KNIGHT AND THE CITY

The Knight Foundation commits millions to the effort to make Miami entrepreneurial.

There was a time when some people didn’t want to talk to Matt Haggman. The former investigative journalist endured his share of slammed doors and “no comments.”

But now every entrepreneur in Miami with dreams of entrepreneurial glory wants to buy him a cafecito and tell him their plans. Though he’s never started a company, he might be the most popular man in the city’s startup community.

Haggman enjoys his new popularity, but he has no illusions about what’s behind it. He is the point man for the Knight Foundation’s campaign to turn Miami into an entrepreneurial hub. And that means he has a lot of say in how Knight spends its millions to make that a reality.

Becoming an engine

Every startup scene needs engines. Usually, they’re companies that attract talent and spin off startups or universities and research institutions that turn groundbreaking R&D into new products or industries. People can be engines as well, serial entrepreneurs who start a succession of companies and angel investors who mentor and back entrepreneurs.

Traditionally, foundations have been ancillary players in entrepreneurship, making grants to various programs, but not the major drivers in local entrepreneurial ecosystems.

Not in Miami, where the John S. and James L. Knight Foundation is attempting to turn a city best known for tourism, nightlife and real estate into an entrepreneurial hub, albeit one with great beaches.

The Knight Foundation, which was created out of the Knight Ridder newspaper empire, has its headquarters in Miami, a city where it has had a major impact on the arts, education and civic life. But its newest project isn’t as concrete as funding a new entertainment center or media program at the University of Miami.

There’s a reason Miami is often missing from national conversations about entrepreneurial hubs. It lacks many of the ingredients found in those cities.

It doesn’t have the tech base of Seattle or Austin or the venture capital and entrepreneurial culture of Silicon Valley. Its universities don’t generate startups like those in North Carolina’s Research Triangle. It can’t match the cluster of world-class research institutions found in Boston or La Jolla.

Perhaps most importantly, it doesn’t yet have a strong, networked and self-sustaining entrepreneurial community, the kind of fecund, chaotic ecosystem in which, in the words of author Matt Ridley, ideas have sex and give birth to companies.

Can a foundation create that kind of entrepreneurial orgy? Haggman thinks so.

Knight has program directors in eight cities in which Knight Ridder used to run newspapers: Miami, Charlotte, Detroit, Akron, Philadelphia, St. Paul, San Jose, Calif., and Macon, Ga. The foundation funds a civic program in each city. When Haggman was hired by Knight as Miami program director in 2011, he was told to find a civic initiative.

After months of research and interviews, the former reporter for the Daily Business Review and Miami Herald came back with the idea to promote entrepreneurship. He saw a city that was entrepreneurial by nature (Miami ranked first of 15 largest metro areas in the 2012 Kauffman Index of Entrepreneurial Activity) and one that was finally gaining the necessary urban density to support a startup community. Other factors were the local universities’ growing emphasis on entrepreneurship and Miami’s wealth.

Plus, Miami has become much richer culturally, the kind of town where young people might want to live for reasons other than the weather, a change for one of the most transient cities in the country.

The pieces were there, Haggman said, but they were scattered and often unaware of each other. Knowing that strong entrepreneurial ecosystems are built on networks of personal and professional connections, he decided Knight could build that superstructure.

“We wanted to create a network of places where entrepreneurs can go to work, to share ideas, to attend events. We thought about funder/mentor networks and we thought to hold lots of meetings to try and share learning opportunities, drive the conversation and create a sense of community,” he said. “We wanted to lower the barriers.”

A high-profile strategy

With its roots in newspapers, Knight knows the importance of telling a good story.

That’s one reason the foundation has put its money behind a blitz of conferences and events that raised Miami’s entrepreneurial profile nationally and internationally (see sidebar). Among them is SIME, a Swedish-based global tech conference that held its first U.S. meeting this year in Miami after previous stops in Stockholm, London, Amsterdam, Barcelona and Helsinki.

But the biggest splash was eMerge Americas, a sprawling week-long event in May that drew an estimated 5,000 participants. It was the brainchild of Manuel Medina, one of the city’s top tech entrepreneurs and investors, but supported by Knight.

The strategy appears to be working, at least in terms of publicity. Over the past year, the Wall Street Journal, CIO Today, Forbes and USA Today have done stories about Miami’s emerging tech scene, stories that have raised eyebrows among some insiders who say the hype (something Miami does well) outshines the reality.

But Knight’s biggest “get” so far has been convincing Endeavor to open its first U.S. program in Miami. The global nonprofit accelerator has a strong track record of propelling successful, high-growth startups to the next level. Though based in New York, it worked exclusively in emerging markets for the first 15 years of its existence.

That changed when Knight dangled a $2 million grant and assembled a local board that pledged another $3 million. Endeavor Miami opened in Sept. 2013 and as its first three entrepreneurs chose KidoZen, an enterprise mobile platform, business app developer Leapfactor and My Ceviche, a fast casual food chain.

The decision to open in Miami was “very thorough and thoughtful,” said Endeavor Miami Managing Director Laura Maydόn. In addition to Knight’s dollars, Endeavor was impressed by the foundation’s commitment to startups in the city.

“I think it’s very innovative what they’ve been doing. I think it’s unique how they’ve catalyzed entrepreneurial growth. It’s great to have someone in the community to fill those gaps,” Maydόn said.

