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OCTOBER 11, 2015 - Miami Herald

Nurturing a future tech hub: South Florida efforts accelerate

BY NANCY DAHLBERG

By at least one measure, South Florida is buzzing with tech startups.

The number of startups registered on AngelList, a platform for startups and investors, shot up 46 percent in the past year, to more than 1,600 companies in the tri-county area. While not scientific, it’s an indicator of momentum in South Florida’s effort to develop a thriving tech hub and startup ecosystem, a long-term project that is beginning to clock results.

The past year’s successes have included an explosion of co-working spaces for entrepreneurs to work, share ideas and find a community, said Matt Haggman, the John S. and James L. Knight Foundation’s Miami program director. Under his leadership, Knight has been spearheading much of Miami’s effort to grow an entrepreneurship and tech ecosystem. Funding for The LAB Miami, one of the Miami’s first entrepreneurial co-working spaces, came from Knight and other backers in 2012. This past year saw expansions of Buro and Pipeline, as well as new entrants including New York-based WeWork. WeWork, the co-working network with at least 42 locations opened or announced in 16 cities in four countries, opened a center on Lincoln Road this summer and recently leased a 96,575-square-foot building in downtown Miami.

And there’s more to come: The highly regarded Cambridge Innovation Center is putting down stakes locally, with plans to open next year and eventually house 500 tech startups at the University of Miami Life Science & Technology Park. (See related story here.)

"That’s hugely validating, and for us at Knight Foundation, that is exactly what we hoped to see. We hope our dollars will be catalytic with other players coming in, and that is what we’ve seen around co-working," Haggman said in an interview in his office earlier this month.

With $2.18 million Knight funding, the past year also saw the launch of the Idea Center at Miami Dade College, comprised of an innovation lab to develop ideas, an accelerator to launch startups, tech training and other support to MDC’s 165,000 students. MAGIC, an innovation space for creative industries, also opened its doors at MDC. A large Knight investment went to LaunchCode, which links trained apprentices with tech companies to fill the jobs of the future.

"It’s been remarkable to see how the Knight Foundation’s entrepreneurial mandate has helped springboard the entrepreneurial scene in Miami," said Adriana Cisneros, CEO of The Cisneros Companies and chair of Endeavor Miami, which selects, mentors and accelerates high-potential entrepreneurs. "It’s about creating the environment where entrepreneurs can thrive: This is where Knight has been successful and why Miami is now a great place to start or run a business."

IT’S ABOUT CREATING THE ENVIRONMENT WHERE ENTREPRENEURS CAN THRIVE: THIS IS WHERE KNIGHT HAS BEEN SUCCESSFUL AND WHY MIAMI IS NOW A GREAT PLACE TO START OR RUN A BUSINESS.
Adriana Cisneros

Altogether, in the past three years Knight has committed $16 million in funding to 164 entrepreneurship initiatives in the Miami area. That’s up from about 90 investments a year ago.

To be sure, nurturing a startup ecosystem is a tri-county effort. The past year also saw the opening of Tech Runway, Florida Atlantic University’s comprehensive entrepreneurship hub and startup accelerator for students, faculty and the Broward County community. Broward and Palm Beach counties were home to the area’s three biggest fundraising rounds in the past year. Boca Raton-based electronic medical records company Modernizing Medicine recently raised $38 million, for a total of $87 million, and Fort Lauderdale-based telemedicine company MDLIVE attracted $50 million in the second quarter, on top of $23.6 million last year.

And jumping out of the headlines last October was Magic Leap, the secretive "mixed reality" technology company that attracted an eye-popping $542 million in venture funding from the likes of Google and other Silicon Valley heavyweights. Magic Leap, believed to have several hundred employees already, is building its headquarters in a 260,000-square-foot space in Plantation, with plans to hire hundreds more.

Earlier this year, the three counties came together, along with entrepreneurs and tech executives from around the world, for the second edition of eMerge Americas, a conference founded by tech entrepreneur Manny Medina, with the goal of making Miami a hub for the Americas. eMerge partnered with NBCUniversal, which resulted in reams of national and international coverage; conference attendance doubled to more than 10,000.

"We had attendees from over 50 countries. They’re coming because they recognize the opportunity here in South Florida," Michael Rodriguez, CEO of eMerge Americas, said via email from a road trip with the eMerge team in Latin America last week. In the next year, Knight will focus its ecosystem-building strategy on broadening support initiatives, including funding more programs serving low-income communities, and continuing to build a funding network and talent pool, Haggman said.

