By Jessica Bott
When he accepted a job in Orlando in 1993, Rob Panepinto’s goal was simply to make the move from New York. Three years later and ready for a new opportunity, he joined the team at Magnetix, a manufacturer of spoken word audio cassettes based out of a barn in Winter Garden. The business soon shifted focus, launching a direct mail and fulfillment organization called Connextions. Panepinto acted as a founding member of the original executive team and managing director of the start-up.
“While Magnetix was a very mature business, we knew at some point, it would run out,” he recalled. The company was profitable and well-run due to the strong leadership of its CEO, Jack LeFort, whom Panepinto described as someone who “surrounded himself with a team that would validate, not validate and amplify,” the ideas which ultimately marked their successes. The dot com bust of 2000 led to a new level of sophistication in business. Shipping products out of Florida was no longer cost-effective and opportunity was migrating offshore, so the team considered industries immune to that model.
“We knew we could be a value-player if we could help business transform from business to business, to business to consumer. That was the direction,” Panepinto shared. Perhaps more striking was the way they saw the growing importance of a direct to consumer relationship in healthcare on the horizon. This “sight” proved invaluable and they began by administering the nurse call-in line at Florida Hospital before working alongside Blue Cross Blue Shield of Florida to develop their first branded website which sold individual policies online.
Financially, their circumstances were unique. Magnetix provided an internal capital-funding source as all profits generated were poured into Connextions. A year and a half into the new venture, the team more than doubled its value. Scaling required capitalization and the time was right. Commodity players were entering the market and Connextions was a well-positioned leader in the healthcare space. In 2006, they took on their first private equity partner and in 2011, the right offer came along and they decided to sell.
Panepinto’s experience playing a variety of roles over the years afforded him insight into how businesses develop and scale. Combining his experience with his desire to add value, he launched Florentine Strategies earlier this year. The company provides board support, strategic consulting and investment capital in the arenas of healthcare, social enterprise and technology.
When it comes to capitalization, Panepinto believes the philosophy around raising it is central. “If you run a business well and drive value for the clients, revenue will solve a lot of problems,” he shared. Focusing on the operational side of the business to support growth will ultimately bring traditional funders around for a look.
He continued, “Initial fundraising to build is a need, but continual fundraising is counterproductive. The same is true for exits. When the focus remains on creating value for the customers and scaling the business, the exit will become much clearer and the business will attract buyers.”
Building Capital in Central Florida
“The good news is that there is a lot of focus and initiative in place. I think it’s wonderful what the Florida Angel Nexus has done through their investments in local start-ups and the work Arsenal Venture Partners is doing,” Panepinto expressed. Locally, there’s a growing recognition that capital is needed for early stage companies and organizations like the Central Florida Partnership are taking a look at the role partnerships can play. The challenge? Outside capital doesn’t look at Central Florida the way they do with larger markets. According to Panepinto, the question on the table is this: How do we let outside capital know we have opportunity here with successful exits?
Education in start-up investing is key and involves helping locals know about returns, risks and the types of investments that can be made. “All of us want to see it move more quickly,” he said. “There’s a lot of good stuff going on and when the community rallies around these things and combines our resources, things move quickly.”
He means what he says about community, too. Beyond running his own business, Panepinto is engaged on the boards of numerous organizations, including his role as Chair Elect for Orlando, Inc., which highlights his deep commitment to see Orlando thrive. As he put it, “More of us are putting our flags down and saying this is home.”