Today, I’m thrilled to announce the first closing of our 500 Startups MENA Fund (aka 500 Falcons) at $15M out of our $30M target. While we have been investing in the MENA (Middle East and North Africa) region since 2011, including 55 deals in 32 companies for a total of $6M, this is our first fund focused entirely on the Arab world.
With this new fund, we plan to invest in approximately 100-150 companies with about half of the fund and reserve the other half for follow-on investment in the top 20% of companies. The fund will focus on early-stage startups in the MENA region, MENA diaspora founders and non-MENA founders targeting MENA.
The MENA Team
I’m so thrilled to announce that Sharif El-Badawi has joined the team as a Partner for 500 Falcons.
Sharif joined 500 Startups as a Venture Partner in February of 2016 while he was still at Google and the Chairman of the leading global non-profit bridging MENA entrepreneurs with Silicon Valley, TechWadi. He left his role at Google after nearly 7 years this past September working with some of the top startups and VC funds in Silicon Valley to focus his time and attention on investing in MENA startups. He’s already been a great help to the startups in our portfolio and an asset to the team. Prior to Google, Sharif was with AdMob, which sold to Google in 2009 for $750 million, and a serial entrepreneur, advisor and investor in Consumer Internet startups since 1998 having jumped into his first tech startup, Website.com. Sharif brings almost twenty years of product, business development, marketing, and sales experience to the 500 portfolio.
We’re also actively recruiting for our team in the region, with plans to have people on the ground in our key markets such as Saudi Arabia, Egypt, and Jordan amongst others.
Who Are We Working With?
I’m pleased to announce that among our LPs for the first closing are 2 highly respected regional institutions, the Qatar Science and Technology Park and the Oman Investment Fund. In these LPs we have found partners that will help us achieve our mission to support and invest in startups and build ecosystems in the MENA region. I truly believe that thanks to LPs such as these we’ll have a significant impact on the regional ecosystem.
Along with our partners at QSTP, we are bringing our Series A Program (formerly known as our Distro Dojo) to the region as ‘Doha Dojo.’ Once a year, we will be working with some of the top MENA startups at the Series A level to bring them to Doha with some of the best growth hackers in the world to help build a growth mindset and support them in their growth. More information on our first batch is coming soon and investor day is taking place on May 23rd in Doha. If you’re a Series A investor and interesting in joining, please get in touch with Ms. Ghada Darwish at email@example.com.
In Oman, we are engaging on an ecosystem building project in partnership with the Oman Investment Fund through the Oman Tech Fund. This year we’ll be advising and supporting the Wadi Accelerator program in Oman with knowledge transfer, capacity building and a cadre of mentors. In addition, we’re working on a unique event, Geeks in a Wadi, the first event of its kind, with further details to be announced soon.
Why Are We Doing This?
The region has long faced political and economic uncertainty, and a growing younger population that is looking to take charge and change things with their own hands. These youth have access to the same global wealth of information as anyone else. If they so choose, they’re capable of achieving the same things anyone else in the world is.
The Middle East and North Africa are among the last large regional ecosystems to rise up, and emerging markets tend to leapfrog adoption of innovations and technology at higher and higher frequencies. Being a latecomer does not mean staying behind, and the Arabic speaking world is 500 million strong – young, resourceful, wealthy and a yearning to thrive.
Top 5 Reasons MENA is a Must Bet
Massive 500 million Arabic speaking population
Largely untapped ecosystem/market, internally and internationally
Shift in fossil fuel prices and changing geopolitical forces
Lower valuations and costs of operating a business
Highly educated, competitive and vibrant talent pool
Bonus (coming soon): Surge in investor interest and options for progression from seed to exit
According to MAGNiTT’s State of MENA Funding Report, 2016 saw nearly $1B of venture capital investment into regional startups, a 424% increase over the previous year, and arguably a flat year due to the fact almost all the VCs were fundraising, including us. Sorry founders, but 2017 is looking very strong! We hope that our 40+ deals/year will boost early-stage startup growth and encourage more angel and venture capital to flow in.
I look forward to 500 Startups playing a significant role in building ecosystems across the MENA region, and investing in the best founders solving real problems. I hope that our deal volume and speed will provide at least a small boost in funding activity at the earliest stages and even encourage others to do more deals as well. I’m grateful to the other investors and key stakeholders in the region who are fighting for the same cause. Progression is key for entrepreneurs and they need optionality of capital sources at all stages in their startup and scaling. We’re all aligned in that we want to create more companies and help those companies grow.
