) and now vice president of strategic partnerships for Florida Funders, explains the benefits.
For entrepreneurs and early-stage companies: “This is a great avenue to receive a lot of advice and money if your company is well-positioned to accept that capital and to execute on a very aggressive growth strategy.”
For investors: “It’s much wiser to invest as part of a group. Being an isolated investor trying to build up your own deal flow can be really challenging. Joining a community that’s well-connected with the different investment opportunities throughout the Southeast will help you get connected faster so you can start building a portfolio.”
According to a 2017 survey by the Florida Small Business Development Centers, known as the SBDC Network, the No. 1 challenge Florida small businesses are most concerned with is access to capital.
Florida Funders is a venture capital fund and crowd-funding platform that invests in early-stage technology companies. It acquired NEXUS, which is now a program of Florida Funders, with the mission of connecting early-stage companies to a vast network of investors and keeping those businesses from moving out of the state to obtain capital.
Martin explains the catalyst of the partnership: “Florida Funders has been a member at NEXUS for a while. We’ve worked regularly with them on deal flow and co-investing on transactions ever since we were founded in 2013. Florida Funders brings more resources and a much larger team to the table, along with an $18 million fund. It just made sense to align more closely, since we had very complementary products and skillsets. We’re taking the best from both companies and putting it all together right now.”
The acquisition offers more services to both investors and early-stage companies. The group activates its accredited investors by getting them involved in mentoring, providing network connections, and investing in Florida’s high-potential companies.
“It’s really exciting to see the progress happening across the state of Florida,” she says. “Fast-paced, venture-backed businesses attract talent, and I believe Florida has a tremendous opportunity over the next 20 years to really put our stake in the ground as one of the most significant tech states in the country. We have everything we need right here.”
Peerfit, a Tampa-based company that makes a digital platform for fitness benefits, came 0 to NEXUS in need of a bridge round of investment. A bridge round gives companies more runway before they raise a much larger round of investment. “Peerfit needed a bridge round, and we found two investors who each committed $25,000,” Martin says. “They were able to use that funding to achieve some very critical milestones.”
With support from Florida Funders and NEXUS, Peerfit was able to raise $5 million in venture capital from Florida investors leading up to its recent $8 million Series B round. Multiple large investors got involved, including Tampa Bay Lightning owner Jeff Vinik, among other notable names in the community.
NEXUS has also worked with the Orlando-based company Fattmerchant, which offers credit card processing and merchant services.
“They were able to raise their seed round and Series A from Florida investors,” Martin says. “CEO Suneera Madhani has done an amazing job. She raised $5.5 million last October and $10.5 million this July led by an Atlanta venture capital fund and has grown her company to about 50 employees from just starting with two. They are expecting to add another 50 jobs over the next year.
“So, you can start to see the whole horizon come together. We are enabling our state’s tremendous population of diverse investors to provide critical, early money that traditionally has been difficult to acquire. Florida Funders supports investors to use their time effectively to build a portfolio of Florida ventures.”
Priming the Pump
Florida Funders and the NEXUS program have strategic models to ease the impact and potential risk in making an investment.
One way is by strengthening the community bond. Throughout the year, Florida Funders hosts investment events across the state. Investors can meet and network with one another, study and learn about deals together, and comfortably fill out a full round of investments. This collaboration allows investors to make informed decisions as a group, rather than hand selecting deals on their own.
Another way the organization caters to investors is by formulating new methods to diversify their portfolios. One of those vehicles includes the Portfolio Select program, which offers investors a guaranteed allocation on future companies with a window to review documents before the deal is showcased on the Florida Funders platform.
“It allows investors to selectively divide their investment into multiple funding opportunities,” Martin says. “You don’t have to do as much paperwork or move money to escrow as many times.”
According to national research on early-stage venture capital returns, an investor should build a portfolio of at least 12 deals. Florida Funders enables accredited investors to invest as little as $5,000 into an opportunity and double down on the ones they really like. “This is a really good fit for some people who want to invest in the asset class and don’t want to have to do all the work themselves,” Martin says.
According to the Angel Capital Association, investing in 12 venture deals offers a 75 percent probability that the return on that portfolio will be 2.6 times the total investment. Expanding to 24 deals increases those odds to 90 percent.
“The key is to have the fortitude to keep investing when the horizon is three to five years,” Martin says.
Growth and Mentorship
“I love mentoring young companies all over the state,” she says. Florida Funders offers a mentorship program for entrepreneurs and companies at any stage.
Martin recognizes the importance of coaching and collaboration. “I think it is so important to have that relationship with people who are further along in their career or have a specific expertise they can bring to the table. I’ve had amazing mentors in my life. I’m 30 years old, and I’ve already had an exit and been the CEO of a company, but I wouldn’t be where I am today if it weren’t for them.”
These mentors help to prepare and elevate companies to future rounds.
Peerfit’s Ed Buckley was the ideal CEO to mentor, Martin says. “He was very coachable, and he worked well with all of our investors.” The investors continued to advocate for Buckley between each round, which attracted even more investments.
“They invested in the second and third rounds because they loved the progress they saw with that company,” she says. “Those are the types of stories we want to see happen throughout Florida.”
Florida Funders and the NEXUS program feature live webinars every Wednesday that showcase one company.
“There’s a lot of win-win due diligence that happens here,” Martin says. “When a company presents, it’s going to get feedback from all these brilliant investors who have very diverse backgrounds and expertise. The presenters are going to get referrals. They’re going to get suggestions about their funding strategy, their growth strategy, their customer segments, their targeting. So it’s a way for companies to leverage that investor base, while providing investors an avenue to support and mentor companies.”
Pitch coaching, an integral facet of the mentorship program, equips entrepreneurs and early-stage companies to present to investors and secure funding.
“A lot of times entrepreneurs are great at sales pitches, but investment pitches are different,” Martin says. “How do you change your spiel to not just convert a customer, but to convert an investor? How do you get that investor to see the whole vision for the company, along with investment returns it could generate?”
Sunshine State to Startup State
The vision of the company is to transform Florida’s economy by creating an influx of investors and providing them with ready-to-scale businesses to invest in. They want businesses that start in Florida to stay in Florida.
“Florida still has this huge gap,” Martin says. “We don’t have a lot of institutional investment going into these companies yet, and we really need to demonstrate success. We need to get Florida companies funded by Florida investors.”
She encourages investors to get involved in the local economy. “Returns of 20 percent to 25 percent over three to five years is a great portfolio return. It’s also an avenue to transition out of running your own business day-to- day, or working in full-time corporate America, into funding new start-ups and providing ways to increase growth — and to connect with other smart people doing really cool things right here in Florida.”