Explainer: How can we propel Black entrepreneurship and innovation in Miami?

Written by Kai Cash with additional reporting by Andrew Sherry

Vision

The vision: It’s 2040, and Miami is one of the truly racially diverse innovation ecosystems worldwide. Successful founders have emerged from multiple Greater Miami neighborhoods; the city’s reputation for access to capital and cultural acceptance has also made it a magnet for the best and brightest Black entrepreneurs from across the country. Mainly, Black-owned high-growth companies are integral to the economy’s success.

How do we make this vision a reality?

Why it matters

In principle, diversity is Miami’s greatest strength. It is a key driver of innovation and is a competitive advantage as global markets become more important. The United States is going through a demographic shift that Miami has already made, but realizing that potential takes an equitable distribution of resources.

Today, access to capital is deeply unequal. Nationwide, the amount of venture funding going to Black startup founders accounted for 1.3 percent in 2021, and in the first half of 2022 the level was 1.2 percent, according to TechCrunch. While Miami-based organizations are among the national leaders in efforts to change that, there is clearly a lot more to do. Increasing access to funding is the top priority of respondents to the first survey designed to measure racial equity, diversity, and inclusion in South Florida’s tech/innovation/entrepreneurship ecosystem.

• The United States is on its way to becoming a majority non-white country by the 2040s. Greater Miami is already there, and as such, it has the opportunity to be the model of a truly diverse, innovation ecosystem — a competitive advantage.
• Successful Black, Hispanic, Non-Asian, and LGBTQ+ founders open the way for the next generation of founders by providing networks and access to funding.
• More successful startups mean more jobs. High-growth young firms contribute disproportionately to job growth.
• Miami has some of the most significant income inequality in the U.S. Creating economic opportunity for people of all backgrounds is essential to drive social mobility and build a strong, cohesive economy rather than slipping farther into an unequal one.

Where we are now

The national numbers remain bleak, even after VC funding for Black founders surged in the aftermath of George Floyd’s killing in May 2020. These numbers likely indicate more capital in the market chasing fewer deals rather than any structural changes in funding distribution.

• The wealth gap between Black and White families in America means — a “friends and family” investment round — is less frequently available to Black entrepreneurs. Founders who clear that hurdle then have to overcome bias from venture capitalists used to investing in people who look like themselves.
• It’s not just a tech startup story. Research suggests personal bias is a factor, at least at smaller banks. Fifty-six percent of Black small business owners surveyed by Bank of America in Q3 2021 reported that problems accessing capital were limiting their ability to grow. Many mom-and-pop businesses in Miami’s communities of color are smaller than those surveyed, making funding even more remote.

There is some progress, nationally and in Miami.

• The national reckoning over racial inequity triggered by Floyd’s 2020 murder led to several billion dollars in pledges of support for Black businesses and organizations. While there are questions about disbursement and commitment to long-term change, there was some visible impact. An example was the launch of the $100 million, Miami-based SB Opportunity Fund, which has already invested in 70+ companies founded by Black and Latinx founders in the country.
• Similarly, there has been an increase in government financing available to minority-owned small businesses, which were disproportionately hit by the pandemic downturn, and often lacked the banking relationships that were key to obtaining federal relief loans.

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