Steve MacDonald made his mark in healthcare technology as an entrepreneur, but he generally avoids the healthcare sector as an investor.
“I don’t invest a lot in healthcare because I came from the space, and I know how complicated and hard it is,” MacDonald said at the Synapse Summit.
MacDonald, who started and sold Tampa companies TechHealth and myMatrixx, was part of a panel of investors talking about big wins and misses, promising sectors and what they look for when considering funding a company.
“I bet on the jockey,” said McDonald, now a board member at Florida Funders. He said he’s invested in about 100 deals and always wants to know about the startup’s founder and the team. “There’s lots of great ideas, but there’s no great idea without execution.”
Florida and companies in the Sunshine State offer a lot of opportunity for investors, said Jake Seid, managing director of San Francisco-based Stone Bridge Ventures.
“I’m impressed with the talent coming out of universities here. It’s a great place to live,” Seid said. “Talent in the valley is too expensive.”
Seid sees cloud computing as a promising sector, while Tony Jimenez, managing director of Medina Capital in Miami, focuses on cybersecurity and data and cloud infrastructure. And while MacDonald doesn’t invest a lot in healthcare, he sees opportunities as reimbursement systems change and payers focus on more holistic care.
Zack Coelius, managing partner of Coelius Capital in Silicon Valley, struck it big with Cruse Automation, with autonomous car technology. He invested in the company at the suggestion of a friend, an entrepreneur involved in launching Cruse.
“I don’t know that much about car technology, but I know Kyle really well. I know the look in the eyes of an entrepreneur when they find it,” Coelius said.
Nine months after Coelius invested $100,000, Cruse had a $1 billion exit.
“That’s the power of what all of us are part of here. There’s so much value being created by technology that those sorts of things can happen and will continue to happen. What is being built in these rooms and rooms like this all over the world is super exciting,” Coelius said.
But the investors had misses too. Coelius didn’t see the potential of Uber before it launched, and Tom Wallace, the managing partner of Florida Funders who moderated the panel, said he wished he had invested in MacDonald’s myMatrixx, which provide a 55-times return when it sold.
One mistake entrepreneurs make is to put too much focus on raising capital, MacDonald said.
“Often times entrepreneurs put a lot of focus on fundraising and lose sight of what they are building and why they are building it,” MacDonald said. “In the long run, a lot of businesses don’t need that much money … more money can mean more problems.”
Another mistake that Coelius sees is trying to emulate Silicon Valley.
“A lot of investors and entrepreneurs look at Silicon Valley as the path they are supposed to follow,” he said. “But I wish they would go their own path based on the things they learn from their own communities, and build something that is unique.”