When it comes to tech, 20 years can seem more like 200.

Back in 1998, when the Miami Herald launched its first ever Business Plan Challenge, Miami had no real startup community. Most of that year’s winners — and those from many of the years that followed — were spread throughout Florida. The judges mostly comprised executives from consulting firms or now-defunct venture capital funds.

And when recessions hit, there were no supportive institutions to help keep the startups afloat.

Fast forward to 2018. Significant announcements about tech and startup-related investments occur on a near-daily basis. And a record 15,000 attendees are expected at the fourth annual eMerge Americas conference, which opens Monday.

“There’s been tremendous progress,” said eMerge CEO Xavier Gonzalez, who began his career as a local innovation booster as the Beacon Council’s director of communications. In just four years, eMerge has become the top tech conference in Latin America.

According to newly compiled Census data published by the non-profit Computing Technology Industry Association, Dade, Broward, and Palm Beach counties are now home to 8,167 technology businesses — the 12th-highest amount in the country. (No, that doesn’t include retail shops selling tech stuff).

Among the community’s milestones: The decision by the Beacon Council, the Downtown Development Authority, and the Knight Foundation to focus on increasing entrepreneurship in the city; the acquisitions of firms like Chewy, eBuilder and LiveNinja; Miami’s No. 1 ranking in the country for co-working spaces; and of course, the region’s inclusion as a finalist for Amazon’s HQ2 project.

But in other ways, the city’s startup sector seems to have reached stability — and is now figuring out what the coming years should look like. While there have been plenty of successes, core issues remain. They include lack of access to capital, tech talent or opportunities for growth in technology careers; and too much buzz without execution.

“There’s still a lot of work to do to really get to what we think is our potential to establish ourselves as a hub and solidify our place on a global scale,” Gonzalez said.

Early days
Brian Breslin has been on Miami’s tech scene since its first breath. The inaugural event of Refresh Miami, the tech booster nonprofit Breslin co-founded, was a meeting at the Starbucks on Alton Road and 16th Street in Miami Beach in 2006. The idea of the group was to connect that various pockets of South Florida’s tech entrepreneurs with those interested in learning more about tech opportunities.

Refresh muddled through the next few years as the local tech scene started to coalesce. After the housing crisis, Breslin says, South Florida investors’ and entrepreneurs’ attention began to shift away from real estate and towards tech. Early key startups included facial recognition company Kairos, medical tech group CareCloud and communication management firm LiveNinja. Tech incubator Venture Hive was also a pillar of the early community.

Another key — though often overlooked — milestone Breslin says, was the creation of Panther Coffee in the heart of Wynwood in December 2010, says Breslin. Its arrival served as a catalyst for the neighborhood at a time when Wynwood’s most popular restaurant was also notorious for getting robbed.

But the neighborhood grew up, and in 2012, two key events set the startup movement on its current trajectory: A group of high school friends just out of college launched The LAB, Wynwood’s first large-scale co-working space. And Matt Haggman, who had just taken over as Miami director for the Knight Foundation, announced that entrepreneurship would now be the Knight Foundation’s priority for Miami. One of Knight’s first investments was in The LAB.

Those moves created a stable source of funding and a common meeting space and neighborhood to incubate ideas, Breslin says.

“[The Knight Foundation] wasn’t necessarily ahead of the curve — they were just responding to what the market needed,” he said.

Miami’s startup ecosystem finally caught the nation’s attention in the winter of 2014, Breslin says, when Refresh hosted an. event featuring reddit cofounder Alexis Ohanian. Hundreds of people attended.

Shifting players
Since 2014, a galaxy of startups of all sorts have come, and in some unfortunate cases, gone — from food trucks to incubators to events. Along the way, two billion dollar startups emerged, with Plantation-based Chewy.com, an online pet supply shop, getting sold in 2017 in a blockbuster acquisition. While the fate of the region’s multibillion-dollar startup, augmented reality software company Magic Leap, hangs in the balance, the presence of both giants has helped lift Miami’s national profile.

That’s also true of Endeavor, the international tech accelerator, which arrived in 2013. It has invested millions in about a dozen Miami startups. Some have grown; some have moved on.

Some of Miami’s most promising startups have also decided to leave town. That’s the case with legal startup Court Buddy, a platform for paring clients with attorneys. The homegrown firm fertilized by Miami’s startup ecosystem has now outgrown it.

