How can we propel Black innovation and entrepreneurship in Miami?
In principle, diversity is the Miami’s tech ecosystem’s greatest strength. Diversity is a key driver of innovation, and it can be a competitive advantage as global markets become more important and the United States goes through a demographic shift that Miami has already made. But realizing that potential takes more than diverse, would-be entrepreneurs — it takes access to capital. And access to capital is deeply unequal.
Nationwide, the amount of venture funding going to Black startup founders nationally doubled in the first half of 2021 from the same period in 2020 to $1.8 billion — but only reached 1.2% of total VC startup investment. While Miami-based organizations are among the national leaders of efforts to change that, there’s far to go. Increasing access to funding is the #1 priority of respondents to the first survey designed to measure racial equity, diversity and inclusion in South Florida’s tech/innovation/entrepreneurship ecosystem.
Why it matters
- The United States is on its way to becoming a minority-majority country by 2040. 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, diverse founders open the way for others, 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 greatest 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.
- The wealth gap between Black and White families in America means the first page of the tech entrepreneur playbook — 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. 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. Research suggests personal bias is a factor, at least at smaller banks.
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 $75 million in 60+ companies.
- 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.
Perspective: Leigh-Ann Buchanan, aīre ventures
Racial equity, diversity and inclusion are chief among our core values.
But we often lack effective tools to help us understand whether these principles and priorities actually translate into practice. That’s why a coalition of over 80 South Florida organizations participated in our region’s first REDI Scorecard. Over the course of one year, we gathered qualitative and quantitative data to identify gaps, assets and priorities for building a more inclusive tech and innovation ecosystem.
Now, we have a playbook for action.
Read Buchanan’s Medium post for Opportunity Miami about the results of the REDI Scorecard.
Next week, we’ll explore solutions to remove obstacles and open pathways to Black entrepreneurship and innovation in Miami. Get a preview by watching or listening to the Opportunity Miami podcast.
Do you have thoughts about how to move forward faster? Send us your ideas.
Andrew Sherry is a communications consultant. Learn more about his work here.
Photo (top): by Good Faces on Unsplash. Opportunity Miami is powered by the Miami-Dade Beacon Council.
