Alexa Serra  ·  August 26, 2021 

South Florida: A Haven for FinTech Startups

South Florida is stepping into the spotlight as a hub for innovation and is rapidly becoming a haven for tech companies.

South Florida is stepping into the spotlight as a hub for innovation and is rapidly becoming a haven for tech companies. FinTech startups are flocking to South Florida as the territory is edging forward in becoming the Silicon Valley of the south.

Beaches, sunny days, and wild parties may be the first things to come to mind when you think about South Florida. Yet, a territory so well known for being the nerve center of the party scene and a preferred holiday spot for many may not seem like an obvious place to launch a Financial Technology (FinTech) startup. After all, when you hear the phrase “FinTech hub for startups,” your mind probably goes west to about San Francisco or Los Angeles, or maybe up north to New York. However, South Florida is quickly, yet conspicuously, becoming one of the nation’s hottest tech hubs for new businesses, especially FinTech startups. With the help of its international flavor and cultural diversity, this network of geographic locations is gradually becoming a FinTech accelerator grid tantamount to old single-location FinTech hotbeds such as Silicon Valley. And with the region’s entrepreneurial growth and the mix of startups and established companies setting up shop, we wouldn’t be surprised if, in some years, South Florida becomes the new epicenter of the country’s FinTech startup ecosystem.

Miami, for instance, is one of the most entrepreneurial cities in the US, with 247.6 startups per 100,000 people. In 2020, 57 of these Miami-based startups raised $972 million for venture capitalists, reaching the city’s highest investor dollar volume and besting previous years by 43%. Additionally, more universities are now teaching entrepreneurship for startups, venture capital (VC) funding is growing and becoming more widespread, and big tech companies like Google, Twitter, and Facebook have opened offices in Miami. All of these factors contribute to South Florida’s allure as an emerging polestar for FinTech innovation and entrepreneurship. Although still early, the region’s transformation into one of the nation’s tech epicenters seems imminent.

So, as South Florida-based FinTech app developers, we at Foonkie found it interesting to look at what makes this region such an appealing prospect for FinTech startups to thrive.

Business-friendly Environment

Business-friendly Environment

In South Florida and the world, FinTech companies are gaining favor among investors as innovation in the banking sector ignites opportunities to expand financial services to mobile and other digital networks. Nevertheless, new business creation and expansion are greatly determined by the environment in which companies unfold and the growth opportunities. On this front, South Florida is the perfect business catalyst. Companies in South Florida raised a record $2.4 billion in 2019, and the region has tech hubs like Miami that ranked among the top 35 global ecosystems that same year. Also, FinTech was the second-strongest sector by the number of deals and dollars in 2020 in the Miami metro area. Moreover, Miami Dade County and Miami City’s governments have started to hire chief information officers (CIOs) in a search to focus on attracting tech-oriented startups and drive innovation.

The state’s favorable tax rates make it a natural place for startups to flourish. For one, Florida’s corporate tax is only 5.5%, which makes it highly advantageous for emerging companies compared to New York’s 7.2% and California’s 8.8%. Secondly, Florida has a tax burden of 6.82%, the 4th lowest in the nation, and is one of the few states with no personal income tax compared to California, which has a whopping 13.3% income tax. Additionally, Florida is the 17th largest global economy. Miami, for example, has an average monthly rent for a one-bedroom apartment is about $1,557, compared with $2,993 in New York City and $3,313 in San Francisco.

Furthermore, South Florida ranked first in startup activity in the U.S. in 2017, meaning that the region was already fertile ground for emerging companies four years ago. Also, the state has streamlined its regulatory environment, making it faster and less complicated to get a startup off the ground. On this front, Florida’s government established the Office of Financial Regulation. This legal body regulates the online financial services industry and waives individual licensing and other bureaucratic requirements for FinTech companies. In a nutshell, the fiscal benefits coupled with the region’s bustling banking sector, ease of doing business, and rising tech industry, are significant drivers for FinTech startup success in South Florida.