Here’s to building world class startups from the Middle East, creating jobs, solving real problems, empowering the youth, women and anyone who wants to effect real change to better their surroundings, and generating a positive return on capital while we’re at it!
“The best way to build the future is to create it” the quote from Peter Drucker best explains Singularity Universities vision for the world of tomorrow.
Earlier last month I had the opportunity to attend Singularity University’s demo day at NASA in Silicon Valley. SU is a global community and accelerator that uses the phrase ‘exponential’ to describe the focus of their entrepreneurs who take part in their programs.
The energy was high, the demo tables were bare, but had just enough energy to catch a passerby interest. Eleven early stage companies were set to pitch on exponential technologies which shape industry on earth and in space. I chose six of them to spotlight below.
Keep in mind, most all of these entrepreneurs are top researchers in their specialty and not web geniuses as some of their websites are in general underwhelming.
Here are the top 6 companies shaping the future (in no particular order)…
I’m sitting, I’m ready, and we jump straight into space.
Problem: We have solar power and huge areas where we can generate it, ex. Sahara Desert but transferring it globally is an issue.
Solution: REBEAM uses a microwave emitting machine to shoot large mirrors on satellites to then transfer power to other grids world-wide.
If that doesn’t already sound cool enough then you should hear the practical application. Drones. For those of you who own them, they normally stay charged for about thirty minutes until they die. With this technology we can keep drones flying for indefinite periods of time.
… a stick, but if you were thinking poop then you’ve arrived to the best place for this group.
Problem: We aren’t doing a great job at detecting cancer early.
Solution: Clinicai wants to take your poop, measure the frequency, smell, and size with a sensor attached to your toilet bowl. These researchers believe that we can detect early onset of colon cancer as well as a slew of other diseases from the comfort of your bathroom and their technology.
Problem: African consumers don’t have access to affordable refrigeration essential to keeping foods, medicines, and other items cold.
Solution: Affordable off-grid solar refrigeration. The pain points of cooling and staying cool are fixed with Afriji’s hardware.
I wish I had more information on hand but again, these founders are all research based and didn’t have the best data on their websites. Definitely worth emailing them if you’re interested in affordable tech for African countries.
Problem: How do you know what nutrients you’re deficient in?
Solution: Hardware that interacts with software to learn your nutrient deficiencies and sends you packets of personalized vitamins to take daily. A big ticket item possibly for those who take vitamins regularly, great food for thought (you see what I did there?).
That’s it for the round-up! Always looking to talk more about future tech, stay tuned for more posts via my LinkedIn or shoot me an email – firstname.lastname@example.org //
Investment in fintech companies is up 8X in the past 5 years, with over 200 financings for a combined $4.9 billion in 1Q2016 alone.
“Silicon Valley is coming. There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking.”
Jamie Dimon, Chairman and CEO of JPMorgan Chase, pointed out: “Silicon Valley is coming. There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking. They are very good at reducing the ‘pain points’.”
Quarterly financing to VC-backed fintech companies has been growing immensely:
But investment is not flowing freely everywhere.
For example, in 1Q2016, Chinese fintech companies received $2.4 billion in funding (albeit primarily from two mega-deals), while the rest of Asia received only $0.2 billion.
Meanwhile in Europe, deal count increased but the amount of capital invested did not. Even when the investment flows, the performance often does not.
After investing in more than 130 fintech startups in 15 countries and providing ecosystem development advisory in markets around the world, we’ve identified three core challenges that most ecosystems face with fintech.
Fintech’s 3 Ecosystem Challenges
1. Regulatory regimes are often ill-suited for fintech.
Regulations in the finance sector are often unclear or highly complex, and regulatory processes and agencies may be slow.
For example, in the U.S., there are 48 different rules (state by state) around what constitutes a money transmitter business. Many states require a surety bond that varies by state and can cost over $1 million. This alone prevents many fintech companies from getting off the ground.
2. Traditional financial institutions may hold down fintech startups, intentionally or unintentionally.
Not long ago in the U.S., many banks did not even entertain meetings with or extend invitations to fintech startup founders.
When some banks did begin engaging with fintech startups, it was with the idea of gaining an edge over competing banks by co-opting and closing off the startup — which could in turn prevent the startup from achieving its potential.
