SoftBank Investment Validates Miami's Startup Boom

Miami's Rise as a Tech Hub

For a long time, Miami has functioned as a haven for individuals seeking respite from colder climates or escaping political and economic instability in Latin America. However, 2020 marked a turning point, as the city began attracting investors, founders, and tech professionals relocating from San Francisco and New York City.

This influx was partially driven by the pandemic, with many seeking a supportive governmental environment, reduced tax burdens, favorable weather, more affordable housing, a vibrant lifestyle, and the kind of diversity that fosters company success.

Investor Confidence in Miami

Investors are demonstrating strong optimism regarding Miami's potential, as evidenced by findings from TechCrunch. A survey of eight local investors highlighted the strengths and opportunities present within the expanding market.

A significant catalyst for this growth is Marcelo Claure, CEO of SoftBank and a dedicated advocate for Miami. He announced a $100 million initiative specifically for startups either based in Miami or intending to establish operations there.

“Miami is undergoing rapid development to meet increasing demand as it solidifies its position as a burgeoning startup destination,” Claure explained to TechCrunch prior to the funding announcement.

Opportunities in Emerging Sectors

He further noted that Miami presents an appealing investment landscape, offering unique entrepreneurial opportunities for immigrants and minority groups. This includes sectors like emerging ‘elder tech’ and biotechnology.

Claure’s understanding of Miami’s tech potential is rooted in personal experience. He founded Brightstar, a global wireless company, in 1997.

In 2013, SoftBank acquired a majority stake in Brightstar for $1.26 billion. His brother, Martin, is also a tech entrepreneur, currently serving as the founder and CEO of Aprende Institute, a Miami-based startup focused on Spanish language skills retraining.

SoftBank's Investment Strategy

Given his personal success in Miami, it’s unsurprising that Claure and SoftBank have such strong faith in the region’s future.

“At SoftBank, our investment strategy centers on technology-driven companies across diverse sectors – including fintech, agritech, and education,” Claure stated. “We prioritize investing in the entrepreneurs and companies spearheading the digital transformation of these industries.

Over the past year, we’ve observed a notable shift in the geographic preferences of these entrepreneurs. While Silicon Valley and New York City traditionally dominated, cities like Austin, Dallas, and, notably, Miami are now gaining prominence.

Mayor Suarez and the Tech Industry

This positioning of Miami at the forefront of innovation and the tech industry is largely attributable to the dedicated efforts of Mayor Suarez,” Claure added.

“The businesses we are currently evaluating in Miami align well with our investment criteria,” Claure continued. “Through our Latam Fund, we focus on companies targeting the Latin American market.

Furthermore, to address the historical lack of diversity and inclusion within the venture capital community, we launched a $100 million Opportunity Fund, dedicated to companies founded by Black, Latino, and Native American entrepreneurs.

Investment Progress and Sector Focus

To date, we have assessed over 700 companies and have made approximately 20 investments totaling $20 million. These investments span a variety of sectors – including healthcare, SaaS, fintech, and gaming – all of which are experiencing growth within Miami.”

2020

According to Crunchbase data, the Miami region experienced an influx of approximately $1.9 billion in investment during 2020. This represents a substantial increase – 21 times greater – compared to the $89.5 million received in 2010.

While 2020 proved to be a strong year for startups, highlighted by significant funding rounds for companies like REEF Technology ($700 million), ShipMonk ($290 million), and Magic Leap ($350 million), it fell slightly short of the record $2.39 billion invested in South Florida-based startups in 2019.

The number of Miami-based companies securing external funding also saw considerable growth. In 2010, only 12 companies raised capital, whereas by 2020, this figure had risen to 70, indicating a thriving entrepreneurial ecosystem.

The initial momentum may have been sparked by the pandemic and the rise of remote work. However, a pivotal moment occurred when Miami Mayor Francis Suarez responded to a suggestion for Silicon Valley’s relocation with a simple, yet impactful question: “How can I help?”

This inquiry resonated widely, generating a surge of interest in Miami’s burgeoning tech scene. Refresh Miami, a leading tech nonprofit with a membership of 11,000, proactively developed a “New To Miami Guide” to address common questions from potential newcomers.

The guide covers essential topics, ranging from school options for families to the best co-working spaces available in the city.

While some individuals are exploring Miami on a temporary basis, many are making long-term commitments by purchasing property and establishing businesses. This includes actively recruiting both for their own ventures and to build a network of colleagues and friends.

A key figure in Miami’s recent transformation is Keith Rabois, a partner at Founders Fund and a veteran of the PayPal team. He notably relocated from San Francisco and made headlines with the purchase of a $29 million Miami Beach estate, complete with a large saltwater aquarium requiring professional maintenance.

Since his move, Rabois has become a prominent advocate for Miami’s tech future, actively recruiting talent and announcing the launch of a new, currently undisclosed, Miami-based company via Twitter.

Blackstone, a major player in the finance industry, has also committed to Miami, announcing a new office that will create 215 tech jobs. Initial reports indicate they have already begun hiring local professionals.

Furthermore, Plug and Play, a global innovation platform and investor based in Silicon Valley, recently announced plans to open a downtown Miami location.

