Connect with us

Uncategorized

SoftBank is just the latest validation for Miami’s booming startup scene

Published

on

Miami has long been a refuge for those escaping the cold or Latin American countries in political and economic turmoil. But, in 2020, it welcomed investors, founders and others in tech leaving San Francisco and New York City, partly propelled by the pandemic, seeking a welcoming government, lower taxes, a decent climate, less expensive housing, a dynamic lifestyle and the type of diversity that’s proven to help companies thrive.

Investors are bullish on Miami, TechCrunch found. In a survey with eight local investors, they point out the strengths and opportunities of the growing market.

Moving the needle, Marcelo Claure, CEO of SoftBank and long-time Miami advocate, announced a $100 million fund dedicated solely to startups based in Miami or those planning on moving here.

For many, the dream is that Miami comes to enjoy the economic prosperity of places like San Francisco and New York City while maintaining the current tech community’s focus on building a Miami for all.

“Miami is quickly evolving to accommodate increasing demand as it becomes a growing startup destination. From emerging ‘elder tech’ to biotech, Miami is an attractive investment market that offers unique opportunities for immigrants and minorities to pursue entrepreneurship opportunities,” Claure told TechCrunch just before making the funding announcement.

Claure knows the potential of Miami tech firsthand. In 1997 he founded Brightstar, a global wireless company. In 2013, SoftBank purchased a majority stake in the company for a cool $1.26 billion. His brother Martin is a tech entrepreneur too, and currently the founder and CEO of Aprende Institute, a Miami-based Spanish language skills retraining startup.

Miami has served Claure well, so it’s no surprise he and SoftBank believe so vehemently in the region.

“At SoftBank, we invest in technology-focused companies in various sectors — from fintech, to agritech, to education,” Claure said. “[SoftBank] invests in the entrepreneurs and companies that are leading the digital transformation of these sectors. Over the last year, we’ve recognized a dramatic shift in where these entrepreneurs call home. For years it was mainly Silicon Valley and New York City — today, it’s also Austin, Dallas and (of course) Miami. Due largely to the tireless efforts of Mayor Suarez, Miami has been positioned at the forefront of innovation and the tech industry.

“Many of the businesses we’re seeing pop-up in Miami are natural fits for what we’re looking to invest in,” Claure said. “Through our Latam Fund, we invest in companies focused on the Latin American region. In an effort to address the long-standing diversity and inclusion issues within the VC community, we also launched a $100 million Opportunity Fund, focusing on companies founded by Black, Latino and Native American entrepreneurs. So far, we’ve evaluated over 700 companies and have made ~20 investments totaling $20 million. These investments span multiple sectors (healthcare, SaaS, fintech, gaming and more) — sectors we’ve seen growing in Miami.”

2020

In 2020, Miami saw about $1.9 billion pour into the region, up 21x from 2010, which brought in about $89.5 million, according to Crunchbase data. While 2020 was a great year and with some standout deals: REEF Technologies raised $700 million, ShipMonk drew in $290 million, and Magic Leap brought in another $350 million, it didn’t quite beat 2019’s record-breaking $2.39 billion that flowed into South Florida-based startups. While in 2010, only 12 companies in Miami raised outside funds, by 2020, we saw that number jump to 70, signaling a healthy amount of tech entrepreneurship in the area.

While the pandemic and remote work may have jolted the first movers, Miami Mayor Francis Suarez’s off-the-cuff response to a tweet suggesting Silicon Valley be relocated to Miami seemed to get the flywheel going. “How can I help?” he put out into the universe. And the universe responded with a flurry of inquiries about tech life in Miami.

Refresh Miami, the largest tech nonprofit in the state boasting 11,000 members, spent the holidays putting together a “New To Miami Guide,” which aims to answer everything from “Where should my kids go to school in Miami?” to “What are some of the best co-working spaces?”

Some new residents might be testing the waters while living the nomadic life, but many others have bought property, set up shop and started the recruiting process — both for their next startup but also to ensure their friends are here, too.

