In December, entrepreneur Jason Crystal logged onto a Zoom meeting, looking to raise money for his crowdfunding marketplace company Miventure.
On the other side of the screen that day: mainly Jacksonville-based investors.
Crystal raised $256,000 in December — with half of that coming from Jacksonville investors — funding he’s used to grow his year-old company that connects early-stage startups with retail investors.
“I think that in general we are seeing a lot of cross pollination between people who live in places like New York City and California who are more willing to invest in, or are moving to different places for those investments,” he said.
He’s not the only startup to find the First Coast an attractive place to raise funds.
While Jacksonville’s venture capital and investing scene is still small compared to places like Orlando, Miami, Tampa and Atlanta, it has seen a surge of interest in recent years.
Of the 177 venture capital, private equity and angel investing groups in Florida, Jacksonville now has about 10, according to data from Pitchbook.
A few years ago, that number was in the single digits.
Building a base
The reason for that growth say those who have watched the nascent industry grow: Jacksonville’s quality of life is attrcting more tech companies, the area has deep roots in back-end tech and top executives are injecting cash into projects they’re passionate about,
“You have people here with the extra capacity who still want to work after they retire, just on their own terms,” said John Mathis, a partner at Harbor View Advisors, an investment bank in Ponte Vedra Beach, “and you have more talent here than people think.”
The other piece of the puzzle, Mathis said, can be found in the “solid base” offinancial services, health care and retail sectors here in Jacksonville.
“We’ve got a decent size market with big players like Blue Cross, Black Knight and Fidelity that are all here,” he said. “Those companies are going to spawn innovative, new startups and funders because the people who work at those big companies are going to get ideas like, ‘Hey, I could go out on my own – I could start things,’ Jacksonville’s ecosystem has been quietly building for some time.”
That’s changed the flows of money on the First Coast.
“About 15 years ago when we launched our firm, Florida was a net importer of capital,” Mathis said, “meaning Florida-based companies had to convince venture capital and private equity investors from other states to travel south.”
Now, those seeking funding can find it in entities like Shoreline Equity Partners, Jax Angels (an angel investing network made up of Jacksonville-based angel investors) and Warren Equity Partners in Jacksonville.
Forging relationships
The growth of Jacksonville’s tech scene has helped contribute to the rise of both angel investors and venture funds, as former executives bring both financing and their knowledge of the industry to the table.
When Tyler Brown, for example, left the former Web.com — where he had been a senior vice president of marketing — he partnered with his father to establish Vertus Ventures, a venture fund based in Ponte Vedra Beach.
Vertus was the lead investor in ToldRight, a company founded by an Emmy Award winning producer who spent 20 years at ESPN and a former vice president at the Golf Channel and NBC Sports Group. They started ToldRight in 2020 to build a network of vetted video production professionals that corporate clients can access on demand for video projects.
Vertus invested the company in February 2020, and earlier this year was joined by OneTeam Partners LLC, a joint venture between the National Football League Players Association, Major League Baseball Players Association and RedBird Capital Partners LLC.
Brown said personal relationships between investors and tech-based startups is becoming a trend on the First Coast.
“You’ve got a lot of capital coming into Jacksonville,” Brown said. “You’ve got a lot of great companies here, and then you’ve got a lot of experienced investors.”
Seeing the growth
Jim Stallings has seen that growth over the years that he has been investing.
Stallings founded PS27 Ventures — an accelerator and venture capital firm — in 2013 after retiring from IBM.
Earlier this year, PS27 launched a $20 million fund backed by First Coast investors seeks to invest in about 20 to 40 startups throughout the Southeast.
“A big chunk of that $20 million is my investment,” Stallings told the Business Journal. “I committed to all the other investors (to start the fund), so I was in first, and about half of it has come from local Jacksonville (investors). It’s really rooted here.”
The fund focuses on companies involved in sustainability, software and e-commerce, with an aim to identify and fund women founders and people of color
Its first investment was in levAR, a software-as-a-service company active in the augmented reality industry.
“PS27 offers not just money but also capital, connections, and community,” levAR founder Tre Lucas said.
The fund has also invested in RYZE Superfoods, an e-commerce company that sells mushroom coffee.
“With PS27’s investment and support, we will be able to continue to bring an entire range of superfood products to market, as well as explore new areas for product expansion and help our customers continue to live a healthy lifestyle,” RYZE CEO Rashad Hossain said in a statement.
Corporate investing
The area is also seeing more venture funding by larger companies, making a name for the city particularly in the financial technology field.
In 2020, Fidelity National Information Services rolled out a $150 million fund, aiming to nurture innovative companies and connect them with FIS’ customers.
“At a time when many other fintech firms are scaling back their investments,” FIS Chief Growth Officer Asif Ramji said in a statement, “FIS is deepening its commitment to stay at the forefront of innovative technologies that can help our clients accelerate digital transformation and emerge even stronger from the current pandemic.”
The first investment by FIS Ventures was participating in a $35 million Series B funding round for Futterwave, a Nigerian fintech that provides payment technology solutions across Africa.
In April, FIS participated in a $205 million Series E funding round for Signifyd Inc., a company that uses artificial intelligence to detect online shopping fraud in real-time, and in May, the company bought a stake in NYDIG, a cryptocurrency-focused fintech company.
VyStar Credit Union, meanwhile, has been making a name for itself in the credit union investing world, making investments both on its own and as part of a consortium of credit unions.
“We didn’t know if we’d be successful in finding fintechs that wanted our investments, or that we’d find fintechs that we would want to invest in,” VyStar Chief Member Experience Officer Joel Swanson told the Business Journal. “Starting the fund was really just a way to signify to the market – and the industry – that we are out there looking for those.”
In April, VyStar invested $20 million into Nymbus CUSO, a company it is using to replace its existing digital banking provider that will re-do and its online and mobile banking for members.
In June, the credit union joined with First National Bank of Omaha and a venture capital firm Northgate Capital to invest $18 million in Zest AI, a Los Angeles-based developer of software for credit underwriting.
As part of that deal, VyStar Chief Lending Officer Jenny Vipperman joined Zest AI’s board of directors.
In August, iconic cigar company Swisher launched Matchbook Capital, bringing on Zack Crafton, who had led online winery NakedWines and held the first permit for a cannabis delivery service in California.
The goal, Swisher said, was to help the company move beyond tobacco into new categories.
Looking to the future
As more tech-focused companies — big and small — are attracted to the First Coast, the investing scene should continue to grow, with the number of both startups and investors increasing.
“We’ve become a destination spot for people in the business world,” said Robert Portrie, CEO of Cloud Media Center, a sports video distribution startup based in Ponte Vedra. “It’s been like that for a long time now and companies look at us as well, and we have a young population ... Jacksonville has really become a melting pot of capability.”
The company’s software, built by former Intel and AT&T developers, has attracted backers like Monterey Capital Partners and the Fenwick Group, both in Ponte Vedra.
Going forward, artificial intelligence will be a hot area, Stallings said, as will fintech, building on the base of industry that exists here.
“There’s always been this flow of labor into good jobs in Northeast Florida,” Stallings said. “There’s always been this customer serviced-based back-office, tech-based labor pool here … Now we have very technically skilled people here.”
The combination of a technological workforce and more funding could bode well for the area.
“It used to be that it was always something was happening somewhere else,” Stallings said. “Now it’s happening right here.”
