The city of Miami has long been known as a place to have a good time, go out drinking and hit the beach. Given its party city reputation—going back as far as "Miami Vice"—many in the tech industry say the city’s position as a burgeoning tech startup district is lacking widespread awareness throughout the U.S.
However, a 2017 Kauffman Index of Startup Activity, released in May, ranked the Miami-Fort Lauderdale-Pompano Beach area as No. 1 among the 40 largest metropolitan areas nationwide for its high level of startup activity. That's based on several factors, including the rate of new entrepreneurs entering the market, the total number of business owners, the rate of startup growth, the number of businesses that scale up successfully, and the density of small businesses, startups and established businesses overall.
Though the index ranks Miami first, that doesn't necessarily mean the Magic City is ready to compete with Silicon Valley.
Marc Howard, head of growth and data analytics at Emerge.me, a Miami-based startup that works to provide supplemental insurance to people experiencing unexpected injuries and illnesses, said Miami’s tech district is thriving—but he doesn’t think it’s at a tipping point yet.
“It’s still growing and it’s not oversaturated like San Francisco,” Howard said. “If we were [in San Francisco] looking for a great developer we’d be probably paying well over six figures for top talent. We don’t compete with that, and that’s not to say San Francisco developers are better than Miami developers, it’s just geography-based and [correlates] with cost-of-living.”
Cappello points out that Miami was already a huge tech hub in the late '90s.
“Basically every Latin American startup that raised over a few million dollars ended up putting their regional headquarters in Miami,” he said. “It was very exciting to be in Miami, but when the tech boom turned into the tech bust all those companies went away.”
Cappello attributes some of Miami’s struggle to re-establish itself as a major tech startup district to a lack of strategy.
“When the second wave of the internet boom began to happen around 2007, with the interconnectivity and social aspect of the web, Miami did not have a plan,” he said.
Though he said many Latin American companies headed to Miami in the '90s, Cappello was frustrated to see the same did not happen in the 2000s, which prompted he and others to partner with the Knight Foundation about five years ago in an effort to change that. The partnership spurred the New York nonprofit Endeavor Global to launch Endeavor Miami in order to accelerate high-impact entrepreneurs and startups in the area.
“Bringing Endeavor to Miami really put Miami back on the map for a lot of Latin American entrepreneurs, as well as offered a great resource for entrepreneurs who were scaling their business in Miami,” Cappello said of the initiative's success.
Diversity yields strength
Laura Maydón, managing director of Endeavor Miami, attributes much of the area’s tech startup success to the diverse population in the region.
The U.S. Census Bureau's portal states that Miami-Dade County's total population for 2015 reached more than 2.6 million residents, and more than 1.7 million, or 65.6 percent of the county's residents were Hispanic or Latino.
“It’s a community of immigrants and I think immigrants and diversity drives innovation. That is a strength that is very unique to our ecosystem," she said.
Maydón said after Miami-based entrepreneurs become successful, they have a multiplier effect within the rest of the city.
“They inspire others to become entrepreneurs, and they also become mentors of others and eventually become investors for others, and that’s usually how [the growth] all starts,” she said.
Rodolfo Saccoman, CEO and co-founder of the machine intelligence company AdMobilize, said Miami’s diversity has played a role in the region's tech success and within his own company’s growth. AdMobilize sells its products in more than 70 countries, and Saccoman said about 50 percent of AdMobilize’s sales are U.S.-based, with 30 percent taking place in Latin America and the remaining 20 percent happening globally.
“The more diverse a group or a city is, the more points of view and experience spectrums you have,” he said. “Miami, of course, has plenty of that, which in many ways is very positive.”
Taking tech to the next level
While Miami’s tech ecosystem is developing, many in the industry say there are still financial obstacles the region faces before it can achieve a new level of success.
According to a list published by the National Venture Capital Association, the Miami area had 29 deals valued at more than $96 million in the second quarter of 2017, compared with the San Francisco area achieving 324 deals in the same quarter worth $6.3 billion. Austin, which ranked No. 2 in the Kauffman Index, completed 60 deals in the same quarter that reached a total value of more than $486 million.
Cappello said the lack of a major venture capital fund based in Miami is hurting those local tech startups in search of funding. He helped set up an 80-person angel group called AGP Miami, but says the area needs more of these resources.
“We need to have not just one or two but dozens of satellite offices of well-known venture funds in Miami to really get to the next level,” he said.
Saccoman referred to the opportunity for Series A and Series B funding in the area as “almost nonexistent.”
“We need more success stories in Miami, so other people globally can start looking at Miami and [see that] it is not just a city with great hotels and apartments. We can start saying that tech companies that revolutionized a certain industry came from Miami, and that’s going to start gaining interest,” Saccoman explained. “I feel good about the progress we’ve made, but you can’t celebrate too much because you have to keep pushing.”
Norma Kenyon, vice provost for Innovation at University of Miami, also said a lack of investment in the local tech ecosystem poses challenges.
“We all know the money is here. It’s about [figuring out how] we get to the point where our startups don’t have to go to New York or California to get the investment they need,” she said.