Benchmarking Miami's Innovation & Entrepreneurship
By Richard Florida and Steven Pedigo on behalf of FIU’s Miami’s Urban Future Initiative.
The Miami metro—which spans Miami-Dade, Broward, and Palm Beach counties—is an aspiring hub for entrepreneurship and innovation. While Miami has long been a breeding ground for small businesses, the economic value of these businesses has historically trailed behind that of leading tech hubs like the San Francisco Bay Area, Austin, Seattle, and Boston-Cambridge. But the tide appears to be turning in Miami’s favor.
Due to the efforts of local entrepreneurs and significant venture capital investment from the Knight Foundation, among other organizations, the Miami metro has quickly strengthened its entrepreneurial ecosystem. In 2017, the metro ranked first on the Kauffman Index of Startup Activity, which uses metrics such as new companies, business density, and growth rates to measure entrepreneurial activity.
The following research brief from the Miami Urban Future Initiative provides a data-driven assessment of the Miami metro on key indicators of innovation and entrepreneurship, comparing its performance to all 53 of America’s large metros with populations of more than one million people.
Miami ranks eighth on venture capital investment. Miami attracted $1.3 billion in venture capital investment in 2016, ranking eighth among large metros on this metric. And yet, the metro ranks much lower—31st among large metros—according to the number of companies that received venture capital investment in 2016 (adjusted for population size). This suggests that Miami is dependent on a small group of superstar companies like Magic Leap, which may have skewed its performance.
Miami ranks second according to its average investment per company. On average, Miami’s high-tech companies each earned $14.2 million in venture capital investment in 2016—the second-highest share among large metros. Only San Francisco performed better on this metric, with an average investment of $17.7 million per high-tech company.
Miami ranks highly according to its number of high-tech and knowledge economy businesses. Miami ranks ninth among large metros according to its absolute number of high-tech and high-tech services businesses. The metro also ranks 10th according to its number of high-tech manufacturing businesses and fourth according to its knowledge economy businesses.
Miami lags in terms of its concentration of high-tech businesses. Miami ranks 17th among large metros according to its number of high-tech businesses per 100,000 residents and 40th among large metros according to its concentration of high-tech businesses, which is 8 percent below the national average. The metro’s concentration of high-tech services and manufacturing businesses also falls below the national average.
Small businesses are a key feature of Miami’s high-tech sector. Miami ranks second-to-last (behind Las Vegas) according to the size of its high- tech businesses, which have 11 employees on average. This share is also 44 percent smaller than the U.S. average.
Research and development spending must increase. University research and development spending is vital to the economic performance of leading entrepreneurial regions like Boston-Cambridge, New York, and Seattle. With around $565 million spent on university research and development in 2015, Miami ranks 24th among large metros—far behind superstar metros like New York, Boston, and Los Angeles. This ranking is even lower—43rd among large metros—when adjusted for population size.