SoftBank is just the latest validation for Miami’s booming startup scene
Miami has long been a refuge for those escaping the cold or Latin American countries in political and economic turmoil. But, in 2020, it welcomed investors, founders and others in tech leaving San Francisco and New York City, partly propelled by the pandemic, seeking a welcoming government, lower taxes, a decent climate, less expensive housing, a dynamic lifestyle and the type of diversity that's proven to help companies thrive.
Investors are bullish on Miami, TechCrunch found. In a survey with eight local investors, they point out the strengths and opportunities of the growing market.
Moving the needle, Marcelo Claure, CEO of SoftBank and long-time Miami advocate, announced a $100 million fund dedicated solely to startups based in Miami or those planning on moving here.
For many, the dream is that Miami comes to enjoy the economic prosperity of places like San Francisco and New York City while maintaining the current tech community's focus on building a Miami for all.
Miami is quickly evolving to accommodate increasing demand as it becomes a growing startup destination. From emerging elder tech' to biotech, Miami is an attractive investment market that offers unique opportunities for immigrants and minorities to pursue entrepreneurship opportunities," Claure told TechCrunch just before making the funding announcement.
Claure knows the potential of Miami tech firsthand. In 1997 he founded Brightstar, a global wireless company. In 2013, SoftBank purchased a majority stake in the company for a cool $1.26 billion. His brother Martin is a tech entrepreneur too, and currently the founder and CEO of Aprende Institute, a Miami-based Spanish language skills retraining startup.
Miami has served Claure well, so it's no surprise he and SoftBank believe so vehemently in the region.
At SoftBank, we invest in technology-focused companies in various sectors - from fintech, to agritech, to education," Claure said. [SoftBank] invests in the entrepreneurs and companies that are leading the digital transformation of these sectors. Over the last year, we've recognized a dramatic shift in where these entrepreneurs call home. For years it was mainly Silicon Valley and New York City - today, it's also Austin, Dallas and (of course) Miami. Due largely to the tireless efforts of Mayor Suarez, Miami has been positioned at the forefront of innovation and the tech industry.
Many of the businesses we're seeing pop-up in Miami are natural fits for what we're looking to invest in," Claure said. Through our Latam Fund, we invest in companies focused on the Latin American region. In an effort to address the long-standing diversity and inclusion issues within the VC community, we also launched a $100 million Opportunity Fund, focusing on companies founded by Black, Latino and Native American entrepreneurs. So far, we've evaluated over 700 companies and have made ~20 investments totaling $20 million. These investments span multiple sectors (healthcare, SaaS, fintech, gaming and more) - sectors we've seen growing in Miami."
2020In 2020, Miami saw about $1.9 billion pour into the region, up 21x from 2010, which brought in about $89.5 million, according to Crunchbase data. While 2020 was a great year and with some standout deals: REEF Technologies raised $700 million, ShipMonk drew in $290 million, and Magic Leap brought in another $350 million, it didn't quite beat 2019's record-breaking $2.39 billion that flowed into South Florida-based startups. While in 2010, only 12 companies in Miami raised outside funds, by 2020, we saw that number jump to 70, signaling a healthy amount of tech entrepreneurship in the area.
While the pandemic and remote work may have jolted the first movers, Miami Mayor Francis Suarez's off-the-cuff response to a tweet suggesting Silicon Valley be relocated to Miami seemed to get the flywheel going. How can I help?" he put out into the universe. And the universe responded with a flurry of inquiries about tech life in Miami.
Refresh Miami, the largest tech nonprofit in the state boasting 11,000 members, spent the holidays putting together a New To Miami Guide," which aims to answer everything from Where should my kids go to school in Miami?" to What are some of the best co-working spaces?"
Some new residents might be testing the waters while living the nomadic life, but many others have bought property, set up shop and started the recruiting process - both for their next startup but also to ensure their friends are here, too.
Miami's recent story can't be told without the inclusion of Keith Rabois, a partner at Founders Fund and a member of the PayPal mafia who flagrantly left San Francisco. Rabois made an equally notable splash in Miami with the purchase of a $29 million Miami Beach mansion that includes a saltwater aquarium so big it requires a scuba diver to maintain. Since moving to Miami, he has become one of the most vocal and ardent recruiters for Miami tech's future. He cryptically announced on Twitter that he's started a Miami-based company and is hiring, though he hasn't publicly disclosed what the company does or will do.
