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Miami won’t be the next Silicon Valley because we don’t need another one

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The rush of founders and investors from the West Coast to states like Texas and Florida are the precursor for something bigger, a movement decades in the making.

The future of startups is a decentralized, global ecosystem. Where wealth and knowledge isn’t concentrated, but shared and open. Where there aren’t capitals, but networks.

Miami has had a head start.

Let’s set the scene. Miami already ranks among the world’s most prominent (nontraditional) startup hubs, and 2020 saw more big names in tech migrate to Florida. Miami Mayor Francis Suarez has been spurring on the influx with an extremely popular Twitter campaign.

Miami already ranks among the world’s most prominent (nontraditional) startup hubs, and 2020 saw more big names in tech migrate to Florida.

These are signs of what globally minded business savvies already know is true. The world is ready for Miami as the pioneer of future tech hubs. Because the city isn’t just a launching pad for U.S. startups with interests in Latin America. It’s a strategic landing pad for global startups who want a presence in the Western Hemisphere.

Across the globe, international opportunities for founders are growing: There is greater connectivity and greater potential for emerging market entrepreneurs to produce life-changing products.

Where will those entrepreneurs want to have a presence? At the heart of global investor and entrepreneur networks, in true melting pots, and at crossroads between mature and emerging markets.

That’s why Miami is in focus right now, but it’s only the first of many cities that will soon be a part of this global trend.

Here’s why Miami is spearheading this new global grid of startup ecosystems.

1. Global tech is no longer concentrated — it’s fragmented across the world

Two-thirds of the world’s top startup ecosystems are outside of North America. Not only that, but 70% of professionals believe that technology power is dispersing away from Silicon Valley. The Bloomberg Innovation Index bumped the United States down from top spot in 2013, to No. 9 in 2020. Tech knowledge and power is growing in Europe and Asia, flourishing in cities like Shanghai and Berlin.

Similarly, microbusinesses will increase (we’re already seeing a surge in new businesses being created around the world), and less of them will have zip codes.

So, when big businesses or VC firms leave/explore outside Silicon Valley, or the United States entirely, they’re not building more of the same, they’re showing us that Silicon Valley is no longer the only M.O. The emerging M.O. is borderless and connected: an inclusive network. It gives investors greater access to more distant business opportunities. It allows entrepreneurs to choose the most convenient place to build a company — and save huge amounts of overhead — while also sharing more expertise.

2. You can build global companies from emerging hubs

Startups in emerging markets have always received a mere fraction of the funding available to U.S. startups. Which means that when money dries up across the board, they are under even more pressure to come up with the most innovative solutions just to survive.

Empowering these local entrepreneurs is the fact that today’s problems need local solutions — from health to logistics, these verticals all require inherent knowledge of domestic infrastructure and services.

The potential here is huge. Emerging markets house the greatest world populations — China, India, Brazil, Mexico, Nigeria… — and language and connectivity barriers are slowly melting away, with mobile internet use surging.

Investors are already perking up to the enormous value of emerging markets, from Asia to Latin America, especially as the strength of the U.S. dollar drops. Just in Q4 2020, VC investment in Latin America saw a 93% growth over Q4 2019, according to Pitchbook.

What does this mean for emerging tech hubs? First, there will be more of them, more distributed and with more funding. Second, we’re going to see a stronger flow of emerging market startups serving customers in the United States to offer services with proven traction, rather than vice versa.

The disruptive products these companies develop and test on millions of users back home find fertile markets not only in the United States, but in other emerging markets with similar needs. Many such companies will want to use the United States as a strategic operating base while keeping the engineering teams in their HQs.

That’s because our founders, accelerators, investors and support organizations have historic experience in internationalization, as well as connections across the globe. So where will these foreign companies land — will they be interested in Denver or Austin, or rather a well-connected city that has made a name for itself as an international hub?

Miami is a landing pad where foreign startups can access both the United States and emerging markets with comparable trends. The city has made strides to position itself at the intersection between mature and emerging markets, creating an ecosystem that is inclusive (half of the population is foreign-born), prioritizes collaboration over individualism and encourages the arrival of newcomers. As such, it will be a (working) model for diverse startup cities.

