News and Updates

#1MCstp: Seedfunders, October 11, 2017

Seedfunders

This week, our second #1MCstp presenter was David Chitester, introducing us to Seedfunders.

Seedfunders is “Investing in Tomorrow’s Technology Today” by providing “funding and mentoring for pre-revenue technology concepts.” The investment team is comprised of four experienced members. David is the Managing Member and has a long history in entrepreneurship. “Basically, I”m an entrepreneur,” David said; “I’ve started and sold a number of companies. I started Florida Funders and retired from that just over a year ago as Chairman.” David’s retirement was short-lived though, and he’s “un-retired,” as he put it, to start Seedfunders.

Irv Cohen is a David’s Partner at Seedfunders; he is also still part of the team at Florida Funders, where he and David collaborated in the past. Irv has “an extensive background, including Wall Street experience. He is the Past President at JP Morgan’s Treasury Technology Corporation and the Former CFO and COO of Barclay’s Bank. “Irv’s been in Tampa Bay for several years now and is heavily involved in a number of organizations,” David said.

Randy Greene is another Member of the Seedfunders team and “one of the smartest guys you’ll ever meet.” He has been a President and CEO of three different public companies and is Chairman of Vistage Florida Group 2060.

Tommy Simon is the fourth Member at Seedfunders. “Tommy’s also very experienced and has experience in entrepreneurship and investing,” David said. Tommy has been the CEO for several entities and is involved with the Tampa Bay CEO Council, CEO Nexis, and Social Venture Partners.

These four distinguished members make up the core team at Seedfunders.

Irv Cohen is a David’s Partner at Seedfunders; he is also still part of the team at Florida Funders, where he and David collaborated in the past. Irv has “an extensive background, including Wall Street experience. He is the Past President at JP Morgan’s Treasury Technology Corporation and the Former CFO and COO of Barclay’s Bank. “Irv’s been in Tampa Bay for several years now and is heavily involved in a number of organizations,” David said.

Randy Greene is another Member of the Seedfunders team and “one of the smartest guys you’ll ever meet.” He has been a President and CEO of three different public companies and is Chairman of Vistage Florida Group 2060.

Tommy Simon is the fourth Member at Seedfunders. “Tommy’s also very experienced and has experience in entrepreneurship and investing,” David said. Tommy has been the CEO for several entities and is involved with the Tampa Bay CEO Council, CEO Nexis, and Social Venture Partners.

These four distinguished members make up the core team at Seedfunders.

The problem Seedfunders is addressing is access to capital. “Basically, technology startups in Florida can’t get the funding needed to develop and launch their product or service,” David explained. On top of this, “the fact is that 97% of accredited investors who could invest in these companies don’t invest in them.”

The reasons for this are numerous. To start, they don’t know how to find and vet the companies. “They don’t know how to analyze what the company’s about and whether they’re really worth investing in,” David said. In addition, investors need legal and accounting assistance. Another barrier to investment is that the minimum investment is typically large – $25k – 100k. “Maybe they think, ‘I don’t want to invest that much. Maybe I’d do $5k or $10k, but I don’t want to do $50k or $100k,” David explained. Finally, many investors simply don’t have the time to invest. “These people are probably working, running their own companies. They don’t have time to do all of this, so they’d rather not get involved.”

“We solve all those problems,” David said. Seedfunders “mobilizes the credit investor base by making it easy for them to invest. We also source and fund high-quality technology companies within the state of Florida.” Similar to the idea of Florida Funders, which funds Series A rounds of $500k – 800k, Seedfunders looks to fund smaller amounts of $25k – 250k to pre-revenue companies.

Seedfunders has very specific investment criteria which they use to vet startups:

  • Invest in pre-revenue technology concepts
    • Cutting-edge concepts in FinTech, EdTech, MedTech, and Urban Tech, as well as Virtual Reality, Artificial Intelligence, Internet of Things, Cyber Security, and e-Commerce
  • Scalable business model with recurring revenue
  • Solid founding team
  • First money in, maybe along with family & friends. “We don’t want a capital table that includes 8 investors, all with different terms,” David said.
  • Common stock/equity, no convertible debt. “We want to be with the founders, at the same level as the founders, in common stock – same as the founders,” David added.
  • Initial investment of $25k – 250k
  • Funding in tranches tied to progress. “So if we’re doing $100k, I might do $20k upfront and then another $25k or $50k time tied to progress, along the development of the company,” David explained.

The team has an extensive and thorough due diligence process which they use to vet startups. Beginning with leads from various areas, some are rejected if they fail to meet the above investment criteria. Those that do move down the funnel to a shortlist. In this stage, the team reviews the business plan, hears their business pitch, and personally meets the founders to gain an “understanding of what they’re all about.” Many more companies are rejected at this stage of the process. Those who continue on go through additional due diligence checks, including gathering more data and checklists. Those who are not rejected at that point then move on to a background check. “Then we close the deal and provide the funding,” David said. In addition, Seedfunders provides mentoring alongside funding, “because we want to be with the founders and move that process through so they are successful.”

Seedfunders was launched this past July and has opened their office at the Station House. They currently have 28 deals that have been submitted for funding and are waiting for 9 additional deals to be submitted. Four deals are currently in the due diligence process.

Seedfunders is helping to retain technology startups in Florida and partners with experienced investors. Members only invest in “the deals you like, so you can pick and choose the deals that you want to invest in,” David said. There are no upfront costs – only success fees for successful deals. Seedfunders vets, monitors, and mentors all of the startups they choose to fund, and they have access to off-market deals “that investors don’t find elsewhere.” It’s possible to earn significant financial returns through the deals made. And David added that, “most of all, we have fun.”


Click here to see this week’s presentation video:


How Can We Help?

David said that we can help Seedfunders most by helping them “get the word out” that “there’s somebody that wants to invest in these companies and there are companies that want to be invested in. Let’s get them together. And let’s get some investors on board who say, ‘Let me know when you have a deal; I’d like to look at it.'”

David elaborated, “we don’t have a big budget for marketing,” so our help spreading the word is appreciated. “I am going around the state next month and attending 7 pitch events and judging two of those. Basically, it’s going out and getting the word out, talking to people,” David said.

If you would like to connect with David, he can be contacted at dave@seedfunders.co or (813) 335-0322.


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