City Hubs for Entrepreneurship Series: Miami, Florida / 13
Access to Finance: Funding Is Not Readily Available for Growing Firms. Access to finance is one of the most important resources for growing companies at the second stage of the ecosystem growth cycle. Unfortunately, the majority of local entrepreneurs leading companies in the scaleup phase reported that access to capital was not readily available. There are only a handful of local investment firms currently making early-stage, series-A-level investments in Miami. The most recent state-level data shows that venture capital investment in Florida is only $10 per resident, which is well below the US average of $71 per resident and significantly below states like Massachusetts, where the average is $330 per resident.18 Local investors also reported that many Miami-based entrepreneurs are poorly educated on the investment process. A prominent angel investor stated that he spends 70% of his time with potential investees explaining the meaning of specific deal terms.
Venture capital investment for the state of Florida is only $10 per resident vs. $71 for the U.S.
“Access to finance is the biggest challenge in Miami.” –Investor
“I was on the Inc. 5000 for four years in a row and no one would fund me.” –Entrepreneur
Mentorship: Growth-Oriented Entrepreneurs Lack Local Mentors and Are Not Mentoring Others. Mentorship is one of the most important ways that successful entrepreneurs reinvest their knowledge and social capital into the next generation of entrepreneurs. Unfortunately, local entrepreneurs at scaleup companies are more likely to have mentors from outside of Miami than inside it, and most of these entrepreneurs do not mentor others themselves. Miami also has a wealth of retired entrepreneurs and executives who could play valuable roles as mentors for local companies in the scaleup phase, and it has a number of entrepreneurs at young, growing companies who could be valuable mentors to local startups. Participants in our focus groups highlighted the lack of a “central clearinghouse” to connect potential mentors with high-potential entrepreneurs who could benefit from their advice.
Fifty-nine percent of the mentors of scaleup entrepreneurs in the study do not live in Miami.
“Not enough successful retirees are being tapped for advice and board roles.”
“I know I should be mentoring others, but I don’t do it.” –Entrepreneur
Role Model Promotion: Successful Entrepreneurs Are Not Promoted as Inspirational Examples within Miami. Entrepreneurs in healthy ecosystems often report that they have been inspired by the success of other local entrepreneurs and companies. This is not the case in Miami. Most of the entrepreneurs leading companies in the scaleup phase did not report being inspired by local founders who had achieved success. The participants in our focus groups noted that Miami is made up of many different communities, which are often geographically and socially isolated from one another. Because of this, the success stories of each community often do not spread to other groups.
Sixty-three percent of entrepreneurs at scaleup companies were not inspired by another entrepreneur in Miami.
“Many parents in Miami, even if they are self-employed, don’t want their kids to become entrepreneurs.” –Educator
“Inspiration is probably the thing we need the most.” –Support Organization