3. The money will follow

Amid talks of a Silicon Valley “exodus,” some have been quick to point out that the hub has always held strong because of a key feature: access to capital.

But investors will follow the best opportunities. Which means that tech investment will only become more global. Put simply, the concentration of wealth in Silicon Valley is incompatible with the growing demand for tech across the globe. Silicon Valley isn’t going to die, but the pie is getting bigger. And more of that capital is already going to emerging tech hubs.

The symptoms include U.S. VC giants branching into emerging regions — like Sequoia opening its first European office, and SoftBank funneling billions into Latin America.

This means U.S. investors will favor regions where they can easily connect with global opportunities, like Miami. Last year, VC investment in the Miami region rose to over $2.2 billion, despite the pandemic (compared to $1.4 billion in all of Spain). But not only that — there is a lot of funding coming from investors in emerging markets.

In Latin America, local funders play a huge role in supporting promising companies. In 2019, almost 40% of the record-breaking $4.6 billion VC dollars invested in Latin America involved a co-investment with at least one Latin American investor. And from what we’re seeing, regional investors are increasingly funding U.S.-based organizations.

They — and others like them — will want to find ecosystems where they can connect with local and foreign founders with whom they can foster partnerships across markets.

Places like Miami need to house these kinds of networks. South Florida already has globally minded accelerators and startup programs like 500 Startups, Plug & Play and TheVentureCity; and VC firms with international networks, such as Ocean Azul, Endeavor Catalyst, Starlight Ventures, Level VC and now SoftBank.

4. Miami is better positioned for the future needs of startups

I’m going to end by underscoring the case for Miami as the U.S. pioneer of international connector startup hubs.

Startups build more with less every five years, and going international from day one, allows them to test their products in more markets straight away. This is feasible given worldwide level of connectivity, and helps to be in an environment that is constantly looking outward, beyond our borders.

It also helps to be in a time zone that is shared by much of South America and is only five hours behind London (San Francisco is only in the same time zone as the rest of the United States and Vancouver).

People who uproot their entire lives to seek success elsewhere want to be welcomed. They appreciate that the mayor of the city is happy to meet them for a “cafecito,” and that other founders are genuinely enthusiastic at their arrival. They don’t want to land in an expensive city where making it big tends to require connections, money and background.

Miami is reflective of the future of global startup hubs. It won’t be the next Silicon Valley, because we don’t need another one. As the entrepreneurial world flourishes in every corner of the globe, emerging market companies will be conquering markets across the United States and Europe, and fortress cities will make way for international networks.

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

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Will moving, ‘spacial video’ start to eat into square-box Zoom calls? SpatialChat thinks so

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With most of us locked into a square video box on platforms like Zoom, the desire to break away and perhaps wander around a virtual space is strong. These new ways of presenting people – as small circles of videos placed in a virtual space where they can move around – has appeared in various forms, like ‘virtual bars’ for the last few months during global pandemic lockdowns. Hey, I even went to a few virtual bars myself! Although the drinks from my fridge could have been better…

The advantage of this spatial approach is it gives a lot more ‘agency’ to the user. You feel, at least, a bit more in control, as you can make a ‘physical’ choice as to where you go, even if it is only still a virtual experience.

Now SpatialChat, one of the first startups with that approach which launched on ProductHunt in April last year, is upping the game with a new design and the feature of persistent chats. The product debuted on ProductHunt on April 20, 2020, and rose to No. 3 app of the day. The web-based platform has been bootstrapped the founders with their own resources.

SpatialChat now adding a special tier and features for teams running town hall meetings and virtual offices, and says it now has more than 3,000 organizations as paying customers, with more than 200,000 total monthly active users.

The startup is part of a virtual networking space being populating by products such as
Teamflow, Gather, and Remo. Although it began as a online networking events service, its now trying to re-position as a forum for multi-group discussions, all the way up from simple stand-up meetings to online conferences.

SpatialChat uses a mix of ‘proximity’ video chats, screen sharing, and rooms for up to 50 people. It’s now putting in pricing plans for regular, weekly, and one-time use cases. It says it’s seen employees at Sony, Panasonic, Sega, LinkedIn, Salesforce, and McKinsey, as well as educators and staff at 108 American universities, including Harvard, Stanford, Yale, and MIT, use the platform.