An analogous hypothetical would be forcing Visa to be exclusive to certain issuers and merchants, rather than allowing ubiquity.
3. Customer preferences may not be ready for certain fintech solutions.
Customer acquisition is very difficult in fintech.
It’s relatively easy to build a big invite list, but it’s very hard to get people to actually change financial institutions. We (the post authors) personally still bank with the banks where we got our first accounts more than a decade ago. Insurance, Loans, and Mortgage are the 3 most expensive word groupings to acquire users for on Google.
Banks in the US spend over $500 to acquire a single user, and over time many startups will get there as well. Unlike some other industries with a higher viral coefficient, in fintech you often spend more to acquire the millionth user than you did to acquire the thousandth.
Banks in the US spend over $500 to acquire a single user, and over time many startups will get there as well
These challenges can’t be fixed overnight, but that doesn’t mean there’s nothing that can be done.
5 Ways Goverments Can Help
1. Create a “regulatory sandbox” that provides startups the opportunity to test new ideas without immediate threat of regulation.
Regulating early-stage startups — before they have found product-market fit and achieved any meaningful scale — seems generally unnecessary from either a systemic risk control or consumer protection perspective while stifling innovation before it starts. Exempting startups from certain regulations in the early-stage can enable innovation and experimentation.
The UK’s Financial Conduct Authority (FCA) has done this already, and the Australian Securities & Investments Commission (ASIC) is looking at doing something similar.
2. Offer fast and transparent regulatory review of potential new fintech products or services.
Once startups emerge from the earliest stages they ought to be compliant.
Reducing the regulatory review process from years to months or from months to weeks would substantially reduce legal expenses and could even mean the difference between life and death for a startup.
3. Create a support system or kit to help fintech startups meet regulatory requirements.
Even founding teams with finance and legal experience can find industry regulations to be a challenging maze. Developing and sharing resources could reduce friction in the industry and ensure early-stage compliance.
Accelerators specializing in fintech are one effective way. For example, startups in 500’s fintech accelerator track get a nontrivial amount of support to sort out regulatory compliance. In the UK, the FCA established an innovation hub with staff available to guide any startup through financial regulation.
4. Roll out consumer awareness initiatives to increase demand.
PSA campaigns to improve financial literacy can help clarify the potential value of switching to new fintech products & services.
Campaigns to raise basic awareness of existing protections can help overcome risk-related hurdles to adoption. The effectiveness of startups running such campaigns is likely low, whereas the cost can be quite high. This is a clear market failure that governments can rectify.
5. Encourage traditional financial institutions to invest in or partner with fintech startups — preferably non-exclusively.
Some banks and some fintech startups have already indeed realized that partnering can be better than competing, so we’re pleased to see that this is happening on an ad hoc basis.
– For ecosystem development and corporate innovation advisory, 500 managing partner Bedy Yang at email@example.com
About the authors:
Sheel is a partner with 500 Startups and head of the recently-announced 500 FinTech fund. His prior startup experience includes 2 successful fintech exits, a payments company and a high-stakes auction company. He also created and hosts a podcast called The Pitch, which has >10,000 listeners.
Eddie is a venture partner with 500 Startups. He is a head of the recently-announced 500 Startups Vietnam fund and is supporting development of 500’s corporate innovation and ecosystem development advisory offerings. He has invested in fintech startups and provided advice on promoting fintech investment in Vietnam.
Many of us who’ve never lived in Los Angeles have strong opinions about the place. It’s the galactic center of the media universe, but we snark about its cultural inferiority, inauthenticity and general lack of seriousness.
All prejudice is based on ignorance; arguably, the Southland encompasses the nation’s most diverse startup ecosystem. Between Santa Barbara and San Diego, “there’s a huge spread of startups,” said Andrei Marinescu, a 500 Startups LA-based Partner on the Distribution Team. Increased access to capital and a more mature talent base have helped make the difference, he said.
There hasn’t been a shortage of people who are entrepreneurial and had fun or crazy ideas, but the ability to execute on those ideas was lacking for a long time. — Andrei Marinescu
According to Built in Los Angeles’s 2015 report, the last three years have shown steady growth in regional startup funding. Last year, 202 companies received $3.065B, and 67 of those firms garnered $2.156B through exits.
