Miami’s startup focus is not boosting wages. Here’s what will, experts say.

A new report by a well-regarded international business organization argues Miami’s status as one of the nation’s top startup hubs has not yet paid dividends. But, it says, the region has what it takes to pivot.

The report comes from Endeavor Insight, the research arm of global entrepreneurship group Endeavor, which opened its first U.S. office in Miami in 2013. The report is part of a periodic survey of Endeavor communities and was conducted with support from the John S. and James L. Knight Foundation.

“Recent national rankings have placed Miami among the top U.S. cities for new business creation, but this activity has not substantially improved local economic outcomes,” it says.

Between 2008 and 2017, Miami’s gross domestic product per capita declined — even as the GDP in other major U.S. metropolitan areas grew by more than 3 percent, according to Bureau of Economic Analysis data. GDP measures the size of the local economy.

To boost economic activity and shift the area’s economy toward high-paying jobs, the report recommends that local leaders refocus energies from fostering startups to building up existing businesses, and target the industries where South Florida has a competitive advantage.

“Though the Greater Miami area is home to dozens of programs for entrepreneurs, analyses conducted by Endeavor Insight indicate that the majority of local support organizations currently focus exclusively on early stage entrepreneurs,” the report says. Efforts such as Endeavor’s new ScaleUp Program can help.

Endeavor’s strategy mirrors that of Miami-Dade Beacon Council’s One Community-One Goal initiative: Focus on sectors where Miami is already strong.

The Endeavor report names transportation and aviation; finance; consulting; pharmaceuticals and medical devices; software; and advertising firms. The OCOG strategic plan identified industries with the greatest promise as aviation, creative design, hospitality and tourism, information technology, international banking and finance, life sciences and healthcare, and trade and logistics.

Since the One Community One Goal launch in 2012, Miami-Dade has created 67,000 new jobs in the seven targeted industries. One third of those have come from travel and tourism, where many jobs pay low wages.

Endeavor does not specify a role for the public sector or organizations like the Beacon Council, putting the onus instead on the business community.

“Businesses with local founders reinvest a greater share of their sales within the region when compared to branches of companies that are headquartered elsewhere,” it says. “The investors and senior executives of entrepreneurial companies are often members of the local community as well, which can create a number of positive spillover effects if a company is sold or goes public.”

For Raul Moas, Miami program director at the Knight Foundation, this strategy is key.

“We need to be focused on founder-led, high-growth companies where job creation happens,” he said in an interview.

He pointed to the example of Mako Surgical, a South Florida-based medical device firm that was sold to Stryker, a Fortune 500 device company, for $1.65 billion in 2013.

Mako’s leaders included Dr. Maurice R. Ferre, who since founded incision-less surgery company Insightec; and Rony Abovitz, founder of high-profile augmented-reality company Magic Leap. Both companies require highly skilled workers and pay commensurate wages.

The Endeavor report also cites transport and logistics companies including Spirit Airlines and World Fuel Services., which capitalize on Miami’s strategic location as a global gateway, as potential leaders for growing local startups like Shipmonk, a fast-growing digital logistics platform.

“Dynamism among this group of larger, high-value, entrepreneurial companies is quite high,” Endeavor finds. “It is expected that these companies will continue to benefit Miami and other cities that have a competitive advantage in producing passenger transit and transportation service companies.”

And some promising news: The Miami businesses in these sectors are much younger than the average age of similar businesses in other cities, the report states.

For Endeavor, that means the region “has significant potential to generate more [valuable] companies in the next five years.”

The Endeavor report confirms the findings of several other recent studies, including one by noted urbanist Richard Florida, that South Florida’s continued reliance on low-paying jobs exacerbates the region’s wealth gap.

“If Miami is going to reach its economic potential, decision makers must reduce the prevalence of low-paying service industries by generating more high-paying, knowledge-intensive jobs in growing sectors,” the report says.

For outgoing Endeavor Miami Director Laura Maydon, this means her organization will likely take a more focused approach to the local companies it selects as mentees.

“We want to be sourcing our companies according to the strength of the local ecosystem,” she said in an interview.

This story was originally published May 30, 2019 at 9:00 AM.