"Diversity is our great differentiator. The more we can create collisions and connections among people of different backgrounds and life experiences and challenges, ultimately that leads to a richer set of ideas that people come up with and ultimately the greater the impact," he said.

DIVERSITY IS OUR GREAT DIFFERENTIATOR. THE MORE WE CAN CREATE COLLISIONS AND CONNECTIONS AMONG PEOPLE OF DIFFERENT BACKGROUNDS AND LIFE EXPERIENCES AND CHALLENGES, ULTIMATELY THAT LEADS TO A RICHER SET OF IDEAS THAT PEOPLE COME UP WITH AND ULTIMATELY THE GREATER THE IMPACT.
Matt Haggman

Building the type of technology hub and startup ecosystem envisioned by Haggman, Cisneros, Medina and other South Florida startup leaders takes time. How much time? Research about such efforts has not been able to adequately answer that question so far, said Yasuyuki Motoyama, director of Research and Policy with the Ewing Marion Kauffman Foundation, which researches, supports and funds entrepreneurship initiatives. "[Entrepreneur and well-known venture capitalist] Brad Feld says the leaders have to commit to the long term, at least 20 years, and I have a pretty close view with his," Motoyama said. "Creating new companies is the beginning phase and you have to successfully scale it up. That scale-up part will take many more years to mature."

Beyond new-company creation — and the Miami area was No. 2 in the nation for new startup activity in 2014, according to Kauffman’s research — Motoyama said emerging areas will see a cluster of companies attracting large funding rounds, as South Florida has seen. Another important indicator that South Florida may be on the road to success is if entrepreneurs feel connected to other entrepreneurs and to support organizations so they can learn from each other, he said. A growing list of support organizations is another indicator. By those measures, South Florida is on the right track, with a growing list of accelerators and incubators, mentorship organizations, talent-development initiatives and, slowly, investors. Haggman talks about the support network like a subway map, where entrepreneurs can hop on and off based on their needs. There is no one path for an entrepreneur.

Miami newcomer Seth Forsgren hopped on through Venture for America, one of the Knight-funded initiatives brought to Miami last year. Venture for America matches bright college graduates from anywhere with Miami area startups. Forsgren, originally from Iowa, moved here 14 months ago with a degree in molecular biology from Princeton and was placed at Rokk3r Labs, a young Miami Beach company that helps build startups. "I never thought of moving here, but was excited to work at Rokk3r Labs so I came on down."

As he helped Rokk3r formulate internal strategy, Forsgren caught the bug himself. Forsgren, who started a nonprofit in college, recruited his childhood friend who graduated from Cornell and a lead developer from Miami he met during late nights at the Rokk3r ping-pong table. After a few months of nights and weekends, they quit their jobs and went all-in in May, Forsgren said during an interview at Panther Coffee, where he first got the idea for his tech startup. The team, now four people, is based at WeWork. "We’re hiring," he said. "We’re trying to build the future of communications."

What this team is building is called Yodel, formerly called Tracks, an app designed to make texting more like face-to-face communication through video and other visuals, with a new version expected soon. The ecosystem at work: Rokk3r and VFA were supportive of him going out on his own and Haggman connected him with potential advisors and funders. Patrick McKenna of HighRidge Global became his first seed investor. Alberto Chang-Rajii, founder of Grupo Arcano who is also on Endeavor Miami’s board, joined as an an investor, as did Andres Moreno, founder of Miami-based Open English, who is also his advisor, and others.

While that is the way an ecosystem is supposed to work, challenges remain. The Miami Herald surveyed 50 entrepreneurs, investors and community leaders for this report, and many of them pointed to a lack of startup funding, particularly Series A rounds of $1 million or more, as one of the area’s biggest challenges.

McKenna, who moved here in 2014 from San Francisco, said he has been impressed with the seed-level funding networks and the commitment the community has to supporting startups. "There is, however, a big gap for Series A and it’s not clear how [it] will be filled. There are some good companies coming up who will face the Series A challenge soon."

He believes there should be a bigger focus on attracting successful entrepreneurs to the area. "This group is already equipped to solve many of the current challenges — attracting talent, funding and scaling. Consider that most of the entrepreneurs in Silicon Valley are transplants."

