When reddit co-founder Alexis Ohanian and Hollywood A-lister-turned-investor Ashton Kutcher heard South Florida-native Andrew Parker’s pitch in August for his “grandkids on demand” service, they were instantly smitten.
Parker is the founder of Papa, which allows seniors to pay $20 an hour to spend time with vetted college students looking to make extra money. He created the company in 2017 after he saw his grandfather struggle with Alzheimer’s and the isolation that comes with growing older.
Of course, elder care can be a struggle for rich and poor alike. So for Ohanian and Kutcher, the decision to invest $2.4 million in the Brickell-based company through their respective venture funds this October was a no-brainer.
“We believe the Papa team has found a unique way to combat loneliness and depression in older adults,” Ohanian said in a statement “The experience that Papa Pals bring their members make it seem like they are part of a family. They are truly ’Grandkids on Demand.’ ”
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Papa is just one of many South Florida startups that have been having strong fundraising in 2018. Over the past six months, in Miami:
▪ YellowPepper, ranked among the top financial technology companies in the world doing business in Latin America, raised $12.5 million.
▪ Plum, which sells wine dispensers, raised $10 million.
▪ Taxfyle, whose platform connects tax filers with tax experts, raised a $4 million.
▪ Caribu, a platform that allows parents to read to their children remotely, raised $1.3 million. It was also chosen for a $100,000 AT&T accelerator.
▪ Luxury travel service company Oasis was acquired by a major rental property provider (financials were not disclosed).
And in Broward:
▪ Sunrise-based virtual doctor platform MDLive raised $50 million from investors including two insurance giants.
▪ Fort Lauderdale-based ClassWallet, a spending management platform for school districts, raised $2.3 million.
▪ The parent company of Tippy, a tipping system for the beauty industry, raised $1.5 million.
▪ Weston-based ERP Maesto, a backoffice software firm, raised $12 million.
Miami tech booster group Refresh Miami has been active in tracking these developments.
“I think we’re seeing a trend of more of the local startups getting cash from investors regardless of where the investors are based,” Refresh founder Brian Breslin said in an email. “This could be a byproduct of too much capital allocated in the VC markets and it is seeking a place to go, as there aren’t enough deals in the [Silicon Valley] to satisfy the amount of dollars available. You’re seeing this in the decline in seed stage funding in [Silicon Valley] and rise in big dollar rounds (If a fund has $1 billion to deploy and only wants to do 50 deals, the deal size has to increase proportionately).”
The list is not exchaustive: MoneyTree and PriceWaterhouseCoopers, which track deals and investment flow, count 20 deals in Miami so far this year, totaling nearly $36 million — already surpassing totals for all of 2017. The data reflect a strong year for fundraising across the U.S. There were nine deals for Broward companies, according to the firms, including deals for Magic Leap totaling close to half a billion.
“This quarter approached quarterly funding records, with $27.5B invested in VC-backed startups and 55 mega-rounds,” said Tom Ciccolella, partner, U.S. venture capital leader at PwC, in the group’s most recent quarterly report. Although deal volume is down, he said, “the overall deal volume [1,229] still reflects a healthy startup ecosystem.”
Meanwhile, with the backing of the Knight Foundation, two different startup guides—an online one called Startup.Miami, and a phsyical book called “Startup Guide Miami,” offer further proof that Miami’s startups may be in the early stages of overcoming the “scale-up” problem — the inability of Miami’s galaxy of small companies to grow into medium- and large-sized ones.
“Miami is a city on the rise, booming with startup activity and inspiring innovators shaping South Florida and beyond,” Raul Moas, Knight Foundation program director in Miami, said in a statement. “ ‘Startup Guide Miami’ traces the evolution of this ecosystem over the last five years. It is a physical testament to progress made so far and an invitation for new entrepreneurs to grow their ventures in Miami.”
One issue that continues to dog Miami’s startup ecosystem is where startup funding is coming from. Serge Elkiner, founder and CEO of YellowPepper, said finding local funding is an even bigger problem than finding local talent.
“There’s no funding here,” he said. “There are almost no [venture capitalists], no [private equity] firms, all of them are somewhere else. There’s a lot of money here, but not structured money, not investor oriented.”
Groups like 500 Startups, TheVenture.City and Rokk3r Fuel are starting to shore up some of that problem. But as long as local funding remains lacking, the growth of Miami’s startup ecosystem will remain sluggish, Elkiner said.
“Ecosystems are based on where you can be funded,” he said, noting none of YellowPepper’s top three investors are based in Miami. “When you’re funding, you like to have companies in your backyard. That’s why there are hubs in Silicon Valley, Austin, Berlin, Tel Aviv, Singapore ... they invest so they can create companies in their backyard.”
Still, YellowPepper has no intention of leaving Miami — though it did just get priced out of Wynwood, where it was being quoted more $45 per foot for rent. It is now located in Little River, which itself is becoming a popular destination for high-end service providers, including Lyft.
“When a neighborhood like Wynwood is pushing you out because of price, you have to relocate,” he said. “But Miami is growing.”