The Buzz Around Florida Startup Growth Isn’t Just Hype

The hype around South Florida as an up-and-coming startup hub isn’t just hype. Seed- and early-stage investment to Sunshine State founders really is up several-fold year over year. And Miami companies are leading the gains.

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So far this year, Florida companies have raised just over $1 billion in early-stage funding, per Crunchbase data. That’s nearly quadruple the sum raised in all of 2020, and comes as other investment stages are also posting gains.

What’s driving the momentum? There is certainly a buzz factor. Among tech influencers on Twitter, posts singing the praises of Miami became a thing last winter. Miami Mayor Francis Suarez capitalized on the moment with a social media campaign to attract startup talent to the city.

But just as you can’t start a fire without a spark, you can’t build a startup hot spot without some elements already in place. Although the spotlight cast on South Florida intensified in recent months, founders, investors and universities in the region have actually been engaged in a years-long process to build up startup momentum, said Kevin Burgoyne, president and CEO of the Florida Venture Forum. Now, much of that effort is coming to fruition.

“It’s a perfect storm of positive indicators that bode really well for the future,” he said, noting that years ago prominent venture firms might have an occasional portfolio company in the state. These days, there’s a sense among the most active startup investors that “now you have to cover Florida.”

What the numbers say

Early-stage deals factor heavily into the Sunshine State’s venture funding tallies. Below, we look at Series A and B investment from 2016 to today:

With two months left in the year, 2021 is already leaving 2020 in the dust with more than $1 billion in early-stage startup funding invested in Florida. While that’s dispersed statewide, most of the largest rounds are to companies in the Miami area, including:

• Elemy, the Miami-based provider of a platform for home-based therapy for autistic children, raised $215 million in a Series B round led by SoftBank Vision Fund 2. In March, the company raised a $94 million Series A.

• PayCargo, a Coral Gables-based provider of a logistics payment platform for cargo, raised $125 million in a summer Series B backed by Insight Partners.
• Recur, a Miami-based NFT startup, picked up $50 million in a September Series A.

Seed deals taking off too

Angel and seed investment in Florida companies is also up sharply, as illustrated in the chart below:

Seed funding data should be analyzed with some caveats. In particular, many seed financings don’t enter the database until weeks or months after they close. That means Florida angel investment is probably a lot higher in recent months than the reported totals indicate.

Locals agree that activity is way up.

“Deal flow has drastically increased in Miami,” said Elle Leemay Chen, acting managing director of the Miami Angels. To adjust to a faster moving market, she said, the group has revamped its investing process to be more nimble and is leaning into investors’ industry expertise for diligence in order to close in two weeks or less.

Other metro areas in the state are also seeing growth, Burgoyne says. The Tampa Bay area in particular is taking off, with some larger funding this year going to CrossBorder Solutions, an AI-enabled tax software developer, and Aspen RxHealth, an app connecting pharmacists and patients. Beyond Tampa, Orlando and Jacksonville are also seeing more startup activity, he said.

Investment across stages

Across all stages, Florida funding is also going strong. We look at annual investment totals since 2016 below:

Among the largest recent late-state funding recipients is Magic Leap. The 10-year-old, Plantation-based augmented reality company closed a $500 million funding round this month at a post-money valuation of roughly $2 billion. The company, which will roll out its second-generation headset next year, has now raised a total of $3.5 billion.

Other large late-stage Florida fundings this year include a $103 million Series C for agricultural technology provider Anuvia Plant Nutrients and a $60 million Series C for Papa, a platform that connects older adults with people who can provide companionship and assistance.

A diversified startup scene

Looking broadly at funded Sunshine State startups, there’s no particular sector that rises above the rest. Chen points to crypto and NFTs, edtech, and proptech as standout areas for Miami, as well as companies with ties to Latin America. Statewide, health care is also a big deal flow driver.

With so much of recent investment skewing toward seed and early-stage deals, where risk is highest, not everyone is poised for a major exit. But odds are that a few—and maybe even quite a few—will turn into something big.

Illustration: Dom Guzman