Over the past year, Atlanta sports has finally had its fair share of the national spotlight – from the Falcons’ Super Bowl season, to our new MLS team, to the construction of the two most advanced pro sports stadiums in the country. But there’s another sector of Atlanta’s economy, which also happens to begin with S, that’s turning heads – startups.
Atlanta was named the No. 3 emerging startup hub to watch in 2016 by Inc. Then earlier this year, Startup Genome designated Atlanta as a top 20 runner up in its 2017 Global Startup Ecosystem Report. I was recently at Collision Conference in New Orleans where attendees made comments like, “I’ve been hearing a lot about Atlanta lately – what’s going on up there?” For those of us entrenched in the city’s innovation ecosystem, metro Atlanta’s emergence as a startup boomtown is no surprise. For decades, the region has been building a comprehensive ecosystem with all of the ingredients needed to catalyze entrepreneurial activity.
For other metropolitan areas looking to spur innovation, here are four ways we’ve engineered startup success:
Education and the Talent Pipeline
With top ranked universities including Emory University, Georgia State, Georgia Tech and Kennesaw State, it’s no surprise that the Brookings Institute named our region one of the top 19 ‘Knowledge Capitals’. Brookings says Knowledge Capital residents are “supremely well-educated,” with 41 percent of the 15-and-over population receiving college degrees. Moreover, with only about 1 percent of the world’s population, Knowledge Capitals generated 16 percent of global patents between 2008 and 2012. But it isn’t just the higher education institutions that make for a robust ecosystem – it’s also the cadre of technical workers, sales professionals and more. Today, America’s talent pipeline is also fueled by non-traditional technical schools and boot camps, like IronYards and General Assembly. And don’t forget the corporate community, which funnels experienced management and technical professionals into the ecosystem.
In addition to a deep cluster of talent, sixteen Fortune 500 companies are headquartered in Atlanta. These giants, including Delta Airlines, The Home Depot and UPS, are increasingly turning to our city’s startups to help them stay competitive in today’s market. TechSquare Labs, which cross-pollinates startups and corporate innovation teams in 25,000-square feet of co-working space, is an example of where these collaborations take place. Around the corner is ATDC, the oldest tech incubator in the Southeast, which partnered with WorldPay to establish a FinTech Program. We’re also home to corporate/startup partnerships such as Cox Enterprises’ TechStars, Comcast NBC Universal’s ‘The Farm’, Coca-Cola’s The Bridge, and Engage backed by ten major Atlanta-based corporations. Since Atlanta has built a critical mass of both corporations and early/growth stage enterprises, many brands are also choosing metro Atlanta as the place to open innovation centers. Take GE’s Digital hub and Honeywell’s Software Center as two great examples. In fact, Atlanta was just ranked No. 6 on Innovation Leader’s list of top North American cities for corporate innovation and R&D activity. Ultimately, these corporate partnerships result in important early-stage revenue, strategic investments and acquisitions for startups, which leads me to deal flow.
Between 2006-2015, Georgia-based companies raised $5.5 billion of venture capital, attracted $116 billion in private equity, and merger & acquisition deals were valued at $180 billion. In both 2014 and 2015, Atlanta consistently outpaced Austin, San Diego, Research Triangle and Denver/Boulder in attracting private investment dollars and total M&A deals. Deal flow is a large component of any region’s ecosystem, but how far investment dollars go is also key. Atlanta is known for a favorable cost of living. High affordability means entrepreneurs don’t have as high of burn rate, and consequently aren’t forced to give up excessive equity for large rounds. For the investors, it means their dollars are being spent on realistic salaries, vendors and other operational expenses, accelerating market penetration and scalability for many startups that call Atlanta home.
The Revolving Door
In many sectors, like politics, the revolving door has a negative connotation. But when it comes to deal flow, revolving doors are quite positive. This is truly Atlanta’s secret sauce, or as I like to call it – ‘the Atlanta way.’ In the Peach State, we’re known for hospitality. Here, people hold the door open for you, and not just in restaurants. Many startup founders who have successful exits in this city don’t let the door close behind them. Rather, they start a revolving door by taking their new wealth and re-investing it in the ecosystem. For example, after David Cummings sold Pardot to ExactTarget, he launched Atlanta Ventures and Atlanta Tech Village, which have fueled new MarTech startups like SalesLoft and Terminus. Another example is Michael Tavani, who exited Scoutmob and then created Switchyards Downtown Club, which is the first B2C startup hub in town.
Ultimately, building a region’s innovation capacity – its ability to produce new ideas, technologies, products, and processes – is a multi-pronged, ever evolving approach. But Atlanta is much further along in our endeavor than most cities competing to become the next startup epicenter. Collectively, Atlanta’s ecosystem is primed to sustain and grow a renowned startup economy for years to come; and finally, the world is beginning to see why.
Author: Jennifer Sherer, PhD, Vice President of Innovation & Entrepreneurship at Metro Atlanta Chamber
Jennifer Sherer is the vice president of Innovation and Entrepreneurship for the Metro Atlanta Chamber where she leads a team dedicated to collaboratively to building metro Atlanta’s innovation capacity. With a background in Molecular Physiology and Biological Physics, Jennifer previously served as executive director of Southeast BIO.
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