In South Florida, startups with female founders (including mixed-gender founding teams) received $481 million in venture capital across 50 deals in 2021.
South Florida is officially a rising star in the U.S. technology scene, with more money than ever pouring into new firms in the tri-county area.
Local investors say the numbers prove what they knew all along: The Miami metropolitan area has the potential to become one of the globe’s leading tech economies.
A record-breaking $4 billion in venture capital investment flooded into local tech startups in 2021 – double the prior year’s funding. The Covid-19 pandemic helped, as South Florida served as a relocation destination for out-of-state entrepreneurs escaping strict mask and vaccine mandates, a trend that put Miami tech on the map. The region has continued to draw new companies and investors ever since.
And money. Lots of it.
Early-stage startups secured more funding than ever, bolstered by multimillion-dollar seed and series A and B rounds.
But even though overall funding surged, not every founder is benefiting equally. Women- and Black-owned startups still attracted a minuscule share of the capital secured by South Florida startups in 2021, mirroring national trends. It raises the question of whether the area’s up-and-coming tech sector will be able to buck the status quo and create an ecosystem that reflects its multicultural makeup.
Bullish for Florida
Fuel Venture Capital founder Jeff Ransdell says Miami’s tech industry has gained something significant over the past two years: relevance.
“Everyone thought I lost my mind when we started [Fuel] here in 2017,” he said. “Now, Miami is a place where founders are expected to be.”
The Coconut Grove-based venture capital firm has $96 million invested in South Florida-based startups, which make up about one-third of its portfolio companies.
Miami was always a focal point for the company, but these days Ransdell says Fuel has more inquiries and pitch decks than ever to sort through. The numbers are so overwhelming that the firm is working on building an online portal that can weed out the duds from the promising applications.
Some ventures are more likely than others to attract capital. Software-as-service, financial technology and biotechnology/pharmaceutical companies in South Florida received the most funding in the five years leading up to 2021, according to data from Panoramic Ventures.
Last year’s most-funded startup, Miami-based cryptocurrency infrastructure company MoonPay, secured $555 million in a series A round. Plantation-based augmented reality company Magic Leap ($500 million), Miami elder tech startup Papa ($150 million) and Coral Gables-based logistics payment platform PayCargo ($125 million) were also among the top raises of 2021.
Major investors such as New York-based Tiger Global Management and SoftBank contributed to some of the largest fundraising rounds of 2021. That outside capital is complementing the investments made by local venture capital firms that focus on smaller, early-stage deals.
“For us, it’s great because they bring the bigger series A and series B money,” said Mark Volcheck, managing partner at Fort Lauderdale-based Las Olas Venture Capital, which invests in companies based in the southeastern U.S. “And more money will make the ecosystem more successful as a whole.”
All of that activity is changing the general perception of what’s possible in South Florida, said Marc Blumenthal, founder of Florida Funders, a Tampa-based firm with about 20 of its portfolio companies headquartered in Miami. Before the pandemic, founders generally believed they had to be in New York; Boston; San Francisco; or Austin, Texas, to have any chance of securing significant capital from investors.
“I can’t recall hearing any founder say that over the past two years,” Blumenthal said. “Instead, I have people asking me for advice about where they should move in Florida.”
The enthusiasm surrounding Miami tech gives local founders an edge when it comes to securing meetings with investors, said Christine Simone, co-founder of Miami-based Caribou.
“Founders are hungry here and investors like that,” she said. “But being from Miami only gets you so far.”
Even though 2021 was a banner year for funding, rising tides aren’t necessarily lifting all boats.
Less than 1% of all venture capital dollars deployed to South Florida last year went to companies with all-female founding teams. Women who teamed with male co-founders fared better, capturing about 12% of total funding, according to PitchBook data. Deals for Black- and Hispanic-founded companies ticked up across Florida as a whole, but still only accounted for about 4% of all funding agreements.
Nationwide, all-female founding teams received about 2% of total venture funding, despite booking more meetings with investors than startups led by men, according to another analysis from Dropbox.
Simone said that, as someone on the ground floor trying to bring more women into the tech industry, the data concerns her.
“Women want to work in environments where they see other women in leadership positions,” she said. “Otherwise, they don’t see a future for themselves.”
Caribou, a health care planning platform for the finance industry, secured $3 million from investors last year. Simone said she suspects being part of a mixed-gender team – she launched the startup with co-founder Cory Blumenfeld in 2020 – might have been a benefit during the fundraising process.
The numbers may not look great, but venture capitalists say they’re committed to funding promising companies backed by founders of all backgrounds – as long as they see a path to profitability.
Maggie Vo, managing director at Fuel Venture Capital, said her firm, first and foremost, has a duty to invest in businesses that will reap the greatest return for its investors.
“We don’t look at race, or whether a founder is male or female [when considering investments],” she said. “We look at metrics.”
Local startups may be raising billions, but it remains to be seen how many will transition into truly successful enterprises.
After all, plenty of companies have secured huge sums from venture capitalists without successfully scaling or turning a profit, Las Olas VC’s Volcheck said. And founders shouldn’t assume it’s going to be easier to get a check just because high-profile investors are flocking to the Miami area.
“There are [companies] with a presence in Miami that aren’t necessarily focused on making investments in companies based here,” he said.
Either way, it’s clear that South Florida is already home to a tech ecosystem unlike any other in the U.S., Florida Funders’ Blumenthal said. The region, a longtime hub for Latin American businesses, is now attracting Mexican and South American tech startups that are entering the American market. And Miami is already making a name for itself as a leader in sectors such as cryptocurrency and the emerging Web3 field, which continues to pique investors’ interest.
“You can’t ignore the concentration of companies and talent that could come out of Miami from that,” Blumenthal said.
The Big Number
12 local startups with at least one female co-founder that were funded in the first three months of 2022.
Written and published at MIAMIINNO