The vision: It’s 2040, and Miami is one of the truly racially diverse innovation ecosystems worldwide. Successful founders have emerged from multiple Greater Miami neighborhoods; the city’s reputation for access to capital and cultural acceptance has also made it a magnet for the best and brightest Black entrepreneurs from across the country. Mainly, Black-owned high-growth companies are integral to the economy’s success.
How do we make this vision a reality?
In principle, diversity is Miami's greatest strength. It is a key driver of innovation and is a competitive advantage as global markets become more important. The United States is going through a demographic shift that Miami has already made, but realizing that potential takes an equitable distribution of resources.
Today, access to capital is deeply unequal. Nationwide, the amount of venture funding going to Black startup founders accounted for 1.3 percent in 2021, and in the first half of 2022 the level was 1.2 percent, according to TechCrunch. While Miami-based organizations are among the national leaders in efforts to change that, there is clearly a lot more to do. Increasing access to funding is the top priority of respondents to the first survey designed to measure racial equity, diversity, and inclusion in South Florida’s tech/innovation/entrepreneurship ecosystem.
The United States is on its way to becoming a majority non-white country by the 2040s. Greater Miami is already there, and as such, it has the opportunity to be the model of a truly diverse, innovation ecosystem – a competitive advantage.
Successful Black, Hispanic, Non-Asian, and LGBTQ+ founders open the way for the next generation of founders by providing networks and access to funding.
More successful startups mean more jobs. High-growth young firms contribute disproportionately to job growth.
Miami has some of the most significant income inequality in the U.S. Creating economic opportunity for people of all backgrounds is essential to drive social mobility and build a strong, cohesive economy rather than slipping farther into an unequal one.
The national numbers remain bleak, even after VC funding for Black founders surged in the aftermath of George Floyd’s killing in May 2020. These numbers likely indicate more capital in the market chasing fewer deals rather than any structural changes in funding distribution.
The wealth gap between Black and White families in America means -- a “friends and family” investment round -- is less frequently available to Black entrepreneurs. Founders who clear that hurdle then have to overcome bias from venture capitalists used to investing in people who look like themselves.
It’s not just a tech startup story. Research suggests personal bias is a factor, at least at smaller banks. Fifty-six percent of Black small business owners surveyed by Bank of America in Q3 2021 reported that problems accessing capital were limiting their ability to grow. Many mom-and-pop businesses in Miami’s communities of color are smaller than those surveyed, making funding even more remote.
There is some progress, nationally and in Miami.
The national reckoning over racial inequity triggered by Floyd’s 2020 murder led to several billion dollars in pledges of support for Black businesses and organizations. While there are questions about disbursement and commitment to long-term change, there was some visible impact. An example was the launch of the $100 million, Miami-based SB Opportunity Fund, which has already invested in 70+ companies founded by Black and Latinx founders in the country.
Similarly, there has been an increase in government financing available to minority-owned small businesses, which were disproportionately hit by the pandemic downturn, and often lacked the banking relationships that were key to obtaining federal relief loans.
Racial equity, diversity, and inclusion are chief among our core values. But we often lack effective tools to help us understand whether these principles and priorities translate into practice. That's why a coalition of over 80 South Florida organizations participated in our region’s first REDI Scorecard. Over the course of one year, we gathered qualitative and quantitative data to identify gaps, assets, and priorities for building a more inclusive tech and innovation ecosystem. Now, we have a playbook for action.
Read Buchanan’s Medium post for Opportunity Miami about the results of the REDI Scorecard.
We are cigar smokers who grew up with a cigar-smoking grandmother who always empowered us as Black women. We grew up in a very Cuban household and celebrated the culture as much as we celebrated the American culture. We are a complete blend of both worlds. Miami has a large population of Cuban residents who have been here for over 50 years, like my parents and there are others who have come recently.
The Afro-Cuban co-owners of Tres Lindas Cubanas Cigars are among entrepreneurs profiled by the Miami Herald for a series about how Black-owned businesses innovated during the pandemic.
I have advised and met with hundreds of Black founders. I know firsthand there is an abundance of talented and overlooked startups in the marketplace. There is no lack of high-quality, Black-led companies. There is only a lack of access to capital.
Read more open Black Ops Ventures recent funding close here.
62% of Americans have a dream business in mind. 41% would start within 6 months if they could. Less than 2% do.
Watch Right to Start’s Miami Start Show.
In Miami, we’re doing as much as possible to foster innovation, starting with the government itself. In the U.S., we’re number one for job creation, for startups, and for small-business growth. We’re number five in the nation in population growth. To sustain these accomplishments, I’m working to ensure the government provides a wealth of resources and does not become an obstacle to our entrepreneurs and growing businesses. Entrepreneurs are the lifeblood of our city.
Read more on Black entrepreneurs here and Mayor Suarez’s aspirations or follow him on Twitter.
In Miami, I think Fintech startups find a diverse business community in terms of the number of organizations and individuals with relevant regional and local experience and interests, be they from the technology, banking, payments or other skilled support areas. You also have a growing investor community, the major payment networks are here as well as many banks and multinational companies. I think Miami can also be a very practical and productive place to operate from the point of view of travel and ease of doing business.
Read Anabel’s full interview here.
