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Will Miami’s tech boom last?
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Miami’s tech scene is having a moment. Tech workers flooded the city in early 2021, cheered on by local VCs and a charismatic, crypto-friendly mayor. Its rise was a big, buzzy business story that tied together everything from crypto to climate change to Peter Thiel.
Now, as the pandemic wanes and the venture capital market cools, the question is whether Miami can keep up the momentum: Will its tech boom last?
Through three quarters of 2022, Miami ranks 7th among U.S. cities in total venture capital invested. The forecast question this week:
Will Miami rank among the top 7 US metro areas by total VC invested in the first half of 2023?
More on the other cities on that list in a moment. Instead of the usual format, this week I interviewed Nicolás Rivero, a climate reporter at the Miami Herald and a former colleague of mine and tech reporter at Quartz. He grew up in the Miami area and has covered its tech boom extensively.
Q&A with Nicolás Rivero
Nonrival: Briefly, what’s the story of Miami’s tech scene over the past few years?
Nicolás Rivero: South Florida has had its share of tech unicorns over the years (see: Magic Leap, which was, at one time, the darling of the AR/VR world; pet supply e-commerce giant Chewy; cybersecurity firm Kaseya). But Miami startup founders have often struggled to be taken seriously. Venture capitalists in San Francisco and New York associate Miami with beaches, nightclubs, and partying–not the rise and grind hustle culture a lot of tech folks fetishize. The city’s tech scene has slowly gained legitimacy and investment over the years. But tech funding suddenly sky-rocketed in 2021 after a very vocal cohort of VCs and entrepreneurs moved to Miami during the pandemic.
How do people who live there feel about becoming a tech & crypto capital?
There’s definitely a local stereotype about clueless tech bros driving up rents and destroying the city’s culture. Tech transplants have been lampooned mercilessly by Miami satirical sites like The Plantain, local gadflies like Billy Corben, and thread after thread in the r/Miami subreddit. Of course, rich out-of-towners were moving into Miami and raising the cost of living long before there was a #MiamiTech movement. But the outrage over recent crypto swindles, NFT rug pulls, and the shambolic collapse of MiamiCoin (after its embrace by Miami mayor Francis Suarez) have put a particularly dislikable face on tech gentrification.
On the other hand, local entrepreneurs who have been struggling to catch the tech world’s attention for years are excited about this moment. They hope they can capitalize on the hype to bring more investment to homegrown startups and create well-paying jobs. But even they recognize the need for the new wave of tech transplants to learn and adapt to Miami’s culture.
What would it take for Miami to become an even bigger tech hub? If we’re looking back in a couple years and it’s grown even more central, what likely happened?
The hope is that Miami entrepreneurs will be able to take advantage of this moment of hype to change tech investors’ perception of the city in the long run.
In the tech world, a lot of value is built on belief. A team of startup founders may not have a viable product yet–or they may have a product that burns through venture capital without ever making a profit–but if the right group of investors believes in it, the company’s valuation can soar to billions of dollars.
MiamiTech boosters think something similar is true of startup hubs. If investors, collectively, believe Miami startups aren’t serious, they won’t invest in local founders. But if a moment of massive hype prompts investors to reevaluate Miami’s tech scene, and they begin to invest in local startups that succeed, they’ll be more likely to invest in the city again. If a few local startups hit it big, their early employees may break off and launch their own startups in the city, or become venture capitalists and invest their newfound wealth in other local startups. In this way, Miami’s early success could snowball and lead to the city becoming a more prominent tech destination over time.
And what’s the case against: If we look back in a few years and Miami’s tech buzz has faded, it’s getting less VC funding, etc. what’s the story of why that might have occurred?
Miami has a few structural challenges that aren’t likely to change any time soon. Unlike San Francisco, New York City, and Boston, South Florida isn’t home to world-renowned research universities that churn out a constant stream of top tier tech talent. (The University of Miami, Florida International University, and Miami-Dade College are rushing to launch new programs to support entrepreneurship, but they simply don’t command the same number of research dollars as juggernauts like Stanford and MIT.)
Plus, Miami doesn’t already have a massive concentration of tech or finance activity like San Francisco and New York. Although both of these cities have been gradually relinquishing their near-total monopolies on their respective industries, they still absorb a big share of startup and investment activity in the US. And there are dozens of up-and-coming cities competing fiercely with Miami to grab their piece of the leftover pie. Like Downtown Las Vegas, Miami might capture the tech world’s attention for a moment, and then lose it to another, shinier would-be startup hub in a few years.
What’s something outsiders get wrong about Miami if they haven’t lived there?
Miami isn’t (only) what you’ve seen on Miami Vice. Yes, there are parts of town where you can lounge on the beach, pay $1,500 for bottle service at a nightclub, and take Instagram selfies from the deck of your friend’s cousin’s boat. But most of Miami is composed of first- and second-generation immigrants starting small businesses at a faster rate than any other city in the country and striving to build a better life for themselves and their families. The city has many challenges–rising seas, a cost of living crisis, local corruption–but a population that doesn’t work because it’s too busy partying isn’t one of them. If someone trots out that lazy caricature in their analysis of Miami’s tech scene, you should tell them to stop comiendo tanta mierda.
Here are the top US cities by total VC invested so far this year (through Q3):
Miami currently ranks 7th. Can it stay there, or rise? Here’s a look at city trends over the past few years, with the top six metros excluded:
To read more about Miami tech, here’s Nicolás’s great Quartz feature story; here’s one from New York Magazine; and the New York Times. Here are some of my other former colleagues on “MiamiCoin”; and here’s a piece Nicolás and I did on tech’s shifting geography.
More Miami bulls than skeptics
On Sunday, Nonrival asked whether Miami’s tech boom would last. Specifically: Would Miami stay a top 7 city for VC funding in the first half of 2023? The overall crowd forecast is a coin flip: The average was 52%; the median was 50%.
But there are more Miami bulls than there are skeptics, as the chart below shows. 16% of forecasters said there was north of an 80% chance of Miami staying in the top 7. No one went below 20%.
The case against Miami:
25% I think Austin will probably recover.
35% Miami won’t catch Seattle to make the top 6. Even if it’s on the rise, there are ~4 other cities that could surpass it any given quarter so I see this as less than 50/50. Plus, the crypto bust could slow things down for Miami.
35% Although the newsletter makes me bullish on Miami, it is in close competition with three other cities, so that lowers the odds.
The case for Miami:
60% It will be either Miami or Austin, but I think Austin will decline because Texas' anti-abortion turn will stop women from moving there or okaying their partners' move there, and some will move away who otherwise would have kept Austin rising. If Seattle's trend is also falling, then Miami will keep rising in the short term. A large population of first- and second-generation immigrants is a strong force for entrepreneurship.
82% Tesla and co moving out of California to Texas as well as Citadel from Chicago to Florida bodes well for the top 7 spot except for the dying fad of crypto and D.C. and Md for defense and security. It seems 50-50 but that's a cowardly bet so I'll go with cryptobros pivoting to landing on something remotely more useful than anarchoFascististic dopey simian jpegs. Miami does have some modern art scene going for it I suppose but the hurricanes, heat, and humidity are deterrents. Maybe the Thiel-MAGA crowd will grow.
What do you think? Make your own forecast:
Fine print: This question will resolve using PitchBook's quarterly VentureMonitor report and its breakdown by MSA.
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