Miami’s recent story can’t be told without the inclusion of Keith Rabois, a partner at Founders Fund and a member of the PayPal mafia who flagrantly left San Francisco. Rabois made an equally notable splash in Miami with the purchase of a $29 million Miami Beach mansion that includes a saltwater aquarium so big it requires a scuba diver to maintain. Since moving to Miami, he has become one of the most vocal and ardent recruiters for Miami tech’s future. He cryptically announced on Twitter that he’s started a Miami-based company and is hiring, though he hasn’t publicly disclosed what the company does or will do.

Other big names include the finance heavyweight Blackstone, who recently announced their new office in Miami, providing 215 tech jobs. They’ve already signed on some local talent, according to a source. Then, of course, there’s Plug and Play, the Silicon Valley global innovation platform and investor who announced last week it will be opening a location downtown. But some other VCs who have recently relocated are doing what great VCs do best: seizing on an early opportunity that not quite everyone believes in yet. Those include Jon Oringer of Shutterstock, David Blumberg of Blumberg Capital, Chris Dixon of Andreessen Horowitz, David Goldberg of Alpaca, whose portfolio includes ClassPass and ClassWallet, Maya Baratz Jordan of FFNY, Alexandra Wilkis Wilson, known for co-founding both Gilt and Glamsquad, and Laura González-Estéfani, a Facebook vet who moved here four years ago to open The Venture City, an accelerator and venture fund with a Miami HQ, but that also has offices in San Francisco and Madrid.

Why Miami

The pandemic has pushed many to rethink what they want out of life. And is work, an exorbitantly priced microapartment and poor governance enough?

Miami is international, diverse and multilingual, with English and Spanish being the dominant languages within the business sectors. Many are attracted to the city’s cosmopolitan style and sophisticated art and culture scene, culminating with Art Basel Miami Beach every December. You can find virtually every major restaurant from New York to London here, but the Miami locations usually include ample outdoor seating. The architecture is second to none, with buildings by the famed Zaha Hadid, Arquitectonica and landscaping by Raymond Jungles. While the Broadway play “Hamilton” was doubly sold out in New York City and London, you could catch the show for a fraction of the price at the Adrienne Arsht Center. Some people I know went twice.

Many say Miami — and any other coastal city — is best experienced from the water. Well, don’t let the fact that your custom-built megayacht hasn’t arrived yet stop you from getting that glowing tan. Miami-based Boatsetter, a startup that lets people rent other peoples’ boats, has a fleet waiting for you. Or perhaps you’d rather go for a meditative paddle on Biscayne Bay; you could use PADL, the recently launched Miami startup that aims to be the paddleboarding industry’s Lime.

Miami has always had fun and games. Still, in 2013, Manny Medina, one of Miami’s early tech entrepreneurs with a successful exit (he sold real-estate-turned-data center Terremark to Verizon for $1.4 billion in 2012), launched eMerge Americas, an annual tech conference. It unofficially established Miami as a tech hub that connects the Americas. By 2019, the event attracted more than 16,000 attendees from 400 participating companies and more than 40 countries. With a world-class airport within 15 minutes of the city center, few other cities can compete with Miami’s strategic geographic location and easy access. But the question remains: Can Miami become another great tech hub?

It’s certainly headed in the right direction, and some investors are bullish on the market while others, who are more cautious, think it’s too soon to say.

Miami’s hot sectors include healthcare, proptech, fintech, elder tech, logistics and edtech. Exits to know include Chewy (whose $3.35 billion exit in 2017 resulted in the largest e-commerce sale to date), the well-funded YellowPepper acquisition by Visa (terms not disclosed), and 2020’s darlings include Ascyrus Medical, which went for $200 million and CareCloud for $32 million.

Those still on the runway include Nearpod, Magic Leap, Ultimate Software, ShipMonk, CarePredict, MDLIVE, Papa, Caribu, Brave Health and REEF, among others. Then, there’s the new kids on the block, such as UpsideHōm, HealthSnap, Domaselo, Secberus, Marco Financial, Birdie, Kiddie Kredit, ConciergePad and Sustalytics.