“In 2010, if you’d said, ‘hey, in a couple of years there will be three really strong mobile companies in LA, I would have said, you’re ****ing nuts,” said Marinescu. “If you look at Tinder, Whisper and Snapchat, those have been great success stories and very illustrative of the shift in LA — more focused on product, engineering and user experience.”
“Los Angeles always seems to get short shrift relative to the Bay Area because Silicon Valley has such a clean and simple story,” he said. Stanford, Xerox PARC and the geniuses in garages they sparked are essential Silicon Valley’s creation myth. Los Angeles lacks a similarly compelling narrative.
“In the Bay Area, there’s this attitude, ‘we’re the cradle of entrepreneurship,'” said Marinescu. “LA itself is actually an incredibly entrepreneurial place, partially because it’s so diverse. There’s a lot of inherent hustle in LA because of that.”
A lot of Bay Area investors didn’t feel like dealing with LA, like, ‘why bother getting on a plane and flying for an hour when I can focus on all the stuff happening outside my door?’ — Andrei Marinescu
Access to capital has definitely opened up in the last five years, Marinescu noted. “Today, there are a fair number of angel investors down here who are smart, savvy, value-add, have really relevant operating experience, are aggressive, and write big checks,” he said.
Despite that shift, “you still have a lot of founders who want to, or feel like they need to raise money from Bay Area VCs,” said Marinescu, adding that VCs have gotten more accustomed to flying down to LA and taking meetings.
“It feels funny saying LA is more real, because it’s kind of a fake town, but if you meet with entrepreneurs here, they’re very much focused on the reality of where their business is, where it’s headed, who they’re targeting and how to engage their consumers on a daily basis,” she said.
“Here, there’s a balance between pushing on innovation and meeting the customers where they are right now,” said Spear. “in Silicon Valley, the view is that if you’re focusing on customer needs, you’re too late.”
Because of that cultural difference, Spear said SoCal entrepreneurs are more focused on problems facing today’s consumers, whereas “Silicon Valley in general is focused on solving problems that maybe don’t even exist yet.”
“They’re working on them today and getting people to believe in them,” said Spear. “In LA, it’s more about building companies now that will be more sustainable over time.”
Before moving to LA last year, Albert founder and CEO Yinon Ravid lived in Manhattan for his entire adult life. “The idea of leaving New York City was very big move for a lifetime east coaster, but starting somewhere new really recalibrates the wires in many ways,” he said.
It’s very different to operate in a new scene instead of someplace that’s been around for a while. — Yinon Ravid
“There really aren’t that many choices you have in terms of a big-city ecosystem for startups,” said Ravid, who’s been shuttling back and forth between LA and SF to join the current Batch. “New York, San Francisco, LA, and maybe Chicago. I really liked the idea of getting out to California, where it’s been the Gold Rush proverbially for many years.”
Because LA now offers a stable and growing ecosystem, “you’re seeing a lot of talent move in pretty fast,” he added. Given the lower cost of living compared to the Bay Area, “building a company in LA is extremely cheaper than building one in San Francisco,” said Ravid. “Rents in West Hollywood versus SoMa are half. Literally half.”
“From buying food to having a place to live, it’s all a lot cheaper, so you can do a lot more with the same amount of capital,” he said. “There are enough challenges launching a business, so getting your capital to go twice as far is very powerful.”
Ravid said Albert’s first hire, who lives on the east coast, is “excited” about relocating to Los Angeles. “Location is so fluid to people those days, and a lot of people are wiling to move,” he said. “It’s important to sit shoulder to shoulder when we’re building a company.”
“We look for people in LA,” said Spear, “but we’ve hired people from other parts of the country, and outside the country as well. There’s some skill sets you may not be able to find in your backyard,” she said, “but you can find good people anywhere if you have a mission that people are excited about and a company that people can feel aligned with.”
If you feel like SF is the only place you can find talent, then you probably shouldn’t do what you’re doing, because you can find good people everywhere. — Trina Spear
According to Andrei, greater access to technical talent has been one of the primary drivers behind the region’s stability and success. “When I was at Hulu, it was a big challenge for recruiters to meet our hiring needs because the talent pools they were trying to draw from were in Silicon Valley and Seattle,” he said. “The challenge they’d run into time and time again as they tried to recruit engineers is that these folks said, ‘it’s high risk for me to move to LA. What happens after Hulu? Where do I go next?'”