But not everything Knight is doing is as high profile. The foundation has made more than 75 grants to support entrepreneurship, none above $250,000.

Aware that one barrier to Miami’s success is a lack of homegrown talent, Knight supports grassroots coding and educational groups such as Code Fever, Girls Who Code and the Network for Teaching Entrepreneurship.

It also is an investor in The LAB Miami, a popular co-working space in the trendy Wynwood neighborhood that hosts many entrepreneurial events and conferences — just the type of environments in which ideas get it on. And Knight has boosted membership in Refresh Miami, a monthly meetup for tech entrepreneurs and developers.

The campaign is deliberately limiting involvement with Miami’s economic power structure, such as the Beacon Council, a public-funded nonprofit that recruits companies to Miami-Dade.

Haggman, 43, said he wants the initiative to be built around entrepreneurs, not the business establishment, which he thinks is too tied to Miami’s traditional economy of real estate, banking and tourism.

An uncertain future

So what does Knight expect to accomplish for its millions?

“It’s still pretty loose,” said Haggman, adding that the foundation will look at three criteria: participation in entrepreneurial and networking events, successful companies launched and talent retention. But Knight does not have hard numbers to hit because it’s still determining the baselines.

Getting entrepreneurs to stay in Miami is crucial, said Haggman’s boss, Carol Coletta, Knight’s vice president of community and national initiatives.

“Miami has always been used to people who spend part of their time here, but who don’t connect civically or from a business standpoint,” she said. “One of the most exciting things about the work that Knight has been fostering is that people who spend part of their time here are being linked much more integrally to investment and business opportunities.”

In his book, Startup Communities, entrepreneurial guru Brad Feld writes that it is essential that entrepreneurial ecosystems be led by entrepreneurs, not universities, government — or foundations.

Right now, Knight, more than any other entity, is the most visible entrepreneurial player in Miami. One gets the sense that if it were to stop spending, the startup scene would lose momentum.

“[Knight] is absolutely crucial. They saw an opportunity and they went for it,” said Nico Berardi, managing partner of Accelerated Growth Partners, a group of angel investors backed by the foundation.

Eventually, other drivers will have to take over. While the campaign is open-ended, Haggman knows it cannot and should not continue indefinitely. If Miami entrepreneurship reaches critical mass and can perpetuate itself, the foundation will shrink its role, he said.

“At some point, this may not be the focus of our work because others will have taken up the work. That would be a great outcome,” Coletta said.

Though Haggman had no experience in entrepreneurship or in running a multimillion dollar grant program, Coletta said Knight is confident in his leadership. “Matt is finding capable, qualified people who are doing good work to whom Knight can make grants. And Matt has proven himself to be really good at that.”

Even if Knight is successful in accelerating Miami’s startup scene, is it realistic to expect the city to join the ranks of Austin, Cambridge, Boulder or Seattle?

“The most honest answer is I don’t know what the ceiling is,” Haggman said. “But I sense a shift. I see the traction. I see that more and more people are getting engaged.”

Summary history of the Knight Foundation  Knight Ridder, once the second-largest newspaper publisher in the country, was sold in 2006, but the foundation started by the news empire continues to make itself felt in cities where it once owned papers.

Started in 1950 in Akron, Ohio, with $9,000, the John S. and James L. Knight Foundation now has $2.4 billion in assets. It concentrates its giving in three areas: journalism, community and national initiatives, and arts and culture. In 2013, it awarded $121 million.

The foundation makes grants in 26 communities where Knight Ridder once published newspapers, including Miami, where the foundation is based and where it has its biggest impact.

Knight Foundation Initiatives  Since launching its entrepreneurship program in Miami last year, the Knight Foundation has made more than 70 grants totaling $7 million.

Among them:

Programs and conferences

  • Start-Up City: Miami (2013 and 2014) – Knight co-sponsored this with The Atlantic Cities.
  • MIA Music Summit (2014) – Pairing traditional music scene with tech.
  • SIME MIA (2013 and 2014) – Knight drew this European digital conference to the U.S. for the first time.
  • Miami Mini Maker Faire (2013 and 2014) – Knight sponsored this celebration of the makers movement.
  • WeXchange (2013) – Conference focused on women entrepreneurs in Latin America.
  • eMerge Americas Techweek (2014) – Major conference that highlighted entrepreneurship in Latin America and North America.
  • Smart City Startups Miami (2014) – Conference on how entrepreneurship can help cities.

Incubators and others

  • Endeavor – Knight awarded $2 million to get this high-growth accelerator to open its first U.S. operation in Miami and helped raise another $3 million in the community.
  • The LAB Miami – Knight sponsors this trendy co-working space in the artsy Wynwood neighborhood.
  • Refresh Miami – Monthly tech and entrepreneurship meetup sponsored by Knight.
  • Accelerated Growth Partners – Knight gave $200,000 to this Miami-based angel investment group.
  • Network for Teaching Entrepreneurship – International organization that instructs low-income high school students in entrepreneurship. Knight gave the South Florida program $200,000.
  • Tech Cocktail – Multi-city media company and event organizer for entrepreneurship.
  • Girls Who Code – Knight funded the Miami chapter of this group that teaches high school girls to code.
  • Code Fever – Knight gave $75,000 to this nonprofit that teaches coding in poor communities.
  • Florida Institute for Commercialization of Public Research — $65,000 to teach angel investing seminars.

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