Call it a sign of the times for South Florida, but an event titled “How to Fund a Startup” had a full house of hackers, entrepreneurs and investors in Miami Beach, on a Wednesday evening.
Organized by LatAm Tech Miami under the auspices of eMerge Americas, the gathering at the newly opened WeWork space featured a panel with John Milciunas, entrepreneur-in-residence at the San Francisco-based Accelerator Ventures; Nico Berardi, managing director of Accelerated Growth Partners; and Ed Boland, a principal at Scout Ventures. Derrick Ashong, a musician and CEO of amp.it, a social network and music site, moderated the discussion.
LatAm Tech is an organization based in New York, San Francisco and now in Miami, whose goal is to connect the technological ecosystems in those cities and Latin America. The discussion included both big-picture themes and practical, specific issues. Knight Foundation has made more than 100 investments over the past three years to support the developing entrepreneurial ecosystem in South Florida.
“There is no institutional capital on the ground here,” offered Boland when discussing why Scout Venture opened offices in South Florida. “We saw that as a great opportunity not just to be here but to help build the ecosystem. … [and also] the opportunities in Latin America. There are tremendous growth opportunities, and the potential for technology to change Latin America … is astounding.”
Meanwhile, Milciunas noted that while much is in place in South Florida and “there is a lot of capital that’s untapped,” it is still unclear who will be creating the new products. Still, he saw the potential importance of South Florida’s developing ecosystem “as a point of reference for the rest of Latin America.”
In fact, added Boland, “a lot of Latin American companies want the structured funding you can find in the U.S. So they come up here and, unlike Silicon Valley, we respect entrepreneurs who aren’t quite Stanford graduates. We take them seriously … and increasingly we see companies coming to Miami as opposed to Silicon Valley or New York. The culture overlap is so prevalent.”
Berardi underscored several issues that make South Florida attractive to both entrepreneurs and investors, such as taxes and cost of living, which in turn translates to lower expenses in big items such as wages. Also, and in contrast with other areas, South Florida “is so collaborative that’s almost a cliché. Right now it’s so friendly, and in a week you can meet everyone you need to.”
In fact, noted Boland, “one of the advantages of being in Miami is that for a big city, it’s a small town.”
As it turns out, each venture capital firm represented a different approach to investing in startups. Accelerator Ventures focuses on early-stage tech companies; Scout Ventures, said Boland, looks for outfits “ready for the next step,” going from angel investing to institutional; while Accelerated Growth Partners, which has received Knight Foundation support, looked for early-stage companies that “are in the market already,” said Berardi. “We tend not to go into the beta, prototype, pre-product, pre-launch stage.”
Perhaps because of it, the panel, which also answered several questions from the audience, offered a broad perspective on several issues.
It addressed issues such as valuations (“Valuations are very subjective. It’s an art not a science; don’t get hung up on them,” said Boland.) and how, as investors, they chose what would be funded, because of the product or the team.
“We look at three parameters: team, market and technology,” said Milciunas. “But if we are not comfortable with the team, it doesn’t matter what the market is and we don’t care about the technology. It’s team first.”
There was also a question about how to close the gap between professional investors and those who, except for “serial entrepreneurs,” are not yet professional entrepreneurs.
“Accelerators are amazing,” Berardi said. “If you are just getting started, go to an accelerator … one of the things they work on a lot is exactly how to navigate the funding process.”
But perhaps his most important point was that “Relationships are key.”
“If you are an entrepreneur “develop, build those relationships so when you are ready and we’ve known you for a couple of years it’s a completely different conversation.”