Through the increased presence of companies like Google and Facebook, “that has changed,” said Marinescu. “It brought a lot more technical talent down here, but it’s also given people a clear sense that if they join a startup in LA that doesn’t work out, there’s a Plan B.”
LA is much more diverse than the Bay Area, certainly more than SF proper. There’s a lot of inherent hustle in LA because of that. — Andrei Marinescu
The cultural differences between LA’s startup environment and the Bay Area are as apparent as the weather, said Marinescu, who’s lived in Northern California. “People in San Francisco sort of look down their noses at LA because of stereotypes about the traffic, the entertainment industry and hot people who are dumb and narcissistic, but in LA, it’s exactly the opposite,” he said.
“You ask people what they think of the Bay Area, and you will not meet a single person who has something negative to say,” said Marinescu. “The attitude down here is that people aren’t comparing and contrasting themselves.” LA’s founders are in their own mode, and their community is thriving, he said.
“‘Silicon Beach,’ even though it’s a term I hate, it’s really stuck. People in Santa Monica on the west side of LA really embrace the term; I would say that’s the center of gravity for LA tech,” he added.
Ravid agrees: “In Santa Monica, you definitely do walk down the pier and you do hear the same chatter you hear when you walk around the Mission: people talking about KPIs and email retention rates. Still, LA has 15 million people sprawled across a very large swath of land, so the pockets are more disjoined,” he said.
“I’ve been here for four or five months, and I’ve definitely built relationships in the tech community — I do end up talking to the same groups of people who’ve founded companies on the tech side, the finance side, so I guess you gravitate towards the people that do the same things as you.”
In LA, you’re less likely to be held up against an insanely high bar that may not even be relevant to what you’re building. — Trina Spear
Spear said she preferred to build her company outside of the Bay Area bubble.
“Silcon Valley is massive, you have every kind of company there,” she said. “In any city outside of that world, you’re outside the magnifying glass and you can really focus on your business with less pressure. In LA, you’re less likely to be held up against an insanely high bar that may not even be relevant to what you’re building.”
“LA is way more diverse than San Francsico in terms of the way people think, act and work,” she added. “In SF, you walk into a company and it’s 4 pm and everyone’s playing ping pong, and then it’s 8 pm and everyone’s eating dinner together, and it’s 10 pm an people are still there.”
“At my company, some people have kids, or their commute is longer, or they have lives outside of the company, and we view that as a good thing,” she said.
Marinescu also said Los Angelinos are living more rounded lives than their Bay Area cousins. “I think there’s more of a work/life balance. The challenge with San Francisco and the Bay Area in general is the echo chamber effect where it’s pretty much everybody you see: all your friends, everyone you see in cafes — they’re all in tech. and that is not the case in LA.”
As a result, LA has “less of that self-reinforcing dynamic where people constantly feel like they’re ranking themselves relative to their friends and their neighbors and the guy at the next table in the cafe,” he said. “It lends more of an even keel.”
There’s more diversity of viewpoint about how people approach the startup world and in our office, the hoodie-wearing bro engineer is not at our company, nor a lot really alive in a lot of other LA companies that I’ve seen. — Trina Spear
Spear concurred that LA encourages more individual thought and less groupthink. “People are focused on disrupting the industry that they’re in and bringing interesting products to the world, but you don’t need to all think the same things to get there,” she said, adding that diverse points of view make for a more inclusive class of entrepreneurs.
“I’ve met a lot of female entrepreneurs in LA, more than in San Francisco,” she said. When you have female entrepreneurs, that diversity alone allows room for other types of diversity and creativity within a company.”
For Ravid, “the most interesting thing about is LA is that you feel like you’re out on the new frontier when you’re doing tech here. And it’s only 45 minutes away from Silicon Valley, which makes it a very interesting business opportunity.”
Few of us who live and work in the Bay Area hail from here, but we still have a regional bias; the Bay Area is the best. We enjoy moderate weather, natural beauty and diverse communities that produce culture so rich, we had to coin the word “hella.”
Still, entrepreneurs don’t require a Mediterranean climate, Bay views and burritos to thrive; startup ecosystems are budding in Detroit, Syracuse, Denver and elsewhere. In Miami, now home to early-stage investment funds, multiple angel networks and several co-working spaces, the startup scene is closer to blooming.
