Last year, Marshall Swatt’s small company was struggling.
He desperately needed engineers to staff Coinsetter, his growing bitcoin exchange startup based in New York. At one point he offered a prospective employee a competitive base salary of $150,000. The very next day a big bank offered that potential employee double.
“Because the environment is so hot, we found ourselves competing with other startups. And because we’re a financial technology company, we were also competing with Wall Street and hedge funds for financial talent,” Swatt explained.
“It was a very clear indicator of the climate we were in.”
Frustrated by the sharp elbows of the startup and financial technology market, Swatt decided it was time to look at opening an office in another city.
Along the way he considered a dozen cities around the U.S. and Canada. He looked at Boulder, Colo., but that seemed a bit too small. Los Angeles was way too big. He thought Austin, Tex., might be just right — but it didn’t have much of a banking or finance industry, something that was essential to his company’s success because his business was a bitcoin exchange, which is like a stock exchange for digital currency trading and investing.
Swatt next turned his gaze to South Florida. It was the number two banking capital in the Americas, just after New York. He also thought Miami would be a good place if he ever wanted to expand into Latin America. And with its proximity to the region, Miami offered an opportunity for him to hire international talent, as well.
He started looking for talent near Miami last May and within a month and a half, he had hired a full staff of engineers based in Buenos Aires, Argentina. By October, he opened an office and moved to Miami.
Swatt eventually sold Coinsetter, but is now working on a new company — this time in Miami from the start. He cites the city’s high quality of life, low cost of living compared to other startup hubs, and cultural diversity as reasons to stay.
And Swatt’s story is just one of many, it seems. Just last year, the 2015 Kauffman Index, which measures national entrepreneurial activity, ranked Miami as the second most active in the country. The parameters measured included number of entrepreneurs coming to the city, opportunities available to entrepreneurs, and density of startups.
Earlier this year, for our series on Tech Resolutions, we spoke with several Miami tech experts (tech-sperts, if you will) about why this city seemed to be booming with new businesses. There are several key ingredients for this startup activity. As Swatt found, the cost of living is comparatively lower than other tech hubs. Moreover, the proximity to Latin America makes Miami an ideal place for any new businesses hoping to have an international reach.
In terms of funding, Miami is home to a lot of early stage capital, as locals Brian Brackeen of Kairos and Will Weinraub, co-founder of LiveNinja, both highlighted.
This means, “there’s a lot of early stage capital. That’s people writing $25,000 to $50,000 checks. … That’s a great way to get a company going.” Weinreb further clarified. “There’s also a lot of growth-stage capital — people who are who are adding large financing rounds when the business model is already booming.” Where Miami lags behind, he added, is that next step, taking companies from early-stage capital to the growth-stage capital phase.
But initially, low costs and high initial capital leads to lots of early, rapid growth, Brackeen summed up.
Conferences, meet-ups, and mentorship are essential to growing and building a thriving startup space, our tech-sperts added. Miami’s got that too.
World-renowned conferences like eMerge Americas, a summit drawing together technology leaders from North America, Latin America, and Europe, and SIME Miami, a two-day conference focusing on the larger themes of convergence, big data, and financial technology, both highlight Miami as a meeting point of international technology leaders.
Additionally, for the past two years Black Tech Week, a week-long series of events that brings together and supports entrepreneurs of color, encouraging diversity in the startup space has also called Miami home.
Diversity is another element that makes Miami’s tech scene competitive. This is why a growing number of accelerators and incubators to support this goal now call Miami home. For example, the Boston-based Women Innovating Now Lab recently set up shop to support the city’s female entrepreneurs, promoting gender diversity in tech.
“Generally women make up about 10 percent of the population in top accelerators, there’s a gender gap that needs to be addressed,” said Heatherjean MacNeil, global director of the WIN Lab. “I think community is really important. The entrepreneurial experience can be really lonely.”
In launching the WIN Lab in Miami, MacNeil hopes to be a resource for budding female entrepreneurs, to support and help them grow. They’ve started by partnering with Wyncode Academy, whose co-founder Johanna Mikkola will be an entrepreneur-in-residence.
“We want to create an ecosystem for women in tech,” MacNeil added.
And as Miami’s startup community continues to mature, it’s important that it grows to include the city’s diversity, rather than apart from it, according to Janelle Alexander, managing director of PowerMoves Miami, an accelerator that works to increase the number of venture-backed startups founded by entrepreneurs of color.
In many cities around the U.S., women and people of color are a late addition to the startup space and companies have to go back and build diversity after the fact. In Miami, however, it would take more effort to not hire staff of color.
“This might be the opportunity in Miami to surpass some of the cities that are a bit more established,” Alexander added.
And for Swatt? Miami’s level of diversity is what he imagines the rest of America might reach in a few years, making it the perfect place to prototype his new event promotion business.
“The demographics are fantastic. … It’s an excellent microcosm of the U.S.,” he said. “I’m looking forward to beta-testing my company here before I go national, and there’s no better city to incubate a consumer tech company than in Miami.”