It’s among the top struggles for Miami entrepreneurs: finding the money to fund their ideas.
Now, they will have ready access to another major source —thanks to a Silicon Valley fund’s decision to break out of the California tech bubble and put down roots in South Florida.
This week, 500 Startups announced it has chosen Miami as its first East Coast U.S. outpost. The $400 million fund is best known for investing in companies including Credit Karma and Twilio.
“Miami has ranked really high in entrepreneurship,” said 500 managing partner Bedy Yang, citing the Kauffman Foundation’s index ranking Miami No. 1 for startup activity. “But there’s also a bit of a hole when it comes to scale ups, when companies need to raise capital. We’ve heard that’s been a gap.” The fund has not yet decided how much it plans to spend on Miami companies and initiatives.
For tech group Refresh Miami, which plans to partner with 500 on hosting events, 500 Startups’ arrival in Miami will mean more of the city’s best and brightest can stay put.
“It’s important for aspiring entrepreneurs to feel that they have the support and the resources necessary to build their businesses here in Miami and that they don’t need to move away to California to attend a world-class accelerator,” Refresh executive director Maria Derchi said in an email. “They can have access to that level of expertise and opportunities right in their own backyard.”
500 Startups joins the likes TheVentureCity and Rokk3r Labs as deep-pocketed investors looking to grow tech in Miami. 500 was already making pit-stops in Miami as it scouted companies in Latin America and Europe. But its leaders became convinced that they needed a more permanent presence here, thanks to Miami’s growing importance as an international financial and logistics hub—and the ongoing community effort to build up the city as a major tech player.
500 was also attraced to the prospect of working with a more diverse pool of talent—the company has made ethnic and gender diversity a top priority.
“We’re a majority-minority company,” Yang said.
Miami’s Downtown Development Authority helped seal the deal. The agency will kick in a total of $300,000 to bring 500 Startups to the heart of downtown. The company will be occupying 7,200 square feet at the downtown property owned by local coworking company mindwarehouse. As part of the grant agreement, 500 Startups and the DDA have set a goal of having 40 percent of the companies it gives support to from the new office go to local ventures.
Visa and the Knight Foundation were also part of the partnership agreement, with Knight kicking in $1 million over three years to bring the fund here.
“So much media attention is focused on Amazon,” said Miami Commissioner Ken Russell, chairman of the DDA. “But when you’re growing an ecosystem and entrepreneurial culture, it’s important to find, attract and incentivize groups like 500 Startups.”
Mindwarehouse founding partner Brian Scheinblum said that in the past, a successful South Florida company that received investment would often be unable to resist the temptation to leave the region. But he believes that with 500 Startups putting down roots, that problem will go away.
“They’re going to be committed to the local community, investing in the local community, and that’s going to result in jobs and opportunities in this community,” he said.