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Tampa Bay Tech Leaders: A State Of The Union On Tech Capital with Marc Blumenthal of Florida Funders

Marc Blumenthal, Florida Funders - Full Stack Talent Tampa Bay Tech Leaders

Florida Funders has made a massive impact on the capital that flows through to Tampa’s startups. We’re eternally grateful to Marc and the rest of the Florida Funders team for bringing in accredited investors with different industry backgrounds into the fold.

Roxanne Williams: I was taking a look at your LinkedIn and you have had a very interesting career. I’m particularly interested in your time at Tribridge. Can you talk to us about that?

Marc Blumenthal: I’ve actually had two stints there. In both cases, I sold my companies to Tribridge. One was a joint venture called Tribridge Software, which was sort of the catalyst for all of Tribridge’s software operations and sales. We built that in 2004. The second time I worked for Tribridge was in 2013, when they bought Intelladon.

I’m more of a build-it-and-somebody-else-buys-it kind of guy. Hang out to integrate it and make sure everybody’s happy, then I go do another one. And really, nobody wants me as an employee, not even my good friend Tony DiBenedetto. He doesn’t want me as his employee, and I don’t want him as a boss.

Roxanne: Do you still talk post-Tribridge?

Marc: I see Tony all the time – in fact, he’ll be here this afternoon working on another deal. Tony and I are good friends – I love Tony.

Matt Vaughn: That’s the rundown for your time at Tribridge, what are the other Cliff’s Notes of your career? How did you get to where you are now, for those that might not be that familiar with you?

Marc: I started my technology career in 1984, going to the University of South Florida and working at IBM. Customers purchased computers, and they desperately wanted to do things with them that IBM didn’t provide services for. So, I left IBM and I started my company. That propelled me into consulting. I then progressed through to networking, ERP software, CRM software, custom software, and finally launching Progressive Business Solutions.

In 2000, I sold Progressive Business Solutions to a company called ePartners that was backed by Austin Ventures. I actually ended up working for them a little bit, until I bought Intelladon and built it. Now I’m at Florida Funders.

Matt: Are there any career highlights that you’re particularly proud of?

Marc: What I’m most proud of are the teams we’ve assembled to build those companies. The thing that’s most special is that the vast majority of them are still my friends or my coworkers, 3 companies and 25 years later. That’s really what I’m most proud of. One of them sits in this office. She was with me at Intelladon, and now she’s with me at Webinfinity.com. I’m on the board there, and I invested in them. So, that’s what I’m proud of – but listen, I love building the companies. I actually liked selling them. I hated the period of time immediately after selling them.

Matt: Seller’s remorse.

Marc: Well yeah, it’s weird. It’s this bizarro experience of feeling lost and without purpose.

Roxanne: Empty Nester syndrome! What’s an average day for you at Florida Funders? Is there even an average?

Marc Blumenthal, Florida Funders - Full Stack Talent Tampa Bay Tech Leaders - Fun

Marc: It’s insane. There are a lot of different things that I do at Florida Funders, or that I do in general, even with my role at Synapse. They’re really intersected because it’s all about the startup and early stage tech ecosystem throughout the state.

Whether I go to the Tampa Bay event tonight, or judge a pitch competition, or meet an early stage company to look at funding it, or to provide some advice and counsel, or to meet with investors, or to raise a new fund, they’re all congruent activities. But to an outsider, it must look like a Rorschach diagram [laughter].

There’s a tremendous number of initiatives to organize what is oftentimes a chaotic ecosystem of entrepreneurial support organizations, startups, and investors all over the state – and to get them to move in concert.

There are a lot of moving parts. We have one company here who we’re raising money for. We’re trying to work through some specifics about timing and understanding the use of funds. Then we have another one that we’re about to close, and we’re finalizing the terms of the operating agreement. And then we have ones that we’re interviewing to put up for funding.

We have plans to do events in South Florida, Orlando, and Tampa. It’s a lot, but it’s a blast. It’s a mix of business development, investment committee, and operations. New things, old things, refinement, and strategy.

But it’s exciting because we’re also in the thick of the mission to transform Florida from sunshine state to startup state. I work harder now than I’ve ever worked, and building those companies wasn’t a cakewalk. But this is a labor of love. We all make way less money than we ever have, but we’re having the most fun [laughter].

Matt: It’s about the passion. For the uninitiated, what’s the quick elevator pitch of both Florida Funders and Synapse?

Marc: The need for Synapse was manifested out of my experience in building Florida Funders. If not for Florida Funders, there would be no Synapse. Yet, they’re very different organizations. They share some office space and they share me, but that’s really it.