Cofounders James and Kristina Jones, the latter a graduate of FIU and the Miami Ad School, founded the company in 2015 from a co-working space in Brickell. Along the way they were guided by Nile Keric at FIU’s Small Business Development Center. As entrepreneurs of color, they were inspired by Felecia Hatcher, who launched community-oriented organizations BlackTech Week and CodeFever, and a for-profit gourmet ice cream business, Feverish.

They caught the attention of 500 Startups, a Silicon Valley accelerator that serves as an advice-and-investment hothouse for startups.

From there, they received a flurry of interest from West Coast investors, including Drew Koven of LDRventures, a Los Angeles-based venture capital fund.

“When we looked at Court Buddy, we thought, this is solving a huge problem — there are millions of court cases where people are going unrepresented,” Koven said.

Last summer, the Joneses relocated to Silicon Valley to take advantage of investment opportunities there.

“Unfortunately it’s a situation where there’s a very small amount of investors [in Miami],” James said. “The startup ecosystem is great, the talent is great in Miami, it’s up and coming … but if you really want to scale and grow and tap into resources that investors can provide, it wasn’t a comparison in terms of the Bay Area versus what Miami had to offer.”

Show me the money
Court Buddy’s move illustrates a problem that continues to bedevil Miami’s startup ecosystem: a shortfall of capital investment. According to new data from PricewaterhouseCoopers and CB Insights, while South Florida company venture activity is not going down — it’s not exactly going up either. The tri-county region raised just $26.1 million in venture capital in the first quarter of 2018. (That excludes the half-billion raised by just one company, Plantation-based Magic Leap.)

South Florida companies earned a total of 11 VC deals overall that quarter, including two for Magic Leap. That puts the first quarter on par with the average of all quarters going back to 2014. There were a total of 42 deals in South Florida last year — about even with the 40 deals counted in 2016.

And even without the billion-dollar deals, 2017 saw the most investment since 2014, with at least $459 million raised across South Florida’s three largest counties.

But WhereBy.Us, an email newsletter company that recently raised $1.25 million (bringing its total to $2.25 million over the past four years), had to look to multiple funding sources in Miami and beyond, including crowdfunding, to raise money. At least one local funder turned them down.

E-newsletter startup WhereBy.Us just raised $2.5 million. They’re based in Miami but now have employees spread across the country.
“Raising money anywhere is hard work, but raising in Miami is a bit tougher because of the short history of angel and venture capital investing in the region,” said WhereBy.Us business development chief Chris Adamo.

Many of Miami’s wealthiest individuals are accustomed to investing in real estate and stock market funds. Tech remains unchartered territory, he said.

And savvy investors that live in the area are looking for companies that have proven, self-sustaining business.

“Due to how young of a tech startup culture we have, as well as our young tech industry, we’re still a few years away from the network effect of local successes at scale and our growing educated and experienced talent pool,” Adamo said.

Minority entrepreneurs
When the Herald contacted CodeFever’s Hatcher about what she sees in the city’s startup ecosystem today, she responded with a single line: That inclusion of minority communities is still not a top priority.

To be sure, it’s a problem that extends beyond Miami. In a recent photoshoot for Vanity Fair featuring 26 women of color diversifying entrepreneurship, CourtBuddy’s Kristina Jones remarked she’d never been in a room with this many other successful black founders before.

Compared with Miami, San Francisco has proven much better equipped to support entrepreneurs from all backgrounds, Jones said, because there are simply more investors around.

Aminta Ventures is one group supporting the growth of female investors by combining the talents of South Florida’s leading female entrepreneurs.

“The purpose of Aminta is to tackle the gender representation gap on the investment side of the pitch table,” says Aminta co-head Natalia Martinez-Kalinina, who also directs the Cambridge Innovation Center coworking space. “Diversifying the composition of existing investment groups and channels is important by itself, but research out of institutions such as Harvard University and Babson College supports that it also affects the likelihood of female founders accessing money.”

Tech-startup divide
Another pernicious divide plaguing Miami’s ecosystem is that many of those working on startups are business entrepreneurs — not tech developers or designers.

“And most of them outsource their talent,” beyond the city — or national — borders, said Julie Kramer, a. software developer for data dashboard company BrightGauge in Coral Gables. She’s also the head of Code For Miami, a group of civic-minded hackers. “It’s a pretty different ecosystem than startups whose main goal it is to make money.”

