New startups are brewing in Miami

Startup funding activity in Miami increased during the pandemic, but it has been largely concentrated at the earliest stages — signaling that the city is still a young hub whose primary growth comes from adding brand new companies to its ecosystem.

Why it matters: Despite a lot of noise from certain Silicon Valley techies and investors who left the area for cities like Miami, new data suggests the exodus was more temporary as some are now quietly returning to the Bay Area.

By the numbers: In the first two weeks of July, notable local deals include Lula ($18 million), Marco ($82 million) and Unybrands ($300 million). And according to data from Pitchbook:

2021 Q2: $831 million invested, up 142% compared to the year-over-year period immediately after the pandemic began.2021 Q1: $224 million invested, up 109% y-o-y.2020 Q4: $216 million invested, down 68% y-o-y.2020 Q3: $218 million invested, down 23% y-o-y.

(Scroll to the bottom for data on Miami deal-making by stage.)

What they’re saying: “Pre-pandemic, there were only a few companies being built here that were a fit,” says ANIMO Ventures general partner Nico Berardi, who’s based in Miami but doesn’t exclusively invest there.

Of the 22 investments ANIMO’s made so far from its first fund, only one is based in Miami, though Berardi cites two other local companies he’s missed out on backing.

Between the lines: “The local ecosystem prior to COVID-19 wasn’t really committed to excellence” and had over-indexed on startup meetups relative to the depth of its startup bench, explains Berardi.

State of play: A number of entrepreneurs are setting up their new startups in Miami, including previously successful founders, says Atomic managing partner (and early transplant) Jack Abraham.

The arrival of investors from established VC firms like Founders Fund and Andreessen Horowitz, and SoftBank’s commitment to investing $100 million in local startups, has sent strong signals about Miami’s viability as a hub. “Symbols matter,” adds ANIMO’s Berardi.There’s also an uptick in VCs from Silicon Valley and other hubs taking trips to Miami to meet with local startups and network. Investors from the #Angels group, Freestyle and GV (among many others) have been in town recently — and are even inking some deals.

Of note: Big and late-stage financings have also started to creep up in Miami and the rest of South Florida over the last couple years — though some have gone to companies that have recently relocated there, like Pipe ($250 million) and Introhive ($100 million).

There was also no financing round above $500 million in the first half of 2021, unlike in the previous three years, as Refresh Miami’s Nancy Dahlberg notes.

The bottom line: Miami’s certainly making strides in beefing up its local startup market, but Silicon Valley it is not (yet, at least).

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