In 2013, Endeavor, a non-profit that supports high-impact entrepreneurs in emerging markets, opened its Miami office. With $2 million in support from the John S. and James L. Knight Foundation, Endeavor Miami offers entrepreneurs strategic advice, mentoring and opportunities to leverage the group’s network and shared knowledge.
“I don’t like to compare our ecosystem to others,” said Laura Maydón, Managing Director and CEO. “I always describe Miami as a teenager; we’re so young.”
“We are supporting 13 companies led by 20 founders,” she said. “We’re focused on helping entrepreneurs accelerate their growth.” Entrepreneurs have a plethora of reasons for moving to Miami, said Laura, but most cite access to customers, easy travel to Europe, the US and Latin America, the region’s relatively low cost of living and high quality of life.
“I think the companies that are very binary, that are going to either be a billion dollars or zero — are best suited for being in San Francisco, because that’s how they think about investment.”
Trina Spear, co-founder, FIGS
“There’s no state income tax, which is helpful, and there’s just a lower cost for building your company here,” said FIGS co-founder Trina Spear.
Spear’s medical apparel startup is an Endeavor network company that began in Los Angeles a few years ago and opened a Miami office in 2015. “I was born and raised here,” said Trina. “I saw what was going on in Miami with an ecosystem that was being developed and nurtured by amazing entrepreneurs and investors. I wanted to build out our company in a place I was fond of, and also in a place that was more startup-friendly.”
“LA has a great startup ecosystem as well,” Trina noted. “But I love it here, and this ecosystem was developing.” She estimates saving about 50% over LA commercial real estate.
Brian Brackeen, CEO and founder of Kairos, a developer of human analytics software, moved to Miami about five years ago before briefly relocating to Silicon Valley to work for Apple, where he “caught the startup bug along the way.” After Apple, Brian started Kairos in San Francisco and went through the NewME accelerator program before bouncing back to Miami.
“We looked at five or six different cities: NYC, Philly, Miami, Austin, San Francisco and Boulder,” said Brian, who judged each on criteria like his employee’s COLA costs, personal and business tax implications, the number of angel investors and the population of PHP coders.
“We were searching things like AngelList, GitHub, different state web sites, then we took all that data and Miami was at the very top of the list in every important category,” he said. “Cheapest for our employees, and the best tax situation for the company and our workers. There’s a large number of PHP developers — a ton of talent — which you may be surprised to hear,” said Brian.
“I met Brian when I launched Endeavor,” said Laura, “and one year later, he was part of the Endeavor network. That, to me, is a sign that companies are growing. Companies that mightn’t have been ready two or three years ago are coming into our pipeline, so I see the ecosystem unfolding.”
“Those investors, 30 to 40% of them will say, ‘hey, we can be more helpful to you if you’re in San Francisco.'”
Brian Brackeen, CEO, Kairos
“I don’t yet know where our strengths play,” said Laura.
“California has one angel investor for every three startups,” said Brian. “Florida has three angel investors for every startup, so there’s a large amount of early stage capital.” Despite the personal wealth, South Florida’s investor class is relatively new to tech, which necessitates ongoing education and outreach, said Laura.
Trina dismissed any notion that founders must live within an Uber ride of their backers. “I think it’s great if you want to meet with investors every day, but it’s very easy to hop on a plane and go have some investor meetings during the time that you’re fundraising,” she said. Ready access to capital can also create a reality distortion field for many founders, Trina added.
“I think that there’s overfunding in some of these markets where you feel like you have to raise more and spend more. I think there’s more discipline around your spending and raising when you’re outside of those cities,” she said.
Even when Silicon Valley likes the cut of your jib, they’ll still try to convince you to relocate, said Brian. “Those investors, thirty to forty percent of them will say, ‘hey, we can be more helpful to you if you’re in San Francisco. You’ve done a great job, really impressive, but if you want to get in the big leagues, you’ve got to come over here and play that game.’”
“I’m aware of three startups that did that… moved to San Francisco, and then all the developers they moved with them who were making $80,000 a year were poached, and they completely lost their dev staff,” Brian recalled. “It caused two of the three to fail.” The survivor returned to Miami, he added.
“This location has been nothing but helpful for the company,” he said. “We bought a company last year in Singapore; those people still work there. Other than acquisition, we’ll be hiring here.”
“I think that investors in general tend to be the laggards; once the opportunities are really evident, they will come,” said Laura. “There’s more and more local funding, but entrepreneurs need to supplement their rounds with money from outside.”
