Five years ago, Dave Chitester set out to help early stage startups: ones that had a proof of concept, solid stream of revenue and some footing.
"When I started Florida Funders, people said 'You’re going to do what?'" Chitester said. "Now they're doing multi-million dollar deals."
He eventually decided to retire, passing the reigns to fellow co-founders Marc Blumenthal and Tom Wallace. But not long after, he saw another need crop up.
"I'm a startup guy — I start stuff," he said. "I wanted to get back into real start up phase of things."
Chitester saw there was still a gap in helping the bootstrapping businesses get funding. In the startup world, bootstrapping entails a business owner using their own investment to fund their company. That comes before the pretty explanatory "friends and family" phase for funding.
Enter Seed Funders.
According to Chitester, Seed Funders looks at the extremely early stage startups: he wants to be their first investor and if a company has over half a million dollars in revenue, it's typically too late-stage for his taste.
"My wife calls me the startup whisperer," he said with a laugh. "We enjoy getting these companies and it's our goal to launch these companies. Our mission is to unleash hundreds of tech startups in the state of Florida."
Chitester's idea has gained some traction, garnering several partners to join the Seed Funders investor board.
"It takes a team of believers and with our partners, they all come on board knowing that we invest in pre-revenue companies," he said. "We’re seeing — relatively recently — investors like bridge angels that are very interested in the things we’re doing and talking to them about joining us."
The Seed Funders have also helped launch a solid handful of companies. Chitester said since he does look at such early-stage companies, whether they're bootstrapping is a good indicator of just how committed they are to their business and its future.
"We want to see something there — we don’t invest in ideas," he said. "So if they bootstrap it themselves, that's admirable to get something done where they're willing to quit a full-time job or part-time job. We’re probably the only ones in the state that will (invest that early)."
But the tide toward investing early is turning — slowly.
"I see it getting a little more acceptable than strictly what Florida Funders is doing," Chitester said. "I see some of the other organizations moving a little more in our direction, which is great. The more they're out, the more they can get funded and launch. It increases the amount of capital available and we have seen some movement in the last six months or so."
Now, he thinks the next step falls on the companies sprouting from Tampa Bay.
"The structure has developed tremendously, we have money to invest and we’re looking for companies," Chitester said. "The issue might be for funding quality companies; we’re investing in one out of about 150 companies. The quality of the companies need to come up."
Other funders looking at bootstrapped companies:
Like Chitester mentioned, Florida Funders was founded in 2014 to focus on early stage technology startups. It's a unique hybrid of investment from the Florida Funders as well as crowd funding with accredited investors and has helped raise millions for dozens of companies.
And Florida Funders keep its work going by teaming up with the University of South Florida. USF was awarded a grant from the U.S. Economic Development Administration to work with Florida Funders to create an early-stage seed fund specifically to grow and keep startups in the Tampa Bay region. The seed fund will be called Seed Tampa Bay Early Stage Investment Fund.
