South Florida companies benefit from new $450M mezz fund

South Florida Business Journal - March 11, 2010

Two South Florida companies are the first receive a financial infusion from a new private venture capital fund created strictly to loan to businesses within the state.

On Thursday, Florida’s attorney general and lieutenant governor were in Broward County to celebrate the creation of the $450 million Florida Mezzanine Fund, which, Attorney General Bill McCollum said, can play a crucial role in helping the state’s young companies grow and diversify the state’s economy.

“Last year, [Florida] had 30 investments in companies, I’m told, by venture capital,” he said. “The state of California had 1,100.”

Hollywood-based Great HealthWorks, one of the first recipients of loans from the fund, plans to add 200 jobs by 2011 thanks to the infusion, founder and CEO Ken Meares said. The company, which has 85 employees and makes highly concentrated omega-3 pills, recently moved from 9,000 square feet into a 39,000-square-foot facility in Hollywood, he noted.

Most of the jobs will be in customer service and pay $25,000 to $50,000, depending on the commissions that employees make on top of their hourly pay, Meares said.

“We need [employees] immediately,” he said. “We’re hiring right now.”

Meares and Florida Mezzanine Fund partner Seth Ellis declined to say how much Great HealthWorks received.

Created by a joint venture between Orlando-based Florida Mezzanine Fund, a group of 50 Florida-based investors, and CapitalSouth Partners, a Charlotte, N.C.-based private investment firm, the fund was created to invest in profitable small companies that have trouble accessing capital.

It will invest between $500,000 and $30 million in debt financing per Florida company. Loans will typically be for a five-year term, and the fund looks to recoup about 20 percent for investors.

It will invest in companies in all sectors except real estate, Ellis said.

Miami-based Association Financial Services also received a loan. CFO Alexander Moskovitz and Ellis declined to disclose the amount, though Moskovitz said it was more than the $500,000 minimum.

The three-year-old company works to collect debt for condominium and homeowner associations. It collects association fees from delinquent association members, but does not charge the associations for the service. When it collects, it makes money from the overdue fees, Moskovitz said.

The company has 15 full-time employees, but hopes to add as many as 15 over the next year.

Broward Alliance President and CEO Bob Swindell welcomed the fund and its investment.

“Access to capital, quite simply, means jobs,” he said. “I hear every day, talking to businesspeople, that access to capital is their biggest challenge.”

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