Florida Funders is about a couple of things. One, we’re an early stage venture capital firm that is focused on Florida companies, or companies that have a nexus to Florida – some significant benefit to the state. Employees, operations, sales, customers, etc. Two, we’re a hybrid venture capital firm. We deliver the capital to early stage companies by combining both an institutional process with a committed venture capital fund, and we use the crowd of accredited investors to be able to put money to work in deals. We have over 1,200 investors, and that number is growing every day.

Marc Blumenthal, Florida Funders - Full Stack Talent Tampa Bay Tech Leaders - Siren Song

So, we’ve kind of democratized capital for the average individual who might want access to this asset class. Our tagline is, “From sunshine state to startup state.” We want this to be one of the best places on earth to build a business, a career, and a life. Not to lose our best and brightest to other cities that have this siren song of capital, talent, and customers – because we have them here.

That’s the mission that drives us, and most of our investors are attached to both. Everybody wants a great return, everybody wants to invest in the unicorn. That might make it more interesting, but in the end, we want to develop. We want to make the communities that we live in as rich a tapestry as we possibly can. Florida Funders is the laser beam focused on providing the capital, advice, and counsel to companies toward that mission.

Florida Funders is a for-profit organization, but we have a very virtuous mission that’s a win for everybody. Synapse is a 501(c)(3), and is all about providing organization and connectivity to Florida’s innovation ecosystems.

They’re geographical in nature, they’re technology-based in nature, they’re industry-based in nature. They’re trying to make sure that defense innovation, health tech, biotech, agricultural technologies, education technologies, and all of the intersecting industries and technologies are visible, and that people can connect with them.

Whether it’s investors, customers, or talent who wants to work for those companies, we make all of that more efficient. And we do it through events like the Synapse Summit. We also do it through the Synapse Connect platform, which shrinks Florida virtually so that you can find where you’re looking for more easily. Sort of match.com meets Netflix. And then we do it with the Synapse challenges, which are these innovation challenges.

Roxanne: The hackathons, right?

Marc: They’re kind of like hackathons. They’re ideation. We’ve done the Victory Ship, Metro development, we’ve got one coming up for Tampa International Airport, we’ve done one for blockchain in healthcare. It’s all these different use cases, and it sparks the talent pool, the makers, the innovators, and the hackers come out of the woodwork to compete.

The challenges create a lot of visibility, news, and talent for the companies that are issuing them, so they’re a big part of what we do.

The Synapse Summit back in January had 5,500 registrations. At any given time, there were 4,200+ people in Amalie Arena. It’s bigger and broader than Florida Funders and it takes a giant effort and community. There are 4 or 5 full-time people that work for the firm, and we have a giant board of advisors – we call it an impact board. We’re going to change the face of Florida.

Roxanne: For the Tampa International Airport challenge, I’m assuming you’re working with Marcus Session?

Marc: It started with Joe Lopano, the CEO. You’ll hear more about it soon. It’s a big, hairy, audacious, cool one. I’m sure Marcus has his fingerprints on it. But our goal really is to do maybe 6 or more challenges per quarter across all orgs and all kinds.

The Suntrust Foundation gave us a pretty substantial grant for doing innovation challenges for nonprofits, so that some of the organizations they support with their foundation can get the benefit of the talent. One of the most successful challenges that we did was in March at our first Synapse Summit with Metropolitan Ministries. You can’t write a story better than the reality of it. Metro Ministries is using it, and Matt Spaulding spun up a business out of it. It was just win win win.

Same thing with the healthcare blockchain challenge that we did with BlockSpaces. The winner won $3,500, but the third place group got jobs that night. They were two young men from Florida Poly. That’s the ripple effect of what Synapse does: it really allows for meaningful collisions to happen more often. It gets the Tampa Bay area and the state of Florida to behave a lot more like a village.

We all run into each other at the coffee shop, and spontaneously we go, “Hey, Marc, what you doing? Matt, what are you doing?” And all of a sudden a business idea would spin up and you’d talk about this serendipitous event. Synapse really is about serendipity, just scaling it across a gigantic piece of real estate called Tampa Bay and Florida.

Roxanne: I saw that you guys are actually going to be at Digital Orlando. Until I saw that, I thought Synapse was exclusive to Tampa.

Marc: No, we’re not exclusive to Tampa. The name of the organization is Synapse Florida, and the premise has always been that the magic of everything that we have here is the resources that we have in the state. Now, you could argue that we could make it if we’re just Tampa. I have no issue with that. But if you were to survey your network, you’d see who came from UF, UNF, FAU, UM, or UCF. Or where customers are, or where the right incubator and accelerators are.