Most of Miami’s techies are primarily concerned with developing an upwardly mobile career path — and one that will allow them to stay in the Magic City.

“We are apparently the most entrepreneurial city. I’d like to see more tech jobs and salaries go up in Miami,” she said.

Miami Mayor Francis Suarez has said he is trying to do as much, announcing recently he would give tech companies moving into Miami discounted co-working space. He’s also hinted at a deal that would bring music streaming company Spotify’s Latin headquarters to Miami.

Part of Miami’s challenge may simply be reputation — Miami has never been known as a hub for developers.

Juha Mikkola is trying to change that. The co-founder of coding bootcamp Wyncode, Mikkola says there are still too many companies that just have an outpost in Miami but no developers here.

“What we need to do is attract development talent,” he said. “I think that’s the competiive advantage Miami is looking for.”

Miami’s Wyncode coding bootcamp is pumping out dozens of job-ready programmers and designers.

Outsiders’ view
Miami’s rankings in tech and entrepreneurial activity deliver a mixed picture. Dual Kauffman rankings show Miami as America’s top community for new startup activity — but near the bottom for scale ups. When it comes to the average number of employees per high-tech firm, a new report from the Miami Urban Future Initiative puts Miami second to last — 52nd among large U.S. metros. With an average of around 11 employees, Miami’s high-tech firms are a third the size of those in San Jose and Seattle, the report says.

Betsy Atkins, a Miami-based entrepreneur and a frequent guest on national business media networks, says Miami is still working its way up to second-tier tech hub status. Pittsburgh, Chicago, and even parts of Ohio remain ahead of it, she said.

What it’s lacking is an iconic local company to act as the area’s calling card.

“We have some companies of scale but by and large, we have individual contributors working in a disrupted fashion as remote workers, and we have smaller early stage startups,” she said.

For Jason Calacanis, a well-known Silicon Valley investor who has put money into WhereBy.Us and Miami sales lead platform Gramercy, the city’s ecosystem remains relatively small — but promising.

“I actually think Miami could be a city of the future, since it’s an amazing place where everyone wants to live … and there is a solid core of angel investors getting their s*** together,” he said. “It only takes one breakout company to build a massive community, maybe that will be Magic Leap, or maybe it will be Gramercy and WhereBy.Us — no one knows.”

Patrick McKenna is the kind of tech-minded investor South Florida is trying to attract. Four years ago, the founder of High Ridge Venture Partners realized San Francisco’s potential had peaked; he was ready to try a new city. Miami fit the bill as an East Coast home base for local and global investments. McKenna was one of the earliest investors in Home61, a real estate platform founded by a University of Miami graduate.

Four years later, McKenna’s Miami “thesis” is still a work in progress.

“The entrepreneurs are more sophisticated,” he said. “The types of business plans they’re proposing, the technical capacity of the teams you’re seeing, are all in the positive direction.”

Next five years
Jared Husch, product manager at education technology company Nearpod and former Chief Operating Officer at LiveNinja, is among a number of locals concerned that Miami has been overhyping itself, prioritizing ideas and buzz ahead over results.

“It’s not easy, it’s not glamorous — but you can’t focus on how people view you,” he said.

Startups that have raised more than a seed round of funding remain few and far between.

“It’s slim pickins,” he said. “Part of that may be where we are at on the curve [of the ecosystem’s development], but I also think it’s a metaphor for the type of makeup of our community.”

Albert Santalo, the cofunder of CareCloud who just founded a new software startup, had much the same to say.

“Many of the companies I see formed in Miami are narrow and not necessarily backable by venture capital or even sophisticated angel investors,” he said. “They often scale to about $2 million in revenue and hit a wall, and therefore cannot provide returns to investors.”

As Raul Moas steps in as Miami director of the Knight Foundation, he wants to shift Knight’s resources towards entrepreneurship initiatives that increase opportunity for Miamians from a wider array of backgrounds.

“Miami is increasingly becoming a place where ideas are developed and scaled,” he said in an email. “At Knight Foundation, we’re eager to build on this momentum by continuing to invest in the infrastructure that supports the growth and success of our community’s entrepreneurs.”

There’s a geography problem too, CIC’s Martinez-Kalinina says, having seen a host of companies recently move from Miami-Dade to Broward.

