Florida’s tech sector vibrant, and likely to stay that way
What's the forecast for South Florida becoming another Silicon Valley?
More than 10,000 people filled the eMerge Americas technology conference in Miami earlier this month as exhibitors displayed emerging technologies, developers faced off in a “hackathon” and networking events matched entrepreneurs and investors.
For many people, it was a sign that South Florida, finally, was on the road to joining Silicon Valley, New York and Boston as a major tech mecca.
Despite this sign of vitality, though, the region will never be another Silicon Valley. And South Floridians should consider that a good thing.
There’s no doubt that Florida is taking part in the technology investing boom. Venture capital investors poured just over $1 billion into Florida startups in 2014, the highest total since 2000, according to Dow Jones VentureSource.
That mirrors the overall rise in tech investing throughout the U.S., which for many is an uncomfortable reminder of the dot-com boom of the late 1990s. We all know how that turned out — with hundreds of overhyped startups plowing through billions of investor dollars before the whole boom went bust in 2000.
You’ll find plenty of people insisting that this time is different, and that the economic fundamentals of the current generation of startups are much stronger than their predecessors’. Only time will tell whether they are correct.
Conservative investing environment
What’s certain is that South Florida is generally well positioned to navigate the inevitable downturn better than most. Investors in South Florida still subscribe to the old-fashioned notion that startups should prove they can identify a viable business model before piling up tens of millions in venture investment. This prudent attitude toward investing, combined with the region’s impressive built-in advantages, speaks well for the region’s tech future.
Part of it comes from a conservative financial streak at odds with the stereotype of South Florida. While the region has an anything-goes reputation for culture, nightlife, fashion, architecture, and more, it also has a tradition of legacy wealth, with investors with strong, old-money ties to the Northeast.
South Florida also has a strong tradition of conservatively investing in cornerstone sectors like real estate, development and construction, through private equity firms and family offices that invest in companies based on tried-and-true criteria such as solid business models and sustainable revenue.
The major tech hubs have a different approach. Filled with brilliant entrepreneurs and investors willing to take bold risks, those areas produce some of the most innovative companies and products in the world. But South Florida need not imitate those places. It shouldn’t overhaul its basic investing DNA to be more like Silicon Valley. What it can do is play to its longstanding strengths, while continuing to build a tech ecosystem that can meld prudent investing with increased innovation and a stronger startup ecosystem.
The recent eMerge Americas conference showed the potential, and other good things are happening. The Gold Coast Venture Capital Association, for example, is working on connecting the entrepreneurial community in South Florida. This group provides a forum to share and develop relationships among entrepreneurs, investors and service providers on Florida’s Gold Coast, from Palm Beach to Miami.
Multiple angel groups are also working to strengthen the early-stage innovation ecosystem, such as New World Angels, which is working collaboratively to bring seasoned investors together with the entrepreneurial community.
What makes Florida shine
These efforts, and more like them, can combine with South Florida’s existing base of advantages:
- Florida is centrally located for international business, enabling people to travel to Europe and all over North, Central and South America in under 10 hours. This is good for both investors and entrepreneurs who are embracing globalization.
- The integration of Palm Beach, Broward and Miami counties, which have become blurred from a business perspective, creates a broad region of innovation.
- The heavy involvement of Europe and South America in the South Florida community brings diversity, creativity and — increasingly — large amounts of money.
- Don’t forget the warm weather, which makes South Florida vastly more desirable than New York, Washington or Chicago, if we don’t say so ourselves.
- The absence of local or state income tax and Florida’s low corporate taxes entice startups, entrepreneurs and established corporations to operate out of South Florida. Why should they pay the high taxes of New York or San Francisco, when they can make better use of those dollars here?
Challenges to confront
Definite challenges remain. One major issue for the Sunshine State is the university system. It is young and relatively underdeveloped, lacking Harvard’s or Stanford’s history or alumni networks. As a result, a young person choosing to attend college in South Florida is more likely to leave the state in search of success.
This “brain drain” is an issue that the region will need to address, and efforts like Florida Atlantic University’s Tech Runway program are good steps. The program, based on the Massachusetts Institute of Technology’s Venture Mentoring System, provides mentorship for entrepreneurs and their ventures.
Non-traditional education platforms are popping up and adding to the talent pool, such as WynCode Academy, a Miami-based software development boot camp aimed at people looking to start their own companies or go to work at established ones.
Nonetheless, advisor networks, startup incubators and similar resources need to be stronger and more cohesive to fuel the growth of developing companies.
Despite these challenges, South Florida’s tech influence will continue to grow, and it’s not hard to envision some of the smartest entrepreneurs and most innovative companies deciding to set up shop — and build the future — in South Florida.
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