A number of early-stage investors are just beginning to dip their toes in the Miami startup market, meeting entrepreneurs and mulling over a few deals. But in just two years, one fund jumped right in and created quite a splash.
Already one of the most active early-stage funds operating in South Florida, Krillion Ventures is a $50 million homegrown venture fund founded by two longtime Miami investor/entrepreneurs. Jeffrey Miller is a prominent South Florida business and civic leader. He has been an active investor for nearly 30 years, with most of his holdings in the real estate, banking and energy sectors. Entrepreneurship is in the Miller DNA: His father, Leonard Miller, took Lennar public; today it is a Fortune 500 company and one of the nation’s leading homebuilders. Melissa Krinzman has a 20-year history of launching, growing and advising private companies and nonprofit organizations. She has been active in the entrepreneurship community as a speaker on capital raising and a judge of business plan competitions across the country, including the Miami Herald’s Business Plan Challenge.
“Krillion was born out of a desire to make South Florida an even better place to live and work,” Krinzman said. She met Miller more than four years ago through the Ransom Everglades School: He was chairman of the board of trustees, she was on the alumni board. “We were both Miami natives, career entrepreneurs, had experience growing businesses as well as nonprofit organizations, and shared a common vision about the importance of access to quality education for all children,” she said.
After many discussions about the imminent growth of South Florida’s tech sector and the corresponding need for active “hometown” early stage venture funds to support these nascent companies, they joined forces in January 2014 as managing partners to launch Krillion Ventures (www.krillionventures.com). They picked up the pace significantly in 2015 and closed the year with a total of 17 investments, including an equity crowdfunding platform for startups, an electric scooter-sharing company and a startup aiming to make it easier for consumers and businesses to use digital currencies.
Today, the firm actively invests in financial services, transportation, logistics, real estate and healthcare startups, and has developed a “Miami First” strategy. Eight of its 17 investments are from South Florida.
“We believe that local investors have an exciting opportunity as well as a responsibility to invest in and support South Florida’s next wave of high growth companies that will contribute to more and better local jobs and talent retention,” she said.
Still, Krinzman sees a potentially nasty venture slowdown ahead and believes entrepreneurs need to batten down. The Miami Herald talked to Krinzman about the firm’s first years and plans for the road ahead.
Q. Why a ‘Miami-first’ and not a ‘Miami-only’ focus?
A. Like all venture capital funds, our primary goal is to earn a return on our investment. We call ourselves a “Miami-first” fund because we prioritize the review of and investment in opportunities in South Florida. Within two years, we have made eight investments in South Florida-based startups, which is approximately half of our portfolio. We have also made investments in early stage companies located in cities such as New York City, Boston and San Francisco. The relationships we make and insights we gain from these investments help our Miami entrepreneurs, and vice versa.
Q. Why have you selected the verticals you have?
A. For the first two years, we decided not to focus on any verticals. We wanted to cast a wide net and see where it would lead us. This is evidenced by the diversity of our current portfolio. But at the end of 2015, we decided to take a note from New York City’s tech sector. In my role as founder and managing director of Venture Architects, a firm dedicated to helping startups raise investment capital, I saw that the New York-based companies that gained the most traction were the ones innovating in the verticals that New York dominated such as advertising, marketing, financial services and fashion.
So, after a rigorous analysis, we selected five focus areas in which we believe Miami has innate strength — financial services, real estate, health, transportation and logistics — and where we can provide value beyond our dollars invested. Moving forward, our investments will primarily fall into these categories.
Q. What stage do you invest in?
A. We are making initial seed stage investments from $50,000 to $250,000. Once the company shows traction, we’ll then provide additional investment capital through their Series A, on a deal-by-deal basis. We prefer to be active investors and often take advisory board or director seats.
Q. A differentiator is your nonprofit strategy. How did that develop?
A. In addition to supporting South Florida entrepreneurs and the overarching technology community, we are also committed to local education and civic initiatives. We believe that one can’t thrive without the other. For example, independent of Krillion, in September 2014, Jeffrey and I were part of the team that opened Beacon College Prep, a nonprofit charter school located in Opa-locka with 240 students in K-3, focused on developing college-bound students. Additionally, Jeffrey is chairman of the board of Breakthrough Miami and supports many cultural, educational and community organizations. And in a few weeks, Krillion will host an event for local investors and entrepreneurs to learn about The Miami Foundation’s leadership agenda, which is looking to the future and addressing transportation congestion, sea level rise and the need for more public spaces — all issues that impact the quality of life for South Florida’s current and future entrepreneurs.