Almas Abulkhairov, CEO and Co-founder of SpatialChat says: “Slack, Zoom, and Microsoft Teams represent a virtual office for many teams but most of our customers say these apps aren’t a good fit for that. They don’t provide the same serendipity of thought you get working shoulder to shoulder and “Zoom fatigue” became a term for a reason. We want to bring the best from offline work.”

Konstantin Krasov, CPO at DataSouls, who used the platform, said: “We had 2500 people in attendance during a 2-day event that we hosted for our community of 50,000 Data Scientists. SpatialChat enabled us to make a cool networking event, Q/A and AMA with thought leaders in data science.”

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Stream raises $38M as its chat and activity feed APIs power communications for 1B users

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A lot of our communication these days with each other is digital, and today one of the companies enabling that — with APIs to build chat experiences into apps — is announcing a round of funding on the back of some very strong growth.

Stream, which lets developers build chat and activity streams into apps and other services by way of a few lines of code, has raised $38 million, funding that it will be using to continue building out its existing business as well as to work on new features.

Stream started out with APIs for activity feeds, and then it expanded to chat, which today can be integrated into apps built on a variety of platforms. Currently, its customers integrate third-party chatbots and use Dolby for video and audio within Stream, but over time, these are all areas where Stream itself would like to do more.

“End-to-end cryption, chatbots: we want to take as many components as we can,” said Thierry Schellenbach, the CEO who co-founded the startup with the startup’s CTO Tommaso Barbugli in Amsterdam in 2015 (the startup still has a substantial team in Amsterdam headed by Barbugli, but its headquarters is now in Boulder, Colorado, where Schellenbach eventually moved).

The company already has amassed a list of notable customers, including Ikea-owned TaskRabbit, NBC Sports, Unilever, Delivery Hero, Gojek, eToro and Stanford University, as well as a number of others that it’s not disclosing across healthcare, education, finance, virtual events, dating, gaming and social. Together, the apps Stream powers cover more than 1 billion users.

This Series B round is being led by Felicis Ventures’ Aydin Senkut, with previous backers GGV Capital and 01 Advisors (the fund co-founded by Twitter’s former CEO and COO, Dick Costolo and Adam Bain) also participating.

Alongside them, a mix of previous and new individual and smaller investors also participated: Olivier Pomel, CEO of Datadog; Tom Preston-Werner, co-founder of GitHub; Amsterdam-based Knight Capital; Johnny Boufarhat, founder and CEO of Hopin; and Selcuk Atli, co-founder and CEO of social gaming app Bunch (itself having raised a notable round of $20 million led by General Catalyst not long ago).

That list is a notable indicator of what kinds of startups are also quietly working with Stream.

The company is not disclosing its valuation but Schellenbach hints that it is “6x its chat revenues.”

Indeed, the Series B speaks of a moment of opportunity: it is coming only about six months after the startup raised a Series A of $15 million, and in fact Stream wasn’t looking to raise right now.

“We were not planning to raise funding until later this year but then Aydin reached out to us and made it hard to say no,” Schellenbach said.

“More than anything else, they are building on the platforms in the tech that matters,” Senkut added in an interview, noting that its users were attesting to a strong return on investment. “It’s rare to see a product so critical to customers and scaling well. It’s just uncapped capability… and we want to be a part of the story.”

That moment of opportunity is not one that Stream is pursuing on its own.

Some of the more significant of the many players in the world of API-based communications services like messaging, activity streams — those consolidated updates you get in apps that tell you when people have responded to a post of yours or new content has landed that is relevant to you, or that you have a message, and so on — and chat include SendBird, Agora, PubNub, Twilio and Sinch, all of which have variously raised substantial funding, found a lot of traction with customers, or are positioning themselves as consolidators.

That may speak of competition, but it also points to the vast market there for the tapping.

Indeed, one of the reasons companies like Stream are doing so well right now is because of what they have built and the market demand for it.

Communications services like Stream’s might be best compared to what companies like Adyen (another major tech force out of Amsterdam), Stripe, Rapyd, Mambu and others are doing in the world of fintech.

