Miami won’t be the next Silicon Valley because we don’t need another one
The rush of founders and investors from the West Coast to states like Texas and Florida are the precursor for something bigger, a movement decades in the making.
The future of startups is a decentralized, global ecosystem. Where wealth and knowledge isn’t concentrated, but shared and open. Where there aren’t capitals, but networks.
Miami has had a head start.
Let’s set the scene. Miami already ranks among the world’s most prominent (nontraditional) startup hubs, and 2020 saw more big names in tech migrate to Florida. Miami Mayor Francis Suarez has been spurring on the influx with an extremely popular Twitter campaign.
Miami already ranks among the world’s most prominent (nontraditional) startup hubs, and 2020 saw more big names in tech migrate to Florida.
These are signs of what globally minded business savvies already know is true. The world is ready for Miami as the pioneer of future tech hubs. Because the city isn’t just a launching pad for U.S. startups with interests in Latin America. It’s a strategic landing pad for global startups who want a presence in the Western Hemisphere.
Across the globe, international opportunities for founders are growing: There is greater connectivity and greater potential for emerging market entrepreneurs to produce life-changing products.
Where will those entrepreneurs want to have a presence? At the heart of global investor and entrepreneur networks, in true melting pots, and at crossroads between mature and emerging markets.
That’s why Miami is in focus right now, but it’s only the first of many cities that will soon be a part of this global trend.
Here’s why Miami is spearheading this new global grid of startup ecosystems.
1. Global tech is no longer concentrated — it’s fragmented across the world
Two-thirds of the world’s top startup ecosystems are outside of North America. Not only that, but 70% of professionals believe that technology power is dispersing away from Silicon Valley. The Bloomberg Innovation Index bumped the United States down from top spot in 2013, to No. 9 in 2020. Tech knowledge and power is growing in Europe and Asia, flourishing in cities like Shanghai and Berlin.
So, when big businesses or VC firms leave/explore outside Silicon Valley, or the United States entirely, they’re not building more of the same, they’re showing us that Silicon Valley is no longer the only M.O. The emerging M.O. is borderless and connected: an inclusive network. It gives investors greater access to more distant business opportunities. It allows entrepreneurs to choose the most convenient place to build a company — and save huge amounts of overhead — while also sharing more expertise.
2. You can build global companies from emerging hubs
Startups in emerging markets have always received a mere fraction of the funding available to U.S. startups. Which means that when money dries up across the board, they are under even more pressure to come up with the most innovative solutions just to survive.
Empowering these local entrepreneurs is the fact that today’s problems need local solutions — from health to logistics, these verticals all require inherent knowledge of domestic infrastructure and services.
The potential here is huge. Emerging markets house the greatest world populations — China, India, Brazil, Mexico, Nigeria… — and language and connectivity barriers are slowly melting away, with mobile internet use surging.
Investors are already perking up to the enormous value of emerging markets, from Asia to Latin America, especially as the strength of the U.S. dollar drops. Just in Q4 2020, VC investment in Latin America saw a 93% growth over Q4 2019, according to Pitchbook.
What does this mean for emerging tech hubs? First, there will be more of them, more distributed and with more funding. Second, we’re going to see a stronger flow of emerging market startups serving customers in the United States to offer services with proven traction, rather than vice versa.
The disruptive products these companies develop and test on millions of users back home find fertile markets not only in the United States, but in other emerging markets with similar needs. Many such companies will want to use the United States as a strategic operating base while keeping the engineering teams in their HQs.
That’s because our founders, accelerators, investors and support organizations have historic experience in internationalization, as well as connections across the globe. So where will these foreign companies land — will they be interested in Denver or Austin, or rather a well-connected city that has made a name for itself as an international hub?
Miami is a landing pad where foreign startups can access both the United States and emerging markets with comparable trends. The city has made strides to position itself at the intersection between mature and emerging markets, creating an ecosystem that is inclusive (half of the population is foreign-born), prioritizes collaboration over individualism and encourages the arrival of newcomers. As such, it will be a (working) model for diverse startup cities.
3. The money will follow
Amid talks of a Silicon Valley “exodus,” some have been quick to point out that the hub has always held strong because of a key feature: access to capital.
But investors will follow the best opportunities. Which means that tech investment will only become more global. Put simply, the concentration of wealth in Silicon Valley is incompatible with the growing demand for tech across the globe. Silicon Valley isn’t going to die, but the pie is getting bigger. And more of that capital is already going to emerging tech hubs.
This means U.S. investors will favor regions where they can easily connect with global opportunities, like Miami. Last year, VC investment in the Miami region rose to over $2.2 billion, despite the pandemic (compared to $1.4 billion in all of Spain). But not only that — there is a lot of funding coming from investors in emerging markets.
In Latin America, local funders play a huge role in supporting promising companies. In 2019, almost 40% of the record-breaking $4.6 billion VC dollars invested in Latin America involved a co-investment with at least one Latin American investor. And from what we’re seeing, regional investors are increasingly funding U.S.-based organizations.
They — and others like them — will want to find ecosystems where they can connect with local and foreign founders with whom they can foster partnerships across markets.
Places like Miami need to house these kinds of networks. South Florida already has globally minded accelerators and startup programs like 500 Startups, Plug & Play and TheVentureCity; and VC firms with international networks, such as Ocean Azul, Endeavor Catalyst, Starlight Ventures, Level VC and now SoftBank.
4. Miami is better positioned for the future needs of startups
I’m going to end by underscoring the case for Miami as the U.S. pioneer of international connector startup hubs.
Startups build more with less every five years, and going international from day one, allows them to test their products in more markets straight away. This is feasible given worldwide level of connectivity, and helps to be in an environment that is constantly looking outward, beyond our borders.
It also helps to be in a time zone that is shared by much of South America and is only five hours behind London (San Francisco is only in the same time zone as the rest of the United States and Vancouver).
People who uproot their entire lives to seek success elsewhere want to be welcomed. They appreciate that the mayor of the city is happy to meet them for a “cafecito,” and that other founders are genuinely enthusiastic at their arrival. They don’t want to land in an expensive city where making it big tends to require connections, money and background.
Miami is reflective of the future of global startup hubs. It won’t be the next Silicon Valley, because we don’t need another one. As the entrepreneurial world flourishes in every corner of the globe, emerging market companies will be conquering markets across the United States and Europe, and fortress cities will make way for international networks.