Issuu on Google+

City Hubs for Entrepreneurship Series: Miami, Florida / 7

Many Startups Are Now Launching in Miami, but Few Are Scaling Up. The most recent metropolitan-area data available suggests that many Miami residents are launching new businesses. Annual startup activity more than doubled between 2000 and 2012, as Figure 2 shows. A recent report from the Kauffman Foundation also noted that Miami had the highest rate of new business formation among the 15 largest U.S. metropolitan areas in 2012.7

Figure 2: Number of Companies Founded in the Miami Metropolitan Area: 2000 vs. 2012.

Unfortunately, very few of these new businesses are growing into large firms. Academic research has shown that fastgrowing companies that scale up to become large firms are among the most effective mechanisms for reducing unemployment. (See “Evidence Shows That High-Growth Companies are Critical for Job Creation” below.) These companies also produce the successful entrepreneurs who are critical to the growth of healthy ecosystems.


50,000 40,000

20,000 10,000 0



Note: Excludes self-employment; Source: NETS Database based on Dun & Bradstreet data.

Figure 3: Change in the Number of Companies by Size in the Miami Metropolitan Area: 2000 - 2012. 250% Micro-businesses (2–9 employees)

200% 150%

Small businesses (10–99 employees)

100% Medium businesses (100–499 employees)


Large businesses (500+ employees)













0% 2001

These facts indicate that significant challenges currently exist within Miami’s entrepreneurship ecosystem. The next six pages share the results of a diagnostic evaluation that assessed the strengths of the local ecosystem, as well as the weaknesses that slow its growth.

In 2012, Miami had the highest rate of new business formation among the fifteen largest U.S. metro areas.



As Figure 3 illustrates, the number of companies employing 500 or more workers in the Miami area dropped by more than 20% between 2000 and 2012, while the number of local micro-businesses increased by more than 200%. The number of small- and medium-sized firms also increased, but only at rates similar to the 15% growth rate of the population in the metro area.


Note: Excludes self-employment; Source: NETS Database based on Dun & Bradstreet data.

Evidence Shows That High-Growth Companies Are Critical for Job Creation. Research has shown that high-growth small- and medium-sized companies scaling up to become large businesses create significantly more jobs than other types of firms. •

A 2008 study found that the fastest-growing 2-3% of companies accounted for nearly 100% of the net new jobs in the United States between 1994 and 2006.8

In Miami, on average, one high-growth small business that becomes a large firm creates more jobs than 160 new micro-businesses or 20 new small businesses.9

Employees at larger companies are also more economically productive and receive higher wages than those at smaller firms.10

City Hubs for Entrepreneurship Series