Hatching A Tech Future: South Florida Startups Are Gaining Strength

By Nancy Dahlberg The Miami Herald

WWR Article Summary (tl;dr) South Florida is a startup and small-business factory, sprouting more new businesses every year than any other large U.S. metro area. But growing large companies has always been a challenge for the Miami area as well as for the state.

The Miami Herald

Nearpod, an education-technology startup, keeps outgrowing its Aventura offices.

"We have been doubling the company every year -- in people, revenue, users, all the key metrics," said Felipe Sommer.

He co-founded the company with Guido Kovalskys and Emiliano Abramzon, three Argentine friends who have worked on ventures together for more than a decade. Nearpod now employs 70 people and expects to be 100-strong by the end of the year.

"As you can see," he said, motioning toward the dozens of workers in the spacious, open office, "we like to double."

Now the company, which develops online lessons for students and teachers, will be doubling down on South Florida.

Until now, Nearpod has kept some of its top management in Silicon Valley to tap talent and stay close to its Bay Area investors. Those employees, including CEO Kovalskys, the vice president of marketing and directors of content and product, will be relocating to Miami.

Nearpod and other South Florida fast-growing startups will be celebrated as the fourth annual eMerge Americas technology conference opens Monday at the Miami Beach Convention Center.

At least 13,000 people are expected to attend the two-day conference, headlined by Steve Wozniak, co-founder of Apple; Uri Levine, co-founder of Waze; Gustavo Cisneros, founder of Grupo Cisneros; and Marcelo Claure, founder of South Florida's Brightstar and now CEO of Sprint. eMerge will also be a show of force for the startup community:

More than 125 startups will be exhibiting, while scores more will be attending.

The backdrop for the conference: a number of recent success stories in South Florida's tech community.

-- In a transaction that closed last month, Dania Beach-based Chewy.com was acquired by PetSmart for about $3 billion, the largest e-commerce deal ever. Chewy CEO Ryan Cohen said the 5,000-employee unit that booked $900 million in revenue in 2016 will operate as an independent subsidiary and continue to grow in South Florida.

-- Modernizing Medicine, the Boca Raton health-tech company founded in 2010, raised $231 million to fund its growth. Modernizing Medicine employs more than 550 people and is booking $100 million in annual revenue.

-- And there's the near-instant global technology player in cybersecurity company Cyxtera Technologies, headed by Manny Medina, who also founded Terremark Worldwide, Medina Capital and eMerge Americas. The result of a $2.8 billion transaction that closed last month, Cyxtera combines 57 data centers and four cybersecurity and data analytics companies from Medina Capital's portfolio, and employs 1,000 people worldwide -- about 100 in South Florida.

"With the major successes we're seeing like Modernizing Medicine, Chewy.com and Cyxtera -- not to mention the massive potential impact of [augmented-reality technology company] Magic Leap -- we are poised to have a number of very large, global technology companies based in this ecosystem," said Xavier Gonzalez, CEO of eMerge Americas.

"These companies and many others will continue to grow, innovate and attract talent from all over the world. That talent will develop new companies and bring even more interest from investors."

The cycle, he said, points to increasing maturation of Miami's technology sector.

Matt Haggman agrees. He is the Miami program director of the John S. and James L. Knight Foundation, which leads the local movement to develop South Florida into a hub for technology and innovation. "Increasingly, what we are seeing is an evolution from what could be to what is now, and that is super exciting," he said. "If you go online right now for jobs in tech, there are hundreds of jobs."

The Knight Foundation has funded organizations and projects to develop an ecosystem since 2012, including Endeavor Miami, Miami Dade College's Idea Center, Startupbootcamp, The LAB Miami and LaunchCode.

It has committed more than $25 million in more than 200 projects in the Miami area, including recently $1.2 million to the Miami Urban Future Initiative, a joint project of Florida International University and the Creative Class Group for economic research on entrepreneurship and technology in South Florida.

It also recently announced $1.2 million in new support for Code Fever's signature event Blacktech Week, planned for September, and related programs that aim to expand opportunities for entrepreneurs of color.

The foundation plans to continue investing in infrastructure projects and organizations that help support and accelerate the growth of an entrepreneurial ecosystem.

"We're just getting started," Haggman said. "If this is a nine-inning game, we are at the bottom of the first or the top of the second. The important thing to understand is that it can happen."

Recent studies shed light on the challenges of that long game ahead. South Florida is a startup and small-business factory, sprouting more new businesses every year than any other large U.S. metro area. But growing large companies has always been a challenge for the Miami area as well as for the state.

Last year, the Miami metro area ranked 39th among the 40 largest metro areas for growth entrepreneurship. Bloomberg's 2016 U.S. State Innovation Index ranked Florida 34th.

The Milken Institute's State Technology and Science Index for 2016 put Florida in 41st place -- four places lower than in 2014. Among the components of the Milken index, the state ranked the lowest, 46th, for science and technology workforce. Other indicators show the state and South Florida lagging in patent activity and venture capital. (See related data on tech and startups here.)

"If you look at startup activity in Miami -- its new venture creation -- it is incredibly high. When we look at growth entrepreneurship, it's pretty low," said Arnobio Morelix, senior research analyst at the Kauffman Foundation and one of the authors of recent reports on startup activity and growth entrepreneurship.

Another key challenge: Miami-Dade's technology sector is dwarfed by the service economy and its low-paying jobs. Still, by number of employees, tech is growing faster than aviation, banking/finance, creative design, tourism, healthcare and trade/logistics -- all industries targeted for growth by the Miami-Dade Beacon Council, the county's public-private economic development agency.

"The tech sector is growing faster than the overall economy," said Jaap Donath, the Beacon Council's senior vice president of research and strategic planning. "What we are starting to see is growth subsets linked to existing sectors, such as fintech, health IT, trade/logistics and tourism."

By number of employees, the technology sector has grown 27.6 percent from 2012 through 2016 to 10,413 employees in Miami-Dade, according to Beacon Council data. The number of tech companies, 1,654, is up 10.9 percent, and the average salary is $95,087, up 16.8 percent -- the second-highest after banking/finance.

In Broward County, where technology is a much larger sector with the likes of Magic Leap, MDLIVE, Chewy and JetSmarter, 3,742 technology companies employ 44,431, and the average salary is $94,273. That's up 19.2 percent from 2012, when the industry employed 37,266, according to the Greater Fort Lauderdale Alliance.

"The last five years have seen an enhancement of our tech ecosystem. For us, it is very exciting to see that growth, especially looking at potential scalability," Donath said. "We've seen that with CareCloud -- that was a local startup, and now [the health-tech company] is a mainstay of the Miami economy with hundreds of employees.

Albert [Santalo, founder of CareCloud,] made a conscious choice to build and grow the company in Miami."

This goes for companies focused on the Latin American market, too. "We're seeing companies that come out of Latin America but find what they need in Miami to sell their products back into Latin America -- a good example being Yellow Pepper, the fintech company," said Donath.

Related News

Leave a Reply

Your email address will not be published. Required fields are marked *