“We are becoming more spread out and less clustered in terms of where our tech, startup, and innovation pieces are happening,” she said. “This will make building momentum harder.”

For eMerge’s Gonzalez, perspective is needed: it may still be to early to say exactly where verything is going.

“One thing I always go back to when I look at the ecosystem, there needs to be a level of patience,” he said. “We’ve made some great strides in the past four or five years .. .but let’s make sure we’re giving it time to grow and mature.”

Information on the eMerge Americas conference

Dates: April 23-24

Location: Miami Beach Convention Center

For more information visit www.emergeamericas.com

What key players are saying now

Raul Moas
Raul Moas, Miami director of Knight Foundation: “I see a fast-growing creative class of entrepreneurs, designers and makers who are building impressive ventures. As a result, Miami is increasingly becoming a place where ideas are developed and scaled. At Knight foundation we’re eager to build on this momentum by continuing to invest in the infrastructure that supports the growth and success of our community’s entrepreneurs.”

Natalia Martinez-Kalinina
Natalia Martinez-Kalinina, director of CIC Miami co-working space: “We have too many events and not enough thought leadership emerging. We are not doubling down resources around the industry verticals that make sense in Miami. We need to galvanize and create truly collaborative cross-stakeholder ecosystems around verticals like health or logistics. Corporations are not engaging with the startup community enough; their innovation practices are mostly insulated in-house, if they exist at all.”

Felecia Hatcher, co-founder of CodeFever: “Inclusion of minority communities is still not a top priority.”

Betsy Atkins, Miami entrepreneur: “Miami is emerging from being a third-tier to second-tier tech city, but still needs a major iconic company. We have some companies of scale but by and large, we have individuals working in a disrupted fashion as remote workers, and we have smaller early stage startups.”

Albert Santalo, CEO of 8base and founder of CareCloud: “Locals have tried to brand Miami as ‘Silicon Beach.’ In my opinion, by saying this we miss the point that Miami is likely not the place where core innovation will happen. If we are to truly emerge as a tech hub we must aim higher and create companies that can scale rapidly and deliver world-changing products.”

Julie Kramer, co-captain of Code For Miami: “I think Miami-Dade County and the City of Miami could be more strategic in trying to attract tech companies to open up shop in Miami. We need to have more jobs and fresh talent in order to grow the tech community. If we could do a better job of this I see no reason why Miami can’t be a competitive tech job market.”

10 Key moments that shaped the ecosystem
Late 1990s: Manny Medina establishes Terremark as a leading telecoms firm

April 2006: Refresh Miami holds its first brainstorm session

2008-2009: Housing crisis shifts investment into tech — and Wynwood, where land is cheap

December 2010: Panther Coffee opens in Wynwood, serving as an anchor and catalyst for Wynwood

Winter 2012: Matt Haggman launches Miami entrepreneurship initiative at the Knight Foundation

June 2012: Wynwood LAB co-working space opens its doors

September 2013: Endeavor accelerator lands in MIami

Winter 2014: First eMerge conference held

July 2016: First Venture Cafe night held at Cambridge Innovation Center (CIC) Miami

February 2018: Miami named No. 1 city for co-working

10 Startups To Watch
Caribu

What they do: Provide a digital platform for enrichment material for children and parents

Key people: Maxeme Tuchman

Chargello

What they do: Provide charging tablets in public and retail spaces

Key people: Freddy Sidi, Johnny Bosche

Gramercy

What they do: Sales lead and referral platform

Key people: Alex Nucci

Home61

What they do: Real estate platform

Key people: Olivier Grinda

Lean Orb

What they do: Plant-based food service packaging and catering supplies

Key people: Anastasia Mikhalockina

Luxe Fête

What they do: Dinner parties in a box

Key people: Nathalie Cadet-James

Moocho

What they do: Payments app for college campuses

Key people: Jonah Goldstein, Matthew Levenson

SpaceWolff

What they do: Online marketplace for selling ad space

Key people: Mary Wolff

WhereBy.Us

What they do: Publish newsletters and track online audiences

Key people: Rebekah Monson, Christopher Sopher, Bruce Pinchbeck, Chris Adamo

Yard Hospitality

What they do: Owners of Wynwood Yard and Jackson Hall

Key people: Della Heiman, Ken Lyon

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