I moved to Miami three years ago and have been pleasantly surprised by the local startup scene. We’re in the early innings of our journey to world-class status.
How do I know?
Because I lived in NYC for twenty years and watched the tech scene grow there. Slowly.
And now it’s a powerhouse! NYC startups are growing headcount rapidly. Google’s office takes up an entire city block in Chelsea. Cornell’s NYC Tech Campus has finally opened on Roosevelt Island. Amazon is expanding its NYC footprint with a large space at Manhattan West while the five boroughs compete for its planned $5 billion second HQ.
MongoDB cofounder Eliot Horowitz remembers ten years ago when they launched, “People thought we were completely crazy for starting a database company in New York. The early VC meetings were like, ‘So when are you moving to California?’ And [we] were like, ‘Uh, never.'”
MongoDB went public last month and the stock popped 33% on day one. Yext and Blue Apron—also headquartered in NYC—also had IPOs in 2017.
NYC has all the components needed to thrive: lots of experienced founders; available financing for all stages of growth; support in the form of accelerators, incubators, and bootcamps; successful exits pushing experienced entrepreneurs back into the ecosystem; and schools and larger companies training developers, engineers, and other senior talent needed to scale startups.
Miami is putting these same pieces into place, which is what’s giving me my sense of déjà vu. I’ve seen this pay off big time before.
Welcome to Miami
Nancy Dahlberg, who’s leaving her post covering startups for the Miami Herald, has a great view of the action. “We’ve seen substantial growth in the past few years. We have larger companies like Nearpod, CareCloud, and Modernizing Medicine—as well as EveryMundo—with 50 or more people working downtown.”
Here are some of South Florida’s major wins this year:
- We’re home to the largest e-commerce acquisition in history: Chewy.com’s $3.35 billion dollar sale to PetSmart. Hello, Miami unicorns!
- MagicLeap recently raised another $500 Million, bringing their total to almost $2 billion in investment. They currently employ about 800 people in the area.
- Miami startup RecordGram won TechCrunch Disrupt NY this year.
- Modernizing Medicine, the Boca Raton health-tech company founded in 2010, raised $231 million to fund its growth. They employ almost 600 people, with $100 million in annual revenue.
- Rokk3r Labs launched the $150 million Rokk3r Fuel ExO investment fund with general partner Salim Ismael of Exponential Organizations and Singularity University. They’ve already invested in startups AdMobilize, Hyp3r, and Taxfyle. Separately, TheVentureCity also announced a $100 million fund.
- We edged out Austin, Los Angeles, and Silicon Valley for the #1 spot in the Kaufman Foundation’s Startup Index (although we need to work on growth, which is what I’m focused on and why I’m writing this article).
Salim Ismael’s Fastrack Institute chose Miami as its first US city, and is currently using exponential technologies to tackle the problem of mobility—because traffic is many people’s biggest complaint about living here. They’ve done an amazing job of bringing private enterprise, local government, and entrepreneurial innovation together to get the job done.
Come to the final presentation on Thursday, December 14th (free RSVP is here).
It’s All About the Money
These aren’t mere participation trophies! Florida currently sits at #4 in total private equity dollars invested across the nation. Venture capital dollars are rising too, and Florida ranked seventh in the US in the first quarter of 2017.
Florida also ranked fourth for the total number of companies receiving investment, following California, Texas, and New York. That’s up from 2015, when the state ranked sixth.
Growth in talent has followed this surge, with the CBRE Tech Talent Momentum Report putting Fort Lauderdale at #2 and Miami at #4. AngelList shows Miami Startups having had 100% annual growth over the last 3 years.
This is real traction that illustrates a city with a thriving startup scene.
Room for Improvement
There are, however, shortcomings that need to be looked at. One of the main engines of growth I saw in NYC was the founders starting their second and third companies. If successful veterans don’t stay in Miami they’re not as likely to build their next venture here.
For all the ludicrous wealth here, Miami hasn’t figured out how to create a financial engine that provides the funding that local startups need—especially beyond the initial round.
This means that entrepreneurs tend to be pulled out of the ecosystem by outside investors at the very moment they’re seeing success. Hyp3r, for example, relocated to San Francisco when they raised $6 million in 2016 from mostly California investors.
Nearpod recently bucked the trend by raising a $21 million Series B from NYC-based Insight Venture Partners—but keeping their headquarters in South Florida. Nancy Dahlberg reports that Nearpod, “expanded its Aventura offices in December , and it now has nearly 50 employees in South Florida, twice as many as 18 months ago. Nearpod was recognized by Inc. in 2016 as one of the fastest-growing private companies, with a three-year revenue growth rate of 1,320 percent and the eighth-fastest in the education space.”
Those are strong numbers! Who says high growth startups can’t succeed in Miami?
Another area for improvement is that South Florida startups are often forced to either import employees or hire remotely. CBRE shows Miami having 24,180 total tech people vs. San Francisco’s 328,070.
Everymundo, a performance marketing channel for 20 global airlines, employs almost 60 people in Miami. CEO Anton Diego reports that about 25% of them are foreigners working on visas, because Miami “cannot yet supply the levels of senior level talent these growing companies need.”
The silver lining is that our population of tech professionals is growing at 47%—and we have more than 15 coding schools now available in Miami.
We have other reasons to be optimistic.
Miami’s Unfair Advantage
Miami is the second fastest-growing major city in the US. It’s also a global destination, with unique access to Latin America, Europe, & Israel. Both domestic and international businesses use it as a launching pad.
Voyhoy relocated its HQ to Miami and won the Emerge Americas Later Stage Startup Competition in June. “Since launching in late 2015, Voyhoy has acquired more than 6 million users, and relocated to Miami to grow the business…believing Miami to be the ideal location for an international headquarters for its growing customer base in Latin America.”
Miami is still developing, giving it more freedom and flexibility to focus on its strengths and grow its tech community. That’s why Endeavor made Miami its first US city in 2013.
Miami also has a unique advantage few other tech hubs can compete with: no state income tax.
Living a world-class lifestyle down here is simply more affordable. People get all the great benefits of a diverse metropolis, fantastic weather, and money saved on taxes.
Selling someone on “Why Miami?” isn’t difficult.
Miami will continue to evolve rapidly. It took over a decade for NYC to hit its stride, so I’m willing to be patient.
The South Florida investor scene is rapidly becoming more cohesive. Talented people are moving here at a rapid rate. We’re seeing local startups grow and have successful exits.
We’re well on our way to powerhouse status.