As with something like payments, the mechanics of building, for example, chat functionality can be complex, usually requiring the knitting together of an array of services and platforms that do not naturally speak to each other.

At the same time, something like an activity feed or a messaging feature is central to how a lot of apps work, even if they are not the core feature of the product itself. One good example of how that works are food ordering and delivery apps: they are not by their nature “chat apps” but they need to have a chat option in them for when you do need to communicate with a driver or a restaurant.

Putting those forces together, it’s pretty logical that we’d see the emergence of a range of tech companies that both have done the hard work of building the mechanics of, say, a chat service, and making that accessible by way of an API to those who want to use it, with APIs being one of the more central and standard building blocks in apps today; and a surge of developers keen to get their hands on those APIs to build that functionality into their apps.

What Stream is working on is not to be confused with the customer-service focused services that companies like Zendesk or Intercom are building when they talk about chat for apps. Those can be specialized features in themselves that link in with CRM systems and customer services teams and other products for marketing analytics and so on. Instead, Stream’s focus are services for consumers to talk to other consumers.

What is a trend worth watching is whether easy-to-integrate services like Stream’s might signal the proliferation of more social apps over time.

There is already at least one key customer — which I am now allowed to name — that is a steadily growing, still young social app, which has built the core of its service on Stream’s API.

With just a handful of companies — led by Facebook, but also including ByteDance/TikTok, Tencent, Twitter, Snap, Google (via YouTube) and some others depending on the region — holding an outsized grip on social interactions, easier, platform-agnostic access to core communications tools like chat could potentially help more of these, with different takes on “social” business models, find their way into the world.

Stream’s technology addresses a common problem in product development by offering an easy-to-integrate and scalable messaging solution,” said Dick Costolo of 01 Advisors, and the former Twitter CEO, in a statement. “Beyond that, their team and clear vision set them apart, and we ardently back their mission.”

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Whatnot raises $20M for its live streaming platform built for selling Pokémon cards and other collectibles

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When I first wrote about Whatnot in February of last year, they were just getting started. Aiming to be the GOAT of collectible toys, they were focusing first on being the go-to trusted spot for buying and selling authenticated Funko Pop figurines.

A few months later, as they expanded into categories like pins and Pokémon cards, the company started to build out a live shopping platform — think of something along the lines of a TV shopping network, but swap out the studios and camera crews for folks at home with iPhones selling to an audience of fellow collectors. The concept had already proven popular in China, and was starting to gain traction amongst buyers of collectibles in the US… but a good chunk of those US live streams were happening on Instagram Live, which isn’t really built for things like bidding or handling payments after a sale occurs. Whatnot saw a gap in the market, and wanted to fill it.

It seems that move is working out well for the team. At the end of 2020, Whatnot raised a $4M seed round; just a few months later, building on the momentum of its live shopping platform and looking to expand into many more categories of collectibles, it has raised another $20M.

The company tells me that this Series A round was led by Connie Chan of Andreessen Horowitz, and backed by YC, Wonder Ventures, Operator Partners, Scribble Ventures, Steve Aoki, and Chris Zarou.

Whatnot continues to offer a more traditional, non-livestreamed selling platform — but co-founder Grant Lafontaine tells me about “95%” of the team’s focus is on the livestream side of things.

“People really come to us for the live, but then they’re like ‘Eh, I don’t want to sell across 10 different platforms’ so we give them the tools to be a one-stop shop,” he says.

As I wrote back in December, one increasingly popular type of livestream on Whatnot is the “card break”, wherein:

Users pool their money to buy an entire box of trading card packs — often boxes that are no longer being produced and can cost thousands of dollars to obtain. Each user gets a number, each number tied to a pack (or packs) within the box. Each pack is opened on the livestream, its contents sent to the (hopefully?) lucky owner tied to that pack’s number.

So why raise more money? Lafontaine tells me it’s to help them expand into more categories, fast. The company currently focuses primarily on Pokémon cards, Funko Pops, FigPins, and sports cards, but they mention things like comic books, video games, and vintage hardware as natural fits. Diving into a new category means building up a community for it, convincing trusted sellers to hop on their platform and marketing to the right buyers to make it worthwhile. In time, Lafontaine tells me, the team expects to cover 100+ categories.

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