Miami has long been known as a wealthy enclave bursting at the seams with money. Still, historically, that money has gone into safer and more traditional investments such as real estate. The notion of writing a $100,000 check for an idea and then forgetting about it is still very rare. Many local investors tend to be slower to move and often still prefer the round being led by an outsider who has experience vetting deals, a common complaint by local founders who find themselves seeking funding across the country. But with more VC money in town now, smart capital should be more accessible.

That being said, one of the main things the area has going for it, and which can’t be replicated, is its people and their propensity to build, grow and welcome others. “The community is super welcoming and always has time for new people; it’s wonderful and not something I’ve ever experienced before,” said Mark Kingdon of Quixotic Ventures. Organizations that have catalyzed the movement over the years include the Knight Foundation, Endeavor, Miami Angels (Florida’s largest angel investment collective), Refresh Miami (an organization that provides startup news, events and creates community), Venture Cafe (a weekly gathering with educational programming for innovators), 500 Startups and The Venture City.

While Miami’s diversity is as ingrained in the culture as the cafecito breaks, the local tech community has been, and continues to be, adamant about putting diversity, inclusion and gender equity at the forefront of Miami tech. In a recent Miami Tech Manifesto, drafted up by community members themselves, Miami tech told the world how things would continue to work around here. Women may not run the world yet — it’s debatable — but it’s fair to say they run Miami tech, and they are bringing everyone else with them.

Miami tech is in a nascent phase to the outside world, and it allows the locals and newcomers to learn from major tech hubs’ mistakes and decidedly do things differently. For many, the dream is that Miami comes to enjoy the economic prosperity of places like San Francisco and New York City while maintaining the current tech community’s focus on building a Miami for all.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

Continue Reading
Comments

Uncategorized

Backed by Blossom, Creandum and Index, grocery delivery and dark store startup Dija launches in London

Published

on

Dija, the London-based grocery delivery startup, is officially launching today and confirming that it raised £20 million in seed funding in December — a round that we first reported was partially closed the previous month.

Backing the company is Blossom Capital, Creandum and Index Ventures, with Dija seemingly able to raise pre-launch. In fact, there are already rumours swirling around London’s venture capital community that the upstart may be out raising again already — a figure up to £100 million was mooted by one source — as the race to become the early European leader in the burgeoning “dark” grocery store space heats up.

Image Credits: Dija

Over the last few months, a host of European startups have launched with the promise of delivering grocery and other convenience store items within 10-15 minutes of ordering. They do this by building out their own hyper-local, delivery-only fulfilment centres — so-called “dark stores” — and recruiting their own delivery personnel. This full-stack or vertical approach and the visibility it provides is then supposed to produce enough supply chain and logistics efficiency to make the unit economics work, although that part is far from proven.

Earlier this week, Berlin-based Flink announced that it had raised $52 million in seed financing in a mixture of equity and debt. The company didn’t break out the equity-debt split, though one source told me the equity component was roughly half and half.

Others in the space include Berlin’s Gorillas, London’s Jiffy and Weezy, and France’s Cajoo, all of which also claim to focus on fresh food and groceries. There’s also the likes of Zapp, which is still in stealth and more focused on a potentially higher-margin convenience store offering similar to U.S. unicorn goPuff. Related: goPuff itself is also looking to expand into Europe and is currently in talks to acquire or invest in the U.K.’s Fancy, which some have dubbed a mini goPuff.

However, let’s get back to Dija. Founded by Alberto Menolascina and Yusuf Saban, who both spent a number of years at Deliveroo in senior positions, the company has opened up shop in central London and promises to let you order groceries and other convenience products within 10 minutes. It has hubs in South Kensington, Fulham and Hackney, and says it plans to open 20 further hubs, covering central London and Zone 2, by the summer. Each hub carries around 2,000 products, claiming to be sold at “recommended retail prices”. A flat delivery fee of £1.99 is charged per order.

“The only competitors that we are focused on are the large supermarket chains who dominate a global $12 trillion industry,” Dija’s Menolascina tells me when I ask about competitors. “What really sets us apart from them, besides our speed and technology, is our team, who all have a background in growing and disrupting this industry, including myself and Yusuf, who built and scaled Deliveroo from the ground up”.

