August 16, 2021 | 3-minute read (493 words)
Is Miami set to become the next Silicon Valley? Not just yet, but given its popularity among early-stage companies, the coastal city is becoming a force to be reckoned with.
In the second quarter of 2021, Miami received an unprecedented $831 million in venture capital investments. This represents a 142% jump in financing from pre-pandemic levels. What’s behind the surge? The founders of more venture-backed businesses are deciding to launch in low-tax Florida versus high-cost innovation hotbeds like California and New York.
What it means for Miami and surrounds
Funding was up 271% in Q2, underpinned by 50 investment deals. To keep these figures in perspective, however, VC investments comprised only 1% of the total made nationwide, with the majority still flowing to Silicon Valley, Boston and New York.
But Miami's Q2 investment activity is a harbinger of more to come, analysts say. The city’s reputation for better work-life balance, no income tax and tropical scenery resonate with entrepreneurs and transplants alike. While Miami's reputation as a retirement town is long gone, the city still has a robust labor pool of engineers, scientists and technologists from which startups can cull talent.
Florida International University and the University of Miami bring academic energy to the city, further enhancing its appeal for innovators. The latter university is home to TheLaunchPad, an entrepreneurial center.
Introducing Miami, a new technology hub
Regardless of Miami's national VC ranking stats, signs are obvious the city is growing into a tech magnet. During Q2, tech firms accounted for 9 of the city’s top 10 deals. These firms represent fintech, healthtech, medtech and edtech. In 2020, Miami tech startups alone garnered $1 billion in venture capital.
The concentration of prominent tech firms in areas such as New York and San Francisco means highly skilled personnel may be taking advantage of their possibilities to job hop with ease. These costly talent battles are less of an issue in Miami, where fewer tech firms are gunning for staff.
Miami startup standouts
In July, three significant venture capital transactions were inked, including startup Lula, which nabbed $18 million in investment with lead investors such as the owner of the Boston Celtics, Florida Funders and SoftBank.
VCs also poured $82 million into Marco, a company that provides loans for Latin American businesses to assist them in affording the costs of exporting goods to the U.S. It is the second successful investment round Marco has landed in Miami.
With $300 million in fresh cash, e-commerce platform Unybrands is the third Miami-based business to get substantial VC funding in July.
One of the perks of establishing a new firm or relocating an existing one to Miami is the city's thriving business community. People who are new to the region and desire to grow find its creative ecosystem welcoming. In the long run, entrepreneurs that can establish themselves in the community during this era of expansion will be at an advantage.