Another factor that makes South Florida’s business environment so alluring is the local government’s receptiveness to emerging and established entrepreneurial activity. Carlos Gimenez, Miami-Dade’s Mayor, and Francis Suarez, Miami City Mayor, have been praised for boosting innovation and promoting new business creation. For example, Mayor Francis Suarez has publicly engaged with big tech names such as Elon Musk and PayPal’s Keith Rabois. In a viral tweet, he engaged with Varda Space co-founder Delian Asparouhov and backed the idea of moving the company from Silicon Valley to Miami. He has also hosted discussions and meetings where he made pitches to startups and companies to move their enterprises and invest in the city. This inviting and welcoming approach, coupled with his policies to simplify business creation processes, has differentiated the state from other less business-friendly regions.

Additionally, Ray Ruga, founder of Fintech Americas, said in a conference: “Miami is the ideal place to converge and build out ideas that can export out into the region and still have the option of keeping [the firms] in the U.S.,” “Miami, as a financial center for the Americas, is an ideal location for developing FinTech.”

Availability of Investors

Availability of Investors

For any region to be considered a technology startup hub, it needs to support and endorse local angel investors and venture capitalists that provide funding options to those startups. Luckily, FinTech startups will find plenty of funding options and support from incubators and investors in South Florida. For one, there are over 150 banks across the southern part of the state, meaning that startups have access to a large pool of financing options from banking entities if they so wish. FinTech startups can also find significant investment capital from venture capitalists (VC), incubators, and angel investors. Moreover, the region’s startup landscape is supported by almost 500,000 accredited investors that range from seed to late-stage funding series, with angel investors making up 59% of all Florida’s venture deals. Most of these funders have one thing in common: they all foster innovation in tech-oriented startups related to virtual reality, AI, IoT, and blockchain.

Additionally, the Miami-Fort Lauderdale-Pompano Beach area ranked 16 in the country for venture capital deal volume and value with 135 deals and $1 billion invested last year. A big chunk of this figure came from established venture capitalist groups that specialize in funding tech startups. Some of the most well-known are Miami Angels, Rokk3r Fuel ExO, Krillion Ventures, and AGP Miami. Furthermore, South Florida’s growing tech-startup ecosystem has captured the attention of business giants like Bill Gates and Jeff Vinik, who, in 2016, made significant investments in Tampa’s startup ecosystem. In addition, scout Ventures, a New York-based top 100 VC firm, set up an office in Miami and currently invests in tech startups.

We could go on and on listing the countless funding events, companies, and opportunities that South Florida brings to the table for FinTech startups. But, the bottom line is that the region, backed by its government and investors, is slowly but surely becoming a breeding ground for FinTech startups without the funding roadblocks or lack of investors we often see in other parts of the country.

Proximity to Latin America

Proximity to Latin America

It works as it does in real estate with startups and business ventures: location, location, location. South Florida, specifically Miami, is strategically positioned at the northernmost tip of the US territory, making it the country’s gateway to Latin America. Additionally, the region has three international airports in the greater Miami area, Fort Lauderdale, and West Palm Beach, which serve direct flights to all significant Latin America and Caribbean destinations. South Florida is also in the same time zone–give or take one hour–as most Latin American countries, which eliminates the grievances of setting up meetings with countries that have opposing day-time hours.

On that same note, communication issues that stem from different time zones usually bring about cultural and language barriers. Luckily, language compatibility is a non-issue between the two regions, with Miami having 66% of Spanish speakers and Latin America having 5.4 million people who speak and understand English. Additionally, the cultural compatibility between the two regions provides solid ground for establishing effective communications channels and ensuring compatibility between parties. The territorial, cultural, and aerial proximity with Latin America, combined with the dynamic FinTech startup community and funding options in South Florida, makes it the natural choice for business partnerships with companies in the southernmost area of the continent.