Menolascina was previously director of Corporate Strategy and Development at the takeout delivery behemoth and held several positions before that. He also co-founded Everli (formerly Supermercato24), the Instacart-styled grocery delivery company in Italy, and also worked at Just Eat. Saban is the former chief of staff to CEO at Deliveroo and also worked at investment bank Morgan Stanley.

During Dija’s soft-launch, Menolascina says that typical customers have been doing their weekly food shop using the app, and also fulfilling other needs, such as last minute emergencies or late night cravings. “The pain points Dija is helping to solve are universal and we built Dija to be accessible to everyone,” he says. “It’s why we offer products at retail prices, available in 10 minutes – combining value and convenience. Already, Dija is becoming a key service for parents who are pressed for time working from home and homeschooling, as one example”.

Despite the millions of dollars being pumped into the space, a number of VCs I’ve spoken to privately are sceptical that fresh groceries with near instant delivery can be made to work. The thinking is that fresh food perishes, margins are lower, and basket sizes won’t be large enough to cover the costs of delivery.

“This might be the case for other companies, but almost everyone at Dija comes from this industry and knows exactly what they are doing, from buying and merchandising to data and marketing,” Menolascina says, pushing back. “It’s also worth pointing out that we are a full-stack model, so we’re not sharing our margin with other parties. In terms of the average basket size, it varies depending on the customer’s need. On one hand, we have customers who do their entire grocery shop through Dija, while on the other hand, our customers depend on us for emergency purchases e.g. nappies, batteries etc.”

On pricing, he says that, like any retail business, Dija buys products at wholesale prices and sells them at recommended retail prices. “Going forward, we have a clear roadmap on how we generate additional revenue, including strategic partnerships, supply chain optimisation and technology enhancements,” adds Menolascina.

Dija testing on Deliveroo

Image Credits: TechCrunch

Meanwhile, TechCrunch has learned that prior to launching its own app, Dija ran a number of experiments on takeout marketplace Deliveroo, including selling various convenience store items, such as potato chips and over-the-counter pharmaceuticals. If you’ve ever ordered toiletry products from “Baby & Me Pharmacy” or purchased chocolate sweets from “Valentine’s Vows,” you have likely and unknowingly shopped at Dija. Those brands, and a number of others, all delivered from the same address in South Kensington.

“Going direct to consumer without properly testing pick & pack is a big risk,” Menolascina told me in a WhatsApp message a few weeks ago, confirming the Deliveroo tests. “We created disposable virtual brands purely to learn what to sell and how to replenish, pick & pack, and deliver”.

Continue Reading

Uncategorized

Daily Crunch: Square acquires Tidal

Published

on

Square buys a majority stake in Jay-Z’s Tidal, WhatsApp improves its desktop app and Hopin raises even more funding. This is your Daily Crunch for March 4, 2021.

The big story: Square acquires Tidal

Square announced this morning that it has purchased a majority stake in Tidal, the music streaming service founded by Jay-Z. It sounds like an odd fit at first, which Square CEO Jack Dorsey acknowledged in a tweet asking, “Why would a music streaming company and a financial services company join forces?!”

His answer: “It comes down to a simple idea: finding new ways for artists to support their work. New ideas are found at the intersections, and we believe there’s a compelling one between music and the economy. Making the economy work for artists is similar to what Square has done for sellers.”

Square is paying $297 million in cash and stock for the deal, which will result in Jay-Z joining Square’s board.

The tech giants

WhatsApp adds voice and video calling to desktop app — This should provide relief to countless people sitting in front of computers who have had to reach for their phone every time WhatsApp rang.

Apple’s App Store is now also under antitrust scrutiny in the UK — The U.K.’s Competition and Markets Authority announced that it’s opened an investigation following a number of complaints from developers alleging unfair terms.

Google speeds up its release cycle for Chrome — Mozilla also moved to a four-week cycle for Firefox last year.