One new initiative of the AGP Network, a growing angel group led by Managing Director Nico Berardi, is an education series aimed at growing the angel base. Miami is overflowing with wealthy people, but most are unfamiliar with tech investing, particularly in high-risk startups. Other challenges identified in the Miami Herald survey included the region’s low corporate density and involvement, bridging the digital divide, a shortage of quality mentorship and lingering perceptions of Miami as a party city.

"We can’t have a tech ecosystem without a true pipeline with dedicated long-term partners. We need large tech companies to hire tech talent from Miami and create tech jobs for Miamians," said Felecia Hatcher, co-founder of Feverish Pops and Code Fever, a nonprofit focused on teaching youth in low-income communities about coding and entrepreneurship.

Added Steve Luis, a director in Florida International University’s School of Computing and Information Sciences: "Our biggest challenge in building our ecosystems is keeping our talent and companies from leaving Miami. To do this we need to consider competitive salaries for engineers, creative incentives for companies to stay, and marketing strategies to attract tech companies." The average software developer salary in South Florida is about two-thirds of what it is in San Francisco, according to government data.

FLORIDA INTERNATIONAL UNIVERSITY RECENTLY OPENED TECH STATION ON ITS WESTERN MIAMI-DADE CAMPUS AND THE CARTA INNOVATION LAB IN MIAMI BEACH. COMING SOON: STARTUP FIU.

FIU recently opened Tech Station on its western Miami-Dade campus and the CARTA Innovation Lab in Miami Beach as places for education, collaboration and experiential learning. FIU has a MOOC entrepreneurship course available to all its students and it opened a Small Business Development Center at FIU in 2014 to help entrepreneurs in the community. Its School of Hospitality and Tourism Management has an innovation program in the works, said FIU President Mark Rosenberg. "We’re not done."

Coming soon: Startup FIU.

Rosenberg described it as "a one-stop hub for our students to come in and get assistance with their ideas and get those ideas off the ground into new businesses. It will also be a source of support for faculty to get products to market and to finish out the licensing and patenting," he said. Satellite centers will likely be established for each academic field of study; the centers will be linked with the main Startup FIU hub, which will be available to students and faculty from any area of study. "We are putting the final details together."

Locating the hub on FIU’s Mitch Maidique campus on SW Eighth Street is strategic, too. "We’re not downtown and we get that, but one of our strategic advantages is our talent. We have one of the largest engineering schools in the country … We want to focus on incubating, nurturing, getting prepared for the innovative 21st century that is upon us. There’s life out here, there is a lot of good stuff happening, and a lot are startups by FIU students and graduates. The time has come for us to focus on that," Rosenberg said.

A wider reach to bring more parts of South Florida into the ecosystem is part of Haggman’s vision, too.

Events like Black Tech Week, which launched in February, and organizations such as Code Fever, the Network for Teaching Entrepreneurship, LaunchCode and the Idea Center — all funded by the Knight Foundation — help to expand the entrepreneurship movement. "There’s a lot more work to do there, but we’ve made some gains," Haggman said. "If we can be that example of an emerging startup community that at its foundation is about diversity and inclusiveness, then we’ve cut a new path."

He said Knight would also be laser-focused on developing the talent pool, citing the early success of programs like LaunchCode that has already signed up more than 120 companies to hire tech apprentices. "LaunchCode is making a market for tech talent in South Florida. We need both talented coders and companies who need to grow," said Jim McKelvey, the co-founder of Square and LaunchCode, who expanded his nonprofit to South Florida earlier this year.

Coders don’t need a degree to be successful, McKelvey said. He pointed to programs like Harvard’s online CS50x coding course, offered this year at a low or no cost to 300-plus students by the Idea Center and LaunchCode.

Before the year is out, expect to see more programs coming to Miami, thanks to Knight funding. Still, Haggman said, it’s a long game. "All this requires ongoing work by everyone. Ultimately the long-term success of this is going to be from the bottom up ... People will be engaging in ways they want to engage and pursuing ideas that they want to pursue. And each person should feel license to just go for it in an ecosystem that is fluid and agile with lots of ways to participate," Haggman said. "Everyone is a champion — that’s how it really works."

More success stories are critical, but the community needs patience, said investor Mark Kingdon, who moved to Miami from New York last year. "Like a fine wine, building a startup takes time. Average exits are eight to 10 years. We need some big exits, and those are years away."