Marc Blumenthal, Florida Funders - Full Stack Talent Tampa Bay Tech Leaders - Florida

The state of Florida is the third largest state in the country. We’re the 14th largest economy on earth. We have 21 million people and approximately 2,000 more per day come here. Additionally, we have 28 research institutions producing various kinds of technology across the spectrum of the sciences and the technologies to be potentially commercialized in businesses. We have an amazing talent pool, business climate, weather climate, and quality of life.

Matt: Out of the ~40 tech leaders that we’ve interviewed so far, one of the resounding things they would “like to see change around and grow in Tampa” is capital. Historically, a lot of investment money in Tampa has been in real estate, hospitality, and healthcare. With your team championing the tech side of capital, what do you think is going to help get new investors’ eyes on local companies?

Marc: Florida Funders wakes up every day doing just that. We have an $18 million committee capital fund, and a $23 million evergreen fund called The Institute. We’re raising a $10 million fund called Seed Florida, and we have 1,200 accredited investors on our platform. That number grows by 10 or more every day. About 25% of them have actually made individual investments into companies that we put up for investment.

Matt: That’s incredible.

Marc: We’ve had over 300 people make investments to one or more of the ~30 companies we’ve done so far. And, we’re about to do 25 more this year, with maybe as much as $18 million more to work with this year. But the magic of it is, I would say probably 80% or more of our accredited investors haven’t made their money in tech. They made their money in real estate, HVAC, flooring, car dealers, farmers, energy, healthcare.

Our investors have built different companies, worked different professions, and are putting their money to work in our deals. Florida Funders does the heavy lifting. We have a team of a dozen people, and another ~20 limited partners, and general partners like Tom Wallace, Kevin Adamek, Mark Sokol, and me.

In order to have ~25 companies that can be funded in a given year, if we fund about 2% – well, do the math. We need to look at well over 100 companies per month. It’s really hard for an individual to do that, if not impossible.

We make sure the entity’s investable, we make sure the cap table’s right, and we negotiate terms. There are so many things we do that make it possible for somebody who made their money in hotels or in real estate or car dealerships to go, “You know what, these folks have a process. They appear to be pretty smart, they have experience, they’ve got a methodology. They’re putting a lot of time and energy and money to work. I’m going to allocate a portion of my investable net worth so that I can get exposure to this fantastic asset class.”

You can’t do one or two deals, you have to do 10 or 20 – or more. You don’t know which ones are going to win, and the winners make up for whatever the zeroes are.

The people who have invested in Peerfit and Homee on Demand, as an example, are in love with those companies. They use them, they tell their friends about them, they scream on the sideline, they refer great people to go work for them, they advise them, they introduce them to customers.

There’s this virtuous cycle that happens with it, but we’re the firm in Florida for investors who aren’t tech-savvy. Heck, even the ones who are tech-savvy work with us.

Roxanne: You’re the bridge.

Marc: We’re absolutely that bridge.

Roxanne: That’s awesome.

Marc: Otherwise, you could be a limited partner in a fund while they’re raising money, you could go do the work on your own, or you could join an angel group. You have to do a lot of work with an angel group. This is the at-scale, simple way to do it.

Some people literally just write us a check and join our portfolio select program and it’s on autopilot. Or they become limited partners in a fund when we’re raising one. Better yet, some people are super active and they come to every presentation, they’re educated about the companies, they decide one-on-one, and they offer their services to help do due diligence. Everybody’s got their own thing, and we meet them where they’re at.

Matt: So they can be as little or as much involved as they want to be. That’s great.

Roxanne: Out of all the investments in Florida Funders, which one would you say is the most successful?

Marc: It’s difficult to say specifically. David Chidester founded Florida Funders in 2014, Tom and I got involved in 2015, but virtually all of our investments happened from the summer of 2016 and forward. Two and a half years is usually not enough time to know with certainty which ones are going to blossom. It’s a 3 to 7 year window for most of these companies. They either make it or fail in that window of time.

If I were just to say on the scale, I would say Peerfit, Homee on Demand, PickUpNow, Finexio, and ClassWallet. With some companies, you’re adding one customer at a time – for example, enterprise software companies. Others, like Peerfit, PickUpNow, or Homee on Demand, you could add hundreds of customers every day.

