By the FL Innovation News editorial team · Entrepreneurship
As South Florida continues to position itself as one of the country’s fastest growing innovation hubs, much of the conversation has centered around the pursuit of the region’s next billion dollar startup. But according to Erick Gavin, General Partner at Edin Capital, that singular focus may be limiting the ecosystem’s long term potential. In this conversation, Gavin challenges the idea that unicorns should be the primary benchmark for success and argues for a broader, more resilient approach to innovation that better reflects the realities of South Florida’s business landscape. From alternative capital structures to the overlooked value of durable, profitable companies, Gavin shares why the future of regional growth may depend less on chasing outlier outcomes and more on building a capital ecosystem designed for sustainability, flexibility, and scale across industries.
Why do you believe South Florida’s focus on producing a unicorn may be the wrong benchmark for measuring ecosystem success?
The biggest challenge with our ecosystem focusing on producing a unicorn is that we believe that should be our only goal, and no other outcomes matter in developing a stronger startup ecosystem. It makes even less sense if you believe that AI will indeed create smaller, more efficient companies, meaning fewer people in a given local economy will be affected by the growth (or decline) of a given startup.
How has the obsession with unicorn outcomes shaped the way founders and investors operate in emerging ecosystems?
It’s less an obsession than a feature of the system founders are trying to raise inside of. If the only available capital rewards explosive, exponential growth, founders will structure their companies as exponentially growing, whether or not that is a proper fit for the business they are building. In emerging ecosystems, this quietly narrows what gets called a successful company. A founder building a business that is high growth but not exponential learns to either repackage the company as something it isn’t, or stop looking for outside capital. Both outcomes cost the region something, and neither shows up in the headline numbers.
What are the risks of building an innovation ecosystem around a small number of improbable outcomes?
Two risks, and they compound. The first is economic: venture assumes most companies fail, so the few that succeed need to deliver outsized local returns to justify everything the ecosystem invested around them. But as companies get leaner and more remote, those traditional local returns, like workforce hiring, commercial leases, and corporate expansion, are harder to capture. The math that used to justify the model is quietly breaking. The second is narrative: a handful of companies end up carrying the story of an entire region, even when they aren’t representative of what the region actually builds or what it’s best positioned to grow next. That makes the ecosystem brittle in both directions, making it economically thin and narratively overexposed.
Why do you believe durable, profitable companies are often overlooked in traditional venture capital models?
Venture isn’t purposefully overlooking or against profitable companies. The industry is designed to capitalize on the valuation of a company as opposed to its profitability. Profits are a part of the calculus but are not a leading factor in determining an investment. A SAFE or equity check requires the company to exit at a valuation high enough to move the fund, and a business with strong margins, real revenue, and linear growth doesn’t get there inside a ten-year window. So durable companies aren’t dismissed because they’re bad. They’re dismissed because they’re the wrong shape for the instrument. That’s a capital design problem, not a company quality problem, and it’s the gap regenerative models are built to fill.
How do current venture structures create barriers for founders who do not fit the traditional Silicon Valley profile?
The barrier isn’t bias; it’s instrument design. Equity requires a company to achieve an extremely high value and a fund to own enough of that company to matter, which immediately filters for founders willing to chase that shape of business. A founder building in hospitality, light manufacturing, services, or any of the sectors South Florida actually concentrates in often has strong margins and linear growth, which is exactly the profile traditional VC can’t underwrite. So the filter isn’t about who the founder is. It’s about whether their business model fits a ten-year fund. The result looks like a pedigree problem but is really a structural one, and that distinction matters because it tells you what to design.
What makes South Florida uniquely positioned to build a different kind of innovation ecosystem?
Normally, and rightfully so, our ecosystem points to our geographic positioning as a huge catalyst to spur a unique formula for building a tech ecosystem, combining huge influences from different international cultures with proximity to have companies soft-land in the US to expand out internationally does play a large role in shaping our ecosystem. Although one thing that was mentioned quite a bit when I first came to Miami that deserves coming back to is the sheer number of companies that are being created in South Florida. Again, we shouldn’t fall prey to big numbers, but I think these businesses will benefit from increasingly productive workflows
Our ecosystem’s usual answer is geography and culture — the proximity to Latin America, the international soft-landing story, the mix of influences. That’s real, but it’s not the most interesting asset on the ground. The most interesting asset is volume. South Florida creates an enormous number of businesses every year, across a wider range of industries than most emerging tech ecosystems, and the traditional venture model has no way to engage with most of them. A capital stack designed for distribution rather than concentration matches what this region actually produces. We don’t need to design the entire ecosystem to focus exclusively on unicorns when the region is generating multiple viable paths for new companies.
How can alternative capital pathways create more resilience during economic downturns or shifts in investment markets?
Emerging ecosystems feel macro slowdowns first because they depend on a small number of high-conviction bets that all get repriced at once. When the funding environment tightens, the entire local narrative tightens with it. Alternative capital structures can generate returns from actual business performance rather than from a single future liquidity event, which means the companies inside them keep operating, keep employing, and keep compounding through cycles that would stall a traditional venture-backed peer. Resilience isn’t about avoiding downturns. It’s about whether the ecosystem still has a functioning capital layer when the next one arrives.
What do you mean when you say capital should integrate into the socioeconomic fabric of a region?
There’s an open question most of the industry avoids: what responsibility, if any, does an investor have to the business community their allocations are shaping? Venture doesn’t need to answer that question. Venture is built to concentrate capital in the smallest possible number of firms through the power law, which is the opposite of integration. Regenerative models work differently. The same incentive that drives returns also pulls capital across a wider set of strong companies, which means the financial logic and the regional impact stop pointing in opposite directions. Integration isn’t charity. It’s a design choice about how a firm earns its returns.
Why do you believe founders need more optionality when it comes to capital structures?
Every founder has their own set of goals and priorities, and expecting that they all fit into the same box of hyper-scaling companies limits what success looks like across our society. Incentives drive outcomes, and capital has evolved over the past few decades to be optimized for one type of company, leaving many companies with high growth potential to push for a single type of strategy, whether it fits their business model or not. Even more importantly, creating new capital structures provides opportunities for newer forms of businesses to emerge. Traditional venture isn’t going anywhere, but much like the emergence of the modern venture capital firm that is commonplace today, some factors will drive newer capital structures to the forefront because of need.
What do you hope South Florida’s innovation ecosystem looks like ten years from now if these ideas are adopted?
In the same way we look at South Florida as a blend of different cultures because of all the foreign influence that has shaped the region, I hope the business economy is as vibrant and varied to serve all the different communities that exist within this region. There is no doubt that this region will continue on a path of growth leading the nation, but I hope we realize that growth doesn’t account for every factor of a growing regional economy. Growth is important but should also be paired with the mixture of industries, retention and inflow of talent, the sustainability of firms, and a capital stack that funds the best companies that our region has to offer.