Latin America also represents a vibrant, diverse, and populated market for FinTech startups. The region holds nearly 10% of the world’s population, with a growing middle class that’s slowly adopting online banking technologies, representing an opportunity for US-based FinTech startups to introduce their digital products into a market that is starting to grow. In 2020, for instance, Latin America had 600 fintech startups that offered payment and financial solutions with MercadoPago, an Argentinian FinTech, as the market leader. Similarly, Latin American FinTech startups can also develop and test their products on US-based users to find fertile markets. Or, US companies can even establish their Latin American headquarters in South Florida as Microsoft did when they set up their LatAm offices in Fort Lauderdale. In addition, this collaboration between the two territories can potentialize outsourcing methodologies such as nearshoring, which can help US-based FinTechs operate in the states but hire Latin American development teams.

On South Florida’s proximity to LatAm, Serge Elkiner, the CEO of YellowPepper, a Miami-based Latin American FinTechsays: “If you work with Latin America, then Miami is definitely the key geographical location…all of the regional headquarters for every large bank, VISA, Mastercard, Amex, everything is in Miami.

Tech-focused Talent Pool

Tech-focused Talent Pool

As stated above, South Florida-based FinTech startups have the chance to nearshore their development teams and engineers to LatAm. However, if for some reason that is not an option, South Florida has a well-supplied tech-focused talent pool. With its sunny beaches and warm weather, the region attracts many tech students every year. A study by CompTIA shows that the sunshine state could add almost 16,000 net new jobs related to IT and technology in 2021. The same research indicates that Florida will likely experience a projected 2.7% growth rate in IT jobs, surpassing the national average of 2%.

Additionally, cities like Miami, Orlando, and Tampa rank in the national top 25 for anticipated job growth, with about 595,000 people working in technology fields, representing 6.4% of the entire state’s workforce. CompTIA’s study also shows that the tech sector accounts for 7.8% of Florida’s economy, boasting a whooping 36,344 tech-related business establishments and startups. Also, out of Florida’s entire tech workforce, almost 85,000 workers specialize in software, app, and web development, which is by far the largest area of expertise in the state.

It’s safe to say that South Florida’s tech talent pool is getting broader and more qualified by the minute. With universities like the University of Miami including FinTech-oriented classes and courses, tech job growth in the region is imminent, and talent availability for FinTech startups will be more diverse soon. And, since positions like data scientists, IT specialists, software and app developers, and cybersecurity specialists are on the rise, FinTech startups will have their pick of a world-class IT-focused workforce.

Government Support of Cryptocurrency

Government Support of Cryptocurrency

It’s a fact: cryptocurrency is the right hand of FinTechs. A whole range of FinTech companies–big and small–are starting to dabble in the electronic ledger technology behind cryptocurrencies such as Bitcoin. For FinTech apps, cryptocurrency is a fail-safe way of ensuring transactional security while promoting scalability, no currency exchanges, comprehensive service coverage, and ease of use. No wonder the market size for cryptocurrency will reach $1087.7 million by 2026, according to recent research. Henceforth, we can safely say that, for innovative FinTech startups, cryptocurrency is a must. On this front, South Florida is one step ahead, in part, thanks to Miami’s mayor Francis Suarez.

Mayor Francis Suarez has been openly bullish on digital currency, endorsing the idea of positioning Miami as the “world’s cryptocurrency capital.” This statement doesn’t seem far-fetched considering that the city is an international financial hub and a breeding ground for FinTech startups. There is also the fact that people from all over Latin America have moved to Miami, resulting in many foreign citizens needing to transfer money overseas to their relatives constantly. Cryptocurrency-based FinTech solutions allow these citizens to avoid going through expensive, double foreign exchange transactions, expensive fees, and delays.

The mayor has backed his “cryptocurrency capital” idea with three initial crypto-based paths:

  1. He wants to give city employees the chance to get their salaries paid in bitcoin.
  2. He proposes that local fees and taxes be paid in bitcoin or any other cryptocurrency.
  3. He wants the city’s treasury to invest some of its capital in bitcoin, which would be groundbreaking for major cities in the US (and probably globally).