Q. What attributes do you look for in founders?
A. As we say on our website, we are seeking “one in a krillion.” We review both referred and unsolicited pitch decks from all over the country and hold office hours once a month to meet with local entrepreneurs. Thus far, we have backed entrepreneurs who believe passionately in their goals to solve a problem but who, at the same time, are willing to learn and be flexible. We believe that passion, tenacity and fearlessness are essential. But if not mixed with the ability to accept and process feedback, we’ve seen these three attributes quickly become negatives. We’ve also found that the entrepreneurs who have taken the time to educate themselves about the process and the etiquette of raising capital are the ones who shine.
Q. Please tell us about a couple of your most recent investments. What attracted you to them?
A. Our two most recent investments were made in December 2015 and both are Miami-based companies — MealPass and Sktchy.
Mealpass is co-founded by Mary Biggins, one of the founders of ClassPass, a membership program for fitness classes across multiple gyms and studios that has raised $84 million from prominent venture funds.
For a flat fee of $99 a month, members can choose to eat lunch at one of over 50 restaurants each day. MealPass launched in Brickell in January and in downtown Boston earlier this month. From the moment Mary started to walk us through her business model, it was clear that she was a seasoned entrepreneur, highly analytical, and extremely focused and hardworking. We also liked that MealPass has a subscription business model and offers a significant cost savings to budget-conscious office workers.
Sktchy, founded by Jordan Melnick, is an app where users submit photos of themselves for inspiration and artists draw, paint or sculpt portraits. The before-and-afters can be discovered and shared on the app. With Jordan, it was clear that he had a deep understanding and connection with his audience and a steadfast vision for Sktchy. We immediately saw the simplicity, usefulness and addictiveness of the app, as well as the significant opportunity to provide a marketplace for these talented artists to sell their sketches. We believe the company is poised for exponential growth and can’t wait for the marketplace to launch in March so that the sketches can be purchased from the talented community of artists.
Q. What keeps you up at night?
A. The venture investing and valuations have recently begun to lose velocity, a repeat of 2000 and 2008, when the venture market slowed to a crawl. In my mind, the only question is, how long will this one last? Having experienced both of the downturns up close and personal, it wasn’t pretty. But most local entrepreneurs that I have spoken with haven’t even begun to think about gathering the hurricane supplies that they’ll need to wait out the storm.
Investors are already putting on their battle gear. Those who have horses in the race are running the numbers to figure out which ones they are going to bet on and which are being released into the pasture. And they have already slowed down their decision-making and will wait out the storm in order to acquire new investments at attractive valuations.
On the other hand, optimists by nature, I haven’t seen many entrepreneurs suiting up. Our advice to entrepreneurs is to educate themselves about the past two market downturns by reading the recent articles by investors and entrepreneurs who survived them, revise their game plans and pro-actively cut costs to make sure their businesses will continue to thrive during the lean times ahead.
Q. In general, how would you characterize the deal flow you have seen from South Florida?
A. Drawing from a broad and diverse gene pool, it is not surprising to us that potential deals in South Florida come in all sizes, shapes, colors and patterns. And we’ve seen a steady increase in the pure number of South Florida-based companies that are seeking investment capital. From our perspective, both are very good things.
Nancy Dahlberg; 305-376-3595; @ndahlberg
Investor: Managing partner of Krillion Ventures, a $50 million Miami-based early stage venture capital firm that actively invests in financial services, transportation, logistics, real estate and healthcare startups.
Business planning: Krinzman also founded Venture Architects, a business planning firm that has positioned early and growth stage companies for success in the capital-raising process since 1998.
Previous experience: Part of founding teams for three prominent, national nonprofit organizations.
Board appointments: Vice chairwoman of the board of The Miami Foundation as well as a board member of Beacon College Prep and the Ransom Everglades School Alumni Board. She also serves as a board member or adviser for a number of Krillion Ventures' investments.
Education: Bachelor’s degree in English and American studies from Tufts University.
Three most recent books read: When Breath Becomes Air by Paul Kalanithi; The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor by Howard Marks; and The Prize: Who's in Charge of America's Schools? by Dale Russakoff.
More about Krillion Ventures: KrillionVentures.com.