Tech startups in Miami get a new way to build military and defense companies

Two firms are teaming up in Miami to help tech entrepreneurs build startups in areas they think are ripe with opportunities to solve real-world problems: defense and national security.

Misfit Labs, founded in Miami in 2022, helps form new businesses from developing ideas to selling products to the market. Black Mountain Strategies, based in Fort Myers, has expertise in defense technology and working with the federal government. It thinks more entrepreneurs should consider doing so.

The partnership seeks to spur companies that develop so-called dual-use technologies, meaning use in both civil society and the military. Examples include software, satellites, drones and semiconductors.

In doing so, both firms also hope to lure more former U.S. military members into entrepreneurship, what they consider an untapped area. Black Mountain’s founders are service-disabled veterans. Florida is home to over 1.4 million veterans.

The initial focus will be in building startups in defense and dual-use AI, cybersecurity infrastructure, energy systems, communications and connectivity, health and human performance and logistics and operational technology.

The new venture comes as interest is surging in the region and beyond as a defense and military tech innovation hub.

The state has long-standing advantages, including home to 3 of 11 U.S. military commands: U.S. Southern Command in Doral, and U.S. Central Command and U.S. Special Operations Command in Tampa. Florida ranks fourth in the nation in defense spending.

South Florida has been gaining newfound interest as well. In September, Silicon Valley giant Andreessen Horowitz said it would open an office in a building owned by Related Ross in West Palm Beach where it would invest out of its $1.18 billion American Dynamism fund.

“Stephen Ross and team are building a truly dynamic city and ecosystem,” Katherine Boyle, co-founder of American Dynamism and general partner at venture capital firm Andreessen Horowitz, also known as a16z, wrote on X on Sept. 10. “We’re excited to become a larger part of it.”

In August, Florida Gov. Ron De Santis announced $23 million in new funding for defense companies. Last year, the annual conference eMerge Americas in Miami Beach held a National Security Demo Day for the second straight year. Meanwhile, Florida’s Space Coast continues to boom.

Misfit Labs is a venture studio, and differs from a traditional venture capital firm that raises large funds and invests them in startups or an accelerator like y-Combinator, which selects founders based on a specific idea and nurtures them for a fixed amount of time.

At Misfit, you can join before founding a company or even prior to developing a concrete idea. They’ll help you do both. They also provide technology, so entrepreneurs can reduce their initial business costs. And once you’re ready to raise capital, they help you out, trying to match you with investment firms in their network.

They say one of the key things they offer is access to that technology and software, including Misfit’s AI tools. The firm helps founders design, build, and scale companies.

Kyle Carriedo and Joey Gutierrez, co-founders and co-managing partners, started the firm near the end of the COVID-19 pandemic. Carriedo is a former senior engineer at Apple and leads Misfit’s AI-powered software development. Gutierrez previously worked in investment banking, was born in Miami and attended Florida International University.

Who should consider Misfit?

The firm considers a variety of backgrounds. You can be a seasoned entrepreneur having built multiple companies, or you can be a rookie. Regardless, you will go through a vetting process. So, if you’re a first-time founder, Misfit will want to see a certain mindset.

For example, if people are new to entrepreneurship, “do they have the determination?” needed to persevere, asked Kyle Carriedo. He and his partner will want to see evidence of that.

“There are a lot of hurdles and challenges to becoming an entrepreneur,” Carriedo said. Success often “comes down to the founder.” So, what kind of vibe you give will be important.

The firm will often bet on individuals. So you can join without a product, or even lacking a fully formed idea.

Misfit will also have to determine if it can provide value to the business idea, not always the case.

The two firms will hold an information session in Miami this month for entrepreneurs interested. The event will be 6 to 8 p.m. Sept. 29. Once you register, you will be told the location.

Using AI to help companies develop software will move it faster. Previously, it would take about eight months for a startup to go from 0 to 1 on a 10 point scale, said Joey Gutierrez. Now it takes 90 days. That means “we can now take on dozens of ventures and help them scale,” he said.

Misfit takes equity in startups it works with, ranging from 10% to 50%, said Gutierrez. That’s contingent on hitting milestones.

Black Mountain Strategies was co-founded by Brandon Mendez-Lynch, a U.S. Air Force veteran and business strategist specializing in military intelligence and national security, and Charles Hatley, a U.S. Air Force veteran and former Mission Crew Commander with more than 1,500 combat flight hours.

Until now, it has been an advisory firm specializing in business development.

Black Mountain’s experience

Black Mountain’s founders’ experience led them to believe that technology innovation in the private sector and the military or government no longer run on parallel tracks or at different speeds. That’s largely due to AI.

Advances in artificial intelligence, cybersecurity, energy, infrastructure, and communications no longer sort cleanly into civilian or military applications, Hatley said. “The most significant opportunities are emerging at that intersection, and capturing them requires a different approach to company building.”

That includes considering the government as either a customer or a source of funding. Black Mountain has extensive relationships that can help with either.

Mendez-Lynch said, “one challenge we hear about from veterans moving into entrepreneurship is how difficult the startup and funding ecosystem can be to navigate, particularly for people coming from outside traditional venture networks.”

“As we build more infrastructure around dual-use company creation, we hope one secondary benefit will be creating additional pathways for strong founders with relevant experience, including veterans, to build and scale companies.”

Charles Hatley says prior to the new venture, Black Mountain has seen about 200 startups. “But they never look at the government as a viable pathway to revenue and also funding,”

There may be at least one advantage in doing so. When the government provides funding, the owners retain their stakes in the company, Hatley said.

Black Mountain has expertise in 17 technologies including quantum computing and aerospace. It also does work in Latin America.

The current convergence of the military and startups in South Florida may be a full-circle moment in one way.

Silicon Valley’s origins largely stem from the Department of Defense. Pioneer Fairchild Semiconductor won many military contracts. Its engineers went on to found giants Intel, AMD and venture capital firm Kleiner Perkins during the late 1960s and early ‘70s.

The internet started in a government agency now called Defense Advanced Research Projects Agency, or DARPA, which years later funded Stanford students Larry Page and Sergey Brin, Google’s eventual founders.

South Florida’s tech scene is now ready for more of a defense and military influence, say Misfit and Black Mountain’s founders, as well as help in scaling companies.

Joey Gutierrez, the Misfit co-founder and Miami native, says he was here in 2014, and today by comparison, “there are tons of venture capitalists and great entrepreneurs.”

But it remains hard to find innovative tech companies that have scaled and become large.

“That’s either lacking or fragmented,” he said.