“Our team in Miami is really strong and very dedicated to our mission in a way that may or may not be true if we were building this in Silicon Valley or NYC.”
Trina Spear, co-founder, FIGS
Because Miami is so PHP-friendly, Brian’s not challenged when it comes to onboarding new employees. Today, his firm has a 200-person waiting list for new hires. “Forty people on that list are from MIT,” he said.
“One of the reasons why PHP is more common here is because quite often schools are not teaching Ruby,” said Brian. “That’s something at code schools, versus traditional schools which are sometimes a little bit behind. For us, that actually comes out in our favor,” since Kairos is “just going in a completely different direction from a technology perspective.”
In Brian’s view, “it’s hard to hire a technical person in any city in the world. It’s hard in Milan, it’s hard in Akron, Ohio, and it’s very difficult in San Francisco, given the amount of folks who are vying for talent there.”
“I think it’s harder to find really good people in Miami, just because it’s still newer,” said Trina. “When you do find them, they’re way more loyal and harder working because they don’t feel like they have a million options around for getting in at an early stage company and really building something as a team together.”
FIGS’ Miami office is home to the company’s sales and customer service teams, “but our designers are not here, and our engineers are not here,” Trina said. “They work out of our LA office. You’ve got to know where the talent is.”
“I don’t know if I would build out our design and engineering teams in Miami. That being said, other companies have been successful doing that, not that we couldn’t,” said Trina.
“I talked to an entrepreneur today,” Trina added, “and her entire tech team is in SF. I think it works if you have really open communication and break up the team by function in a clean and clear way.”
“Growing and having an ecosystem of high impact entrepreneurs, that will attract talent in itself, because they will have higher needs,” said Laura, noting that Endeavor Miami’s network companies “have several models for talent acquisition: most of them have local teams, but some outsource.”
“There are certain specialties that might be more difficult to find locally, but I think that more and more people are coming to Miami to fill that skill gap,” she added. Wyncode Academy, another Endeavor Miami entrepreneur, does its part by offering coding classes in South Florida to residents who want to “get immersed in the Miami tech ecosystem.”
“I’m a firm believer that human capital is a free resource, so I don’t get too worried about whether you find it here or bring them here,” said Laura. “You want to work with the best talent, no matter where it is.”
“I feel like I’ve made stronger bonds in Miami than I have in any other city.”
Trina Spear, co-founder, FIGS
“The other thing that’s unique about Miami is a cultural difference,” said Brian. “There’s this gold rush mentality: the best and brightest want to chase their dream in tech, and they move to California to do so, which makes perfect sense. It’s a very American, ‘go west, young man’ type of thing.”
“Given Miami’s location and proclivity to be very Latin, the culture is very different,” he told me. Instead of people leaving to seek their fortune. “it’s more like, now you’re old enough to take care of a family,” said Brian. “These cultural differences lead us to have people with Harvard-level skill sets and Stanford-level skill sets who stay in Miami because they have responsibilities. For that reason, we actually retain a much higher percentage of talent than other cities,” he said.
“Silicon Valley is very much about happy hour every night and foosball, and let’s have this amazing culture from a perks standpoint, but in Miami, I think it’s more about where are our goals, and where are we headed and how can we continue to make this work on a holistic level,” observed Trina.
“We don’t need to go to dinner together every night because we have families and we have friends and other outside interests, other than living and breathing the company. But at the same time, we’re all working together for a common goal. It’s not about perks and dinners and working until midnight,” she said. “It’s about loving your job and whatever you’re doing outside of your job.”
“We have fifteen employees and we’re doing a Series A right now. Hopefully, we’ll go to fifty in a year’s time.”
Brian Bracken, CEO, Kairos
“One of the opportunities and challenges we have is to help entrepreneurs stay; depending on the specific vertical they’re in, they might find it easier or more synergy to be based in Silicon Valley,” said Laura. “Some of the entrepreneurs who’ve decided to go there — it’s because of funds, not necessarily because of the markets. I think there’s more striving to be based here.”
“I believe there are all the ingredients in Miami needed to grow the ecosystem , but there’s also a lot of work to do,” Laura said. “This is a long-term game and the ecosystem is putting all its parts together and growing, so hopefully, in a few years, I’ll be able to tell you a progress story.”