And even a long game deserves some timeouts, it seems. Last month, more than 300 local entrepreneurship fans gathered to celebrate milestones, including the launch of 500 Startups’ growth marketing accelerator and the opening of the co-working space Building.co. The evening end a group selfie shot from a drone. This is Miami, after all.

SEASON OF THE STARTUP

It’s not just the arts calendar that heats up at this time of year. Here are some of the major startup and tech conferences and events to put on your calendar — save the dates.

*  FinTech: Fintech Americas bridges the divide between banks and disruptive startups, Oct. 22-23, Miami Dade College Wolfson Campus. Tickets and more info: fintechamericas.co.

*  Emerging Technologies and Business Showcase: This all-day business matchmaker event includes a pitch competition with $150,000 in prizes, investor panel, luncheon and networking opportunities, Nov. 4, Hyatt Regency, Coral Gables. For tickets to the event: https://www.facebook.com/EDCofSouthFla.

*  Miami Make Week: A 10-day celebration of creative co-working and maker spaces in the Greater Miami area kicks off Nov. 6 with educational workshops, networking opportunities and other public events, ending with a design and prototyping competition. More info: miamimakeweek.com. *  The TigerDirect Tech Bash: The free expo and party returns on Nov. 6 for an evening of innovation, emerging technology, interactive entertainment and shopping opportunities. Now in its fourth year, the free TigerDirect Tech Bash will take place at Miami Marlins Stadium. Get your ticket here: tigertechbash.com

Startup Weekend Miami at FIU: Join a team and build a company in a weekend, Nov. 20-22, FIU’s Tech Station. More info on Eventbrite. *  Sime MIA: The conference that has explored technology trends by bringing in speakers from Singularity University, Hollywood and the Oslo Freedom Forum is returning to Miami Beach for a third year Dec. 1-2 with an expanded format focusing on big data and fintech. Buy tickets and get info here: simemia.co.

*  ITPalooza: Now in its fourth year, the conference on Dec. 3 at Nova Southeastern University in Davie brings together the entire South Florida IT community from CIOs through tech user groups to top local, national and international presenters and guests. Buy tickets and get more info here: www.itpalooza.com.

NEXT YEAR

Sup-x: A startup expo for entrepreneurs, investors and service providers, Feb. 16-17, Broward County Convention Center. More info: www.sup-x.org.

Miami Mini Maker Faire: The popular event returns in an expanded format Feb. 20-21 at YoungArts in Miami. More info: http://makerfairemiami.com/ eMerge Americas: The third annual eMerge Americas conference, with two days of speakers, exhibits, contests and celebrity fun, returns April 18-19. More info: emergeamericas.org.

REPORT CARD

A look at some metrics for South Florida and Florida technology:

Number of tech startups in South Florida: Hard to quantify because of the high failure rate, but by one measure, AngelList registrations, there are 1,682 startups and early stage companies seeking funding in the tri-county area. That is up 46.4 percent since a year ago, when the number was 1,149.

Job growth: 20 percent from 2012 to 2015, the top performing of The Beacon Council’s seven targeted industries, according to The Beacon Council’s 2015 One Community One Goal report. By number of jobs, 1,629, technology is also by far the smallest of the seven targeted industries.

Average salary: Software developer: $75,380 (Miami-Dade); $73,278 (Broward).

Venture capital: Florida ranked 13th in the nation based on venture capital flows into Florida companies in the first half of the year, taking in $239 million, or 0.8 percent of the U.S. total; 68 percent of the dollars and 50 percent of the deals went to South Florida companies. South Florida’s slice of the VC pie was about 1/2 percent of the U.S. total.

Patents per capita: Florida ranked 19th for patents per capita in 2013.

Pipeline: South Florida ranks seventh in the nation for college students per capita. According to the 2014 edition of the ASEE Profiles of Engineering & Engineering Technology Colleges, FIU placed seventh in the country for number of bachelor’s degrees in computer science. Entrepreneurial activity: The Miami metropolitan area ranked second among 40 big markets studied in new entrepreneurial activity in 2014, behind Austin and ahead of San Jose, according to the Kauffman Foundation.

Immigrant tech entrepreneurs: The Miami and Fort Lauderdale metro areas were No. 1 and No. 2 for growth rates of immigrant tech entrepreneurs, 2000-11.

Sources: U.S. Labor Dept., Beacon Council, Pwc MoneyTree reports, Internet Coast, Kauffman Foundation, AngelList, Herald research