Startups, funding and venture capital

Hopin confirms $400M raise at $5.65B valuation — For Hopin, the round is another rapid-fire funding event.

Coursera is planning to file to go public tomorrow — The company has been talking to underwriters since last year, but tomorrow could mark its first legal step in the process to IPO.

Luxury air travel startup Aero raises $20M — The startup describes its offering as “semi-private” air travel.

Advice and analysis from Extra Crunch

As activist investors loom, what’s next for Box? — A company with plenty of potential is mired in slowing growth.

Unraveling ThredUp’s IPO filing: Slow growth, but a shifting business model — ThredUp is a used-goods marketplace approaching the public markets in the wake of Poshmark’s own strong debut.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

SITA says its airline passenger system was hit by a data breach — Global air transport data giant SITA has confirmed a data breach involving passenger data.

How to successfully dance the creator-brand tango — What makes creators succeed, and how should brands work with them?

Announcing the Early Stage Pitch-Off Judges — On April 2, TechCrunch will feature 10 top startups across the globe at the Early Stage Pitch Off.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Continue Reading

Uncategorized

Making sense of the $6.5B Okta-Auth0 deal

Published

on

When Okta announced that it was acquiring Auth0 yesterday for $6.5 billion, the deal raised eyebrows. After all, it’s a substantial amount of money for one identity and access management (IAM) company to pay to buy another, similar entity. But the deal ultimately brings together two companies that come at identity from different sides of the market — and as such could be the beginning of a beautiful identity friendship.

The deal ultimately brings together two companies that come at identity from different sides of the market — and as such could be the beginning of a beautiful identity friendship.

On a simple level, Okta delivers identity and access management (IAM) to companies who use the service to provide single-sign-on access for employees to a variety of cloud services — think Gmail, Salesforce, Slack and Workday.

Meanwhile, Auth0 is a developer tool providing coders with easy API access to single-sign-on functionality. With just a couple of lines of code, the developer can deliver IAM tooling without having to build it themselves. It’s a similar value proposition to what Twilio offers for communications or Stripe for payments.

The thing about IAM is that it’s not exciting, but it is essential. That could explain why such a large number of dollars are exchanging hands. As Auth0 co-founder and CEO Eugenio Pace told TechCrunch’s Zack Whittacker in 2019, “Nobody cares about authentication, but everybody needs it.”

Putting the two companies together generates a fairly comprehensive approach to IAM covering back end to front end. We’re going to look at why this deal matters from an identity market perspective, and if it was worth the substantial price Okta paid to get Auth0.

Halt! Who goes there?

When you think about identity and access management, it’s about making sure you are who you say you are, and that you have the right to enter and access a set of applications. That’s why it’s a key part of any company’s security strategy.

Gartner found that IAM was a $12 billion business last year with projected growth to over $13.5 billion in 2021. To give you a sense of where Okta and Auth0 fit, Okta just closed FY2021 with over $800 million in revenue. Meanwhile Auth0 is projected to close this year with $200 million in annual recurring revenue.

Identity and access management market numbers from Gartner.

Image Credits: Gartner

Among the top players in this market according to Gartner’s November 2020 Magic Quadrant market analysis are Ping Identity, Microsoft and Okta in that order. Meanwhile Gartner listed Auth0 as a key challenger in their market grid.

Michael Kelly, a Gartner analyst, told TechCrunch that Okta and Auth0 are both gaining something from the deal.

“For Okta, while they have a very good product, they have marketing muscle and adoption rates that are not available to smaller vendors like Auth0. When having [IAM] conversations with clients, Okta is almost always on the short list. Auth0 will immediately benefit from being associated with the larger Okta brand, and Okta will likewise now have credibility in the deals that involve a heavy developer focused buyer,” Kelly told me.

Okta co-founder and CEO Todd McKinnon said he was enthusiastic about the deal precisely because of the complementary nature of the two companies’ approaches to identity. “How a developer interacts with the service, and the flexibility they need is different from how the CIO wants to work with [identity]. So by giving customers this choice and support, it’s really compelling,” McKinnon explained.

Continue Reading

Trending