VC Investment Trends

Several other venture capitalists have recently relocated to Miami, identifying and capitalizing on emerging opportunities. These include Jon Oringer of Shutterstock, David Blumberg of Blumberg Capital, Chris Dixon of Andreessen Horowitz, and David Goldberg of Alpaca, whose portfolio features companies like ClassPass and ClassWallet.

Maya Baratz Jordan of FFNY, Alexandra Wilkis Wilson – co-founder of Gilt and Glamsquad – and Laura González-Estéfani, a former Facebook executive who established TheVentureCity in Miami four years ago (with additional offices in San Francisco and Madrid), are also contributing to the area’s growth.

The Appeal of Miami

Recent global events have prompted many individuals to reassess their priorities in life. Is a demanding career, coupled with expensive living arrangements and ineffective local administration, truly fulfilling?

Miami presents itself as an international, multicultural, and multilingual city, where English and Spanish are the primary languages used in professional settings. The city’s cosmopolitan atmosphere and thriving arts and culture scene, highlighted by Art Basel Miami Beach each December, draw numerous people. While renowned restaurants from cities like New York and London are present, their Miami counterparts frequently offer expansive outdoor dining spaces. The architectural landscape is exceptional, showcasing designs from celebrated figures like Zaha Hadid and Arquitectonica, alongside landscaping by Raymond Jungles. Notably, while performances of “Hamilton” were consistently sold out in New York and London, tickets were available in Miami at a significantly reduced cost at the Adrienne Arsht Center; some attendees even enjoyed the show multiple times.

Experiencing Miami – and any coastal urban center – from the water is a common recommendation. However, the absence of a personal megayacht shouldn’t deter anyone from achieving a desirable tan. Miami-based Boatsetter, a platform facilitating boat rentals from private owners, provides a diverse fleet. Alternatively, a tranquil paddleboarding session on Biscayne Bay is possible through PADL, a new Miami startup aiming to become a leading force in the paddleboarding industry.

Miami has long been synonymous with entertainment and leisure. In 2013, Manny Medina, an established Miami tech entrepreneur who achieved a successful exit – selling Terremark to Verizon for $1.4 billion in 2012 – initiated eMerge Americas, an annual technology conference. This event effectively positioned Miami as a key tech hub connecting the Americas. By 2019, the conference had attracted over 16,000 attendees representing 400 companies and more than 40 nations. With a world-class airport located within a short distance of the city center, Miami’s strategic location and accessibility are difficult to match. However, the central question persists: is Miami poised to evolve into a significant tech center?

The city is undoubtedly progressing in that direction, with some investors expressing strong confidence in the market, while others maintain a more cautious outlook, believing it’s premature to draw definitive conclusions.

Currently, Miami’s most promising sectors include healthcare, proptech, fintech, elder tech, logistics, and edtech. Notable exits include Chewy, with a $3.35 billion sale in 2017 representing the largest e-commerce transaction to date, and the acquisition of YellowPepper by Visa (financial details undisclosed). Companies like Ascyrus Medical, acquired for $200 million, and CareCloud, valued at $32 million, also garnered attention in 2020.

Companies continuing to develop include Nearpod, Magic Leap, Ultimate Software, ShipMonk, CarePredict, MDLIVE, Papa, Caribu, Brave Health, and REEF. Emerging startups like UpsideHōm, HealthSnap, Domaselo, Secberus, Marco Financial, Birdie, Kiddie Kredit, ConciergePad, and Sustalytics are also gaining traction.

Miami has historically been recognized as a prosperous area with substantial wealth. However, this wealth has traditionally been invested in more conservative options, such as real estate. The practice of investing $100,000 in a nascent idea without further involvement remains uncommon. Local investors often prefer a more deliberate approach, frequently favoring investment rounds led by external parties with proven deal-vetting experience – a common concern voiced by local founders seeking funding elsewhere. Nevertheless, the increasing influx of venture capital suggests that access to intelligent funding should improve.

A key advantage for the region, and one that is difficult to replicate, lies in its people and their dedication to innovation, growth, and inclusivity. Mark Kingdon of Quixotic Ventures remarked, “The community is incredibly welcoming and consistently makes time for newcomers; it’s a truly exceptional experience.” Organizations like the Knight Foundation, Endeavor, Miami Angels (Florida’s largest angel investment group), Refresh Miami (a source of startup news and events), Venture Cafe (a weekly gathering for innovators), 500 Startups, and The Venture City have been instrumental in fostering this movement.

While Miami’s diversity is deeply embedded in its culture, the local tech community is committed to prioritizing diversity, inclusion, and gender equity within the Miami tech landscape. The Miami Tech Manifesto, collaboratively drafted by community members, outlines the principles guiding the future of technology in the city. While women may not yet universally lead the world, their influence is undeniable in Miami tech, and they are actively working to include others in their success.

Miami’s tech sector is still developing, allowing both residents and newcomers to learn from the mistakes of established tech hubs and adopt a different approach. The aspiration for many is that Miami will achieve the economic prosperity of cities like San Francisco and New York while preserving the current tech community’s commitment to building a Miami that benefits everyone.