Interestingly, Peerfit, PickUpNow, and Homee on Demand are all sort of gig economy B2B2C companies. I don’t think the dataset is statistically relevant, but it is interesting. They scale super quickly. If they’re good at what they do, Homee can roll out across the country market by market. It’s not easy, but there’s so much demand from their partner. Same thing with PickUpNow.

Matt: For those unfamiliar, what is PickUpNow?

Marc: PickUpNow is on-demand same day delivery of big, heavy things. Go to Best Buy and get a giant TV, or go to a furniture store and get a big couch. Anything that’s big can be hard to schedule, because it needs a certain size truck and strong movers. So, if you go into these retailers, you’ll see a picture of a Good Guy (they call their movers The Good Guys) and in line at the counter, they would say, “Would you like that delivered today?” you’re like, “I didn’t know I could get it delivered today. You know what? I would love it delivered today.”

Basically, they’ll just charge it right there, and the PickUpNow guys will run it over to your house. So, it’s just dynamite. They’re trying to deliver stuff that nobody really wants to deliver but everybody still buys.

Matt: Who is someone in Tampa Bay doing cool and innovative tech that you’d like to spotlight?

Marc Blumenthal, Florida Funders - Full Stack Talent Tampa Bay Tech Leaders - Growth

Marc: That’s easy. I really like what Immertec is doing. I really like what the guys at Script are doing. And, I like what Marcus Howard is doing in the indie game world. Honestly, there are some companies that are just doing amazing things. I’d love to invest in more of them. They’re not all investable, not all going to fit our thesis, but there are some really smart people. The talent, growth, energy, creativity, and the markets, they’re accelerating. Everything is growing exponentially here and the number of deals that we look at, the quality of those deals, and all these different tech markets are developing simultaneously.

I’m really high on Magic Leap, but it’s different. I’m high on what’s possible from Magic Leap.

Matt: Same here. To be honest, I was not thrilled by the demo. That being said, I am super excited about Magic Leap’s greater potential as standalone, portable AR.

Marc: I’ve talked to them at length about the demos. But I think the opportunity is for entrepreneurs to build applications that are more meaningful than the ones they demoed, that are more disruptive in a business opportunity. It’s sort of like 2007 with the iPhone. The app marketplace, the ecosystem that develops around it, becomes bigger than the company itself. And that’s essentially what I can see happening for these spatial computing use cases.

Matt: I mean, that’s been a huge issue for years with VR/AR. I’ve been a video game enthusiast most of my life, and have tried / owned all the tech. The industry horror is the vicious cycle. Third party development companies are hesitant to go all-in on building a large roster of apps, in case the hardware doesn’t gain a mainstream userbase to sell to. But then the userbase doesn’t explode because there is a lack of apps to justify the high starting cost. It seems like Magic Leap has some interesting plans to fill out the marketplace.

Marc: They just ramped up 50 indie grants, so they’re going to write checks to 50 companies.

Roxanne: Are there any further thoughts that you’d like to share, anything exciting coming down the pipeline for Florida Funders or for yourself?

Marc: We now have offices in Orlando, Miami, and Gainesville. We’re growing radically. Our footprint is growing, our team members are growing, and our scale is growing in a way where we should onboard over 1,000 additional investors this year.

There’s no one who is having the impact that we’re having. I say that not to brag, because there’s a lot of money being put to work. Somebody writing a $30 million check into one company is a tremendous, wonderful thing. But, that only impacts one company. If you really want to make a dent, seed the early stage. Enough companies need to get enough capital so that enough of them can succeed.

It’s not only about the return on investment – it’s jobs too, it’s a lot of other things. We want to create more ConnectWises. 70 millionaires – that’s a beautiful thing, and they’re tech millionaires too.

I would encourage all of your readers to register as accredited investors. You can self-accredit, there’s no cost. Come see what Florida Funders is doing. We’re doing over 30 events this year from Thirsty Thursdays to investment pitches. We’re doing this big investor summit down in Miami right before Emerge, it’ll be a full day of phenomenal investor education and company presentations. You can look at the agenda, it’s pretty spectacular. 150 people that we present to on Sunday will get a ticket to come to Emerge too, so it’s a great value. We’re just trying to change the landscape, one investor in one company at a time.

About Florida Funders:

The Florida Funders team of serial entrepreneurs, venture capitalists, and experienced angel investors conduct a rigorous vetting process to uncover future superstars of the tech world. With a proven track record of successful exits and a shared passion for growing the next generation of Florida tech companies, they have the connections, resources and experience to generate serious returns for serious investors.

Roxanne Williams is the Marketing Director at Full Stack Talent, a technology staffing agency in Tampa, FL. Find her LinkedIn here.

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