Other big names include the finance heavyweight Blackstone, who recently announced their new office in Miami, providing 215 tech jobs. They've already signed on some local talent, according to a source. Then, of course, there's Plug and Play, the Silicon Valley global innovation platform and investor who announced last week it will be opening a location downtown. But some other VCs who have recently relocated are doing what great VCs do best: seizing on an early opportunity that not quite everyone believes in yet. Those include Jon Oringer of Shutterstock, David Blumberg of Blumberg Capital, Chris Dixon of Andreessen Horowitz, David Goldberg of Alpaca, whose portfolio includes ClassPass and ClassWallet, Maya Baratz Jordan of FFNY, Alexandra Wilkis Wilson, known for co-founding both Gilt and Glamsquad, and Laura Gonzalez-Estefani, a Facebook vet who moved here four years ago to open The Venture City, an accelerator and venture fund with a Miami HQ, but that also has offices in San Francisco and Madrid.
Why MiamiThe pandemic has pushed many to rethink what they want out of life. And is work, an exorbitantly priced microapartment and poor governance enough?
Miami is international, diverse and multilingual, with English and Spanish being the dominant languages within the business sectors. Many are attracted to the city's cosmopolitan style and sophisticated art and culture scene, culminating with Art Basel Miami Beach every December. You can find virtually every major restaurant from New York to London here, but the Miami locations usually include ample outdoor seating. The architecture is second to none, with buildings by the famed Zaha Hadid, Arquitectonica and landscaping by Raymond Jungles. While the Broadway play Hamilton" was doubly sold out in New York City and London, you could catch the show for a fraction of the price at the Adrienne Arsht Center. Some people I know went twice.
Many say Miami - and any other coastal city - is best experienced from the water. Well, don't let the fact that your custom-built megayacht hasn't arrived yet stop you from getting that glowing tan. Miami-based Boatsetter, a startup that lets people rent other peoples' boats, has a fleet waiting for you. Or perhaps you'd rather go for a meditative paddle on Biscayne Bay; you could use PADL, the recently launched Miami startup that aims to be the paddleboarding industry's Lime.
Miami has always had fun and games. Still, in 2013, Manny Medina, one of Miami's early tech entrepreneurs with a successful exit (he sold real-estate-turned-data center Terremark to Verizon for $1.4 billion in 2012), launched eMerge Americas, an annual tech conference. It unofficially established Miami as a tech hub that connects the Americas. By 2019, the event attracted more than 16,000 attendees from 400 participating companies and more than 40 countries. With a world-class airport within 15 minutes of the city center, few other cities can compete with Miami's strategic geographic location and easy access. But the question remains: Can Miami become another great tech hub?
Florida-based logistics provider ShipMonk raises $290 million on the back of rising eCommerce demand
It's certainly headed in the right direction, and some investors are bullish on the market while others, who are more cautious, think it's too soon to say.
Miami's hot sectors include healthcare, proptech, fintech, elder tech, logistics and edtech. Exits to know include Chewy (whose $3.35 billion exit in 2017 resulted in the largest e-commerce sale to date), the well-funded YellowPepper acquisition by Visa (terms not disclosed), and 2020's darlings include Ascyrus Medical, which went for $200 million and CareCloud for $32 million.
Those still on the runway include Nearpod, Magic Leap, Ultimate Software, ShipMonk, CarePredict, MDLIVE, Papa, Caribu, Brave Health and REEF, among others. Then, there's the new kids on the block, such as UpsideHm, HealthSnap, Domaselo, Secberus, Marco Financial, Birdie, Kiddie Kredit, ConciergePad and Sustalytics.
Miami has long been known as a wealthy enclave bursting at the seams with money. Still, historically, that money has gone into safer and more traditional investments such as real estate. The notion of writing a $100,000 check for an idea and then forgetting about it is still very rare. Many local investors tend to be slower to move and often still prefer the round being led by an outsider who has experience vetting deals, a common complaint by local founders who find themselves seeking funding across the country. But with more VC money in town now, smart capital should be more accessible.
That being said, one of the main things the area has going for it, and which can't be replicated, is its people and their propensity to build, grow and welcome others. The community is super welcoming and always has time for new people; it's wonderful and not something I've ever experienced before," said Mark Kingdon of Quixotic Ventures. Organizations that have catalyzed the movement over the years include the Knight Foundation, Endeavor, Miami Angels (Florida's largest angel investment collective), Refresh Miami (an organization that provides startup news, events and creates community), Venture Cafe (a weekly gathering with educational programming for innovators), 500 Startups and The Venture City.
While Miami's diversity is as ingrained in the culture as the cafecito breaks, the local tech community has been, and continues to be, adamant about putting diversity, inclusion and gender equity at the forefront of Miami tech. In a recent Miami Tech Manifesto, drafted up by community members themselves, Miami tech told the world how things would continue to work around here. Women may not run the world yet - it's debatable - but it's fair to say they run Miami tech, and they are bringing everyone else with them.
Miami tech is in a nascent phase to the outside world, and it allows the locals and newcomers to learn from major tech hubs' mistakes and decidedly do things differently. For many, the dream is that Miami comes to enjoy the economic prosperity of places like San Francisco and New York City while maintaining the current tech community's focus on building a Miami for all.
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