"For Miami founders, there are not a lot of early-stage VC funds here. There’s a lot of capital but probably more late-stage Series B plus, growth equity, hedge funds. Most funds are based [elsewhere], some have one person like me here — our team is not here. The market has changed; Miami has definitely changed. I’ve done two deals here [Ugami and Mueshi] already — we had never done a Miami investment here. But it’s still really hard for founders. People can feel disconnected from the hype. You hear that Miami is booming. Yes, Miami is better off. It’s booming from where it was but it’s growth on a small base. Everything has to be relative, in perspective."
In Episode 3 of the Opportunity Miami podcast, Matt Haggman spoke with four Black tech and innovation leaders about work that’s being done -- and remains to be done -- to build a future where being a Black tech company founder is commonplace.
Nearly 30% of respondents to a survey of South Florida’s tech and innovation ecosystem said making capital and funding more accessible to all groups was the top priority. It was the top priority for 40% of Black respondents.
Research
Ecosystem-building has become a field, reflecting the job-creating power of high-growth, young companies. Building inclusive innovation ecosystems takes intent, as the playbook from the Kansas City Fed conveyed. Nationally, some of the best equitable growth resources are the Brookings Institution’s Metropolitan Policy Program and the Kauffman Foundation.
Organizations on the ground
Several Miami-based organizations are working to make the tech and innovation ecosystem more inclusive.
Venture capital firms and angel investment groups with funds investing in founders of color are based in Miami, or have strong Miami connections. These include Softbank’s $100 million Opportunity Fund, Reign Ventures, Lightship Capital, Black Angels Miami, and Black Ops Ventures.
The Center for Black Innovation, aire ventures, Black Men Talk Tech, Black Girl Ventures, Digital Grass and Culture Shifting Weekends by Culture Shift Labs are among nonprofits working to support Black founders and make Miami a truly diverse innovation ecosystem. Black Ambition, a national prize and accelerator for entrepreneurs of color, is headquartered here, as are TechNolij and the Black Professionals Network.
It’s not all about tech. The Miami-Dade Chamber of Commerce, the Haitian-American Chamber of Commerce, the South Florida Black Prosperity Alliance, and the ICBA World Network are some of the South Florida-based organizations where small and mid-sized businesses can find support.
Nationally other organizations like Right to Start, Colorwave, BLCKVC, and Valence provide training, community, and access to capital.
Who are we missing? Let us know.
Shu Nyatta, who led the SB Opportunity Fund before departing to start his own venture earlier this year, said venture capitalists need to recognize that investing in founders of color is good business. “Profit and social impact are not these dichotomous things. They're often very related, and seeing them together can be more powerful than seeing them apart. These founders are overlooked for the wrong reasons.”
Big-name investors such as Softbank, J.P. Morgan, and Goldman Sachs should recognize that their brand matters along with their money, as it helps close the “permission gap” and encourages people of color to see themselves as potentially successful founders, Nyatta added.
Nyatta said the biggest challenge is at “the top of the funnel,” when companies are starting out. To stir more company creation by Black founders, Miami would benefit from a well-known accelerator, such as Y Combinator, to incubate many early-stage startups to the point where they are ready for VC investment or organizations like Colorwave which provide training for talent at the top of the funnel. This is especially necessary since Black and Brown founders are far less likely to have access to “friends and family” investment rounds than White, upper-middle class founders like Mark Zuckerberg, Nyatta said. This year, such an initiative was launched in Tulsa as TechStars, with the support of the George Kaiser Family Foundation, launched an accelerator focused on Black entrepreneurs.
Brian Brackeen, Lightship Capital co-founder, argues that VC firms should abandon the practice of unanimous partner approval for investments because there will always be one person in the room with bias that makes them find fault with Black founders.
Felecia Hatcher stressed that attracting capital shouldn’t be the only success metric for Miami’s tech ecosystem. Companies that don’t fit the venture model but generate strong revenues should be supported and counted. After becoming CEO of Black Ambition this year, Hatcher expanded the prize-and-incubation initiative to include both types of companies.
Take a wide view. Certainly, the issue of access to capital affects Black entrepreneurs outside of tech, where small businesses may be struggling to get lines of credit or mortgages. Supporting entrepreneurs should be a priority for state and local lawmakers because it can revitalize communities from the ground up, says Victor Hwang, founder of the entrepreneurship advocacy group Right to Start.
Direct funding support. Government support can be a game-changer. Brackeen said his firm had received $17 million in state and municipal funding to create a center in Cincinnati to incubate founders who are women and people of color. That’s significantly more than Hatcher's foundation support to found the Center for Black Innovation in historically Black Overtown.
Long-term approach. Breaking down deeply-rooted structural inequity to create a diverse, inclusive tech and innovation ecosystem will take both resources and a long-term commitment, Nyatta, Brackeen and Hatcher all said. “It’s not a one-year affair, maybe it’s not even a 10-year affair,” said Nyatta. “The most important thing is consistent effort over time because what you want to create is this self-reinforcing flywheel of founders who do not any longer feel underrepresented.”
Everyone has the choice to support Black-owned businesses; The Black World Guide, put together by Miami-Dade County’s Black Affairs Advisory Board, lists hundreds organized by geographic area.
Individuals can’t change the access to capital issue alone, but many may have the means to become avid supporters of new businesses. For instance, they can buy small, help entrepreneurs with distribution and host start parties for founders.