He has also bought bitcoin and ether–and announced it publicly–, he uploaded the Bitcoin white paper to the city’s website. He also constantly tweets a stream of bitcoin news and diverse data related to cryptocurrencies. Actually, earlier this year, he tweeted: “The City of Miami believes in #Bitcoin, and I’m working day and night to turn Miami into a hub for crypto innovation.”

However, apart from these “symbolic,” seemingly passive moves, Miami is already taking tangible action into becoming a crypto-driven economy. This year, the cryptocurrency exchange firm FTX will secure the naming rights of Miami’s American Airlines NBA arena in a deal that will bring the city $135 million and will last 19 years. The city also hosted the Bitcoin 2021 conference after it was moved from Los Angeles to Miami and will also host the Miami Crypto Expo in November. And, if that weren’t enough, on June 3rd, Blockchain announced they were moving their US headquarters from New York to Miami. This big move may very well be the push South Florida needs to kickstart its crypto-based economy and become the FinTech startup it’s promising to be.

Growing Online Banking Mentality

Growing Online Banking Mentality

South Florida’s online banking mentality is becoming very tangible and is perhaps the most compelling advantage for FinTech startups to set up shop in the region. Considering all the points exposed in this article that favor South Florida as a FinTech startup haven, we can safely conclude that traditional banks are sorely lagging in digital currency adoption, business opportunities, and coverage for underbanked ex-pats and immigrants. And, due to their excessive transactional fees, lack of customer service, and outdated IT systems, traditional banking services in the region and the entire US have a broken relationship with their customers. FinTech startups can take advantage of this gap and, with the benefits that South Florida brings to the table, they can develop sterling products that flip the script on traditional banks.

Luckily, South Florida has already started to shift to an online banking mentality, and FinTechs startups and established online banks are beginning to turn to the southern part of the state to set up their businesses. For instance, earlier this year, New York-based, Novo, a digital bank that offers low-fee banking services, announced opening an office in Miami. But that’s not all; they also raised $40.7 million in their series A fundraising round, the most significant round of any online bank in the region. Bill Harris, Paypal’s former CEO, has also chosen South Florida, specifically Miami, as the headquarter for his FinTech startup. Nirvana, a digital bank that offers financial services in a simple, to-the-point way. In addition, Robinhood, a FinTech firm that allows customers to make in-app stock purchases, has recently moved to South Florida. The company chose Orlando as their home base and hopes to tap into the region’s bustling IT workforce and hire more than 200 people.

Lastly, Majority, a Swedish online bank that provides financial services to migrants, has also set up Miami. This FinTech is taking advantage of the city’s 2.5 million immigrants. Some of them lack bank accounts or access to physical banking opportunities, and Majority is enabling transactional services without costly fees or security hazards. And this way, we once again go back to South Florida’s strategic location and cultural melting pot, and we witness how it serves as a driver for FinTech startups to tap into and expand.

Although still with its challenges, South Florida’s online banking ecosystem is steadily flourishing. Whether big or small, the enterprises mentioned above can play a pivotal role in catapulting FinTech startups into stardom and propelling them forward in a region that is aching for more digital banking solutions.

The Future of South Florida’s FinTech Ecosystem

The Future of South Florida’s FinTech Ecosystem

There’s no denying that technology is changing the way we do business. Countries and cities across the globe are starting to tap into the modern technological stream in a search for facilitating business operations and potentializing business creation. On this front, South Florida has all it needs to succeed. Its business-friendly environment, coupled with its growing tech-focused workforce and its adoption of cryptocurrency, seem to be driving the region forward in terms of attractiveness for business creation.

Even though South Florida’s tech-driven future is still at an early stage, the region is making significant strides in becoming a FinTech startup haven and maybe even becoming the nation’s FinTech hub in years to come. But, for now, the region seems to be welcoming more and more FinTechs which seem to be thriving and attracting new ones. And although not without its challenges, the region’s burgeoning FinTech scene seems to be aching for tremendous growth and expansion, two things we will indeed witness soon.

If you have any questions about this article or want us to develop your FinTech app, don’t hesitate to get in touch. This South Florida-based app development company is here to help!

Let's do something great