When tech investor and tech Venture Capital founder Delian Asparouhov asked on his Twitter account “How if we move Silicon Valley to Miami?”, Miami Mayor Francis Suarez was quick to respond “How can I help?”
Like Asparouhov, thousands of tech investors are turning their sights to Miami, seeing it as a city with high potential to become a new Silicon Valley on the East Coast.
Mayor Suarez has been active in contacting tech executives luring them to the city of Miami to set up shop. Suarez has reached out to Tesla founder Elon Musk, Twitter CEO Jack Dorsey, former Google CEO Eric Schmidt and Peter Thiel, CEO of Palantir.
Miami’s location with access to the Caribbean Sea, a large airport, the University of Florida, the University of Miami and its geographic and cultural proximity to Latin America, make it an attractive destination for thousands of start-ups and venture capitalists looking for a new destination to direct their ventures.
A mecca for tech start-ups and investment funds
In 2020 Miami received $972 million in venture capital, the most money ever to come into the city from this type of investment, and the Miami metropolitan area received nearly $2 billion in venture capital investment.
Many investors have left states such as California and New York because of their high cost of living, tax infrastructure that discourages capital accumulation and penalizes companies for being efficient, to more fiscally competitive states such as Florida.
Venture capital manager David Blumberg, of the Blumberg Capital fund, said “poor governance at the local level in San Francisco and at the state level in California has made us go.” Like Blumberg, several investors have decided to leave hostile California for friendly Florida, including: Reddit co-founder Alexis Ohanian, Shuttershock founder Jonathan Oringer and former PayPal executive Keith Rabois.
On the other hand, cold New York has also lost hundreds of executives who have preferred to relocate to warm Miami, where they have not only the same time zone, but also a more business-friendly legislation and a better climate. Among the companies that have migrated are the Citadel investment fund, Goldman Sachs’ money desk, and Elliot Management.
Although nothing has been confirmed yet, the New York Stock Exchange, should the state pass a financial transactions tax, may have to move to another state, with Texas and Florida being the preferred candidates.
“We are a tax-free environment for business in most areas, there is no income tax here, and the corporate tax is very low” explains Michael Finney, president of the Miami-Dade Beacon Council, the economic development organization for Miami-Dade County.
The mayor of Miami also suggested starting to pay public employees in Bitcoin and allowing the investment of public funds in this cryptocurrency, as part of his strategy to attract the attention of technology companies. The proposals are still being considered by the Miami-Dade City Committee, although there are doubts about whether the state’s laws allow investing the city’s public funds in an asset with the volatility of Bitcoin.
Mayor Suarez’s strategy seems to be paying off in attracting new businesses, according to the Kauffman Index, which measures entrepreneurial activity in the United States, Miami-Dade County is first in startup activity in the nation.
On the other hand, the city needs to modernize its productive infrastructure as nearly 96,000 people in Miami-Dade County remain unemployed and another 80,000 workers have left the labor force. Attracting new companies in the financial and technology sector can give the city and the State of Florida the necessary boost to provide new opportunities for its residents.