5 Ways to Improve the Atlanta Startup Community

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Tonight I had the opportunity to attend a dinner, sponsored by a great VC firm in town, for the sole purpose of discussing the Atlanta technology startup community, including what’s working well and what can be improved. None of the solutions are effortless, nor are too many likely to happen soon, but the goal is to spread awareness of how we can improve things. Here are five ways to improve the Atlanta technology startup community:

Allow the Georgia government pension funds to invest in the venture capital alternative asset class
Convince Fortune 500 companies in the metro area to buy from local startups and acquire local startups
Introduce several new local seed stage and early stage investment funds
Encourage successful entrepreneurs to give back and reinvest in the community
Increase the number of clusters and improve their recognition (e.g. online marketing, vertical e-commerce, lead generation, etc)

There are many more but these were some of the main takeaways from the evening. The great news is that over the past five years the Atlanta startup community has really blossomed and has many different ways to get involved.

Comments

13 responses to “5 Ways to Improve the Atlanta Startup Community”

February 9, 2010

Adam Wexler

david-

by clusters, do you mean our strengths? i think it’s key to play to atlanta’s strengths if we want to have startups benefit from each other and put themselves in position to attract the bigger companies from the area.

-adam w.

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1. February 9, 2010
  
  davidcummings
  
  Thanks Adam for the comment. Yes, clusters are areas that we’re already strong and have a critical mass of companies (e.g. Internet security, logistics, etc)
  
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February 9, 2010

Vladik

I especially think the first and second point on your list are important. Without clearing those two, you end up having a difficult time getting to the others. I think 3 and 4 will naturally occur after the proper exits. With 5, I’m not sure how you accomplish the goal. Lots of PR?

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1. February 10, 2010
  
  davidcummings
  
  Thanks Vladik. I believe 5 comes about the same way 3 and 4 will — lots more exits.
  
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  1. February 12, 2010
    
    Vladik
    
    Agreed David, that’s the most natural way for clusters to occur, but that is tough to influence and will take even more time. Or do you think that definition could come quicker?
February 10, 2010

Al Meyers

As a contrarian, I must respectfully disagree with the simplicity of the 5 points that came out of this vc dinner. I have been blogging about how to create an “innovation ecosystem,” and I’m afraid that it goes much deeper than what has been discussed herein.

In this economic environment, numbers 1 and 2 are not feasible or practical. My suggestions are as follows:

1. Bring some of the new companies that have relocated to Atlanta (e.g., NCR) into the venture community. We need more capital and our venture community is far less established than in Boston or Silicon Valley.
2. The only way to encourage more seed funds are angel/venture investment is for the government to better leverage the tax code and use it to stimulate certain types of investment. See the JOBS Act of 2010 proposed by Georgia State Representative Tom Graves as a very valid example.
3. We need to build natural bridges between the Fortune 500 companies located in GA and the venture community. For too long, there has been little, if any, meaningful collaboration.

My website outlines a tried and true formula for how to build an “innovation ecosystem” as originally conceived by Shirley Jackson, President of Rensselaer Polytechnic Institute.

However you slice it, Atlanta, can, and must do better to grow its startup community.

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1. February 10, 2010
  
  davidcummings
  
  Thanks Al for the detailed comments. Here’s the link to the piece on your blog:
  http://almeyers.squarespace.com/als-blog/2009/10/28/building-a-successful-sustainable-education-industry-ecosyst.html
  I agree that your three points should be added to the list of things to do to improve the community.
  
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February 10, 2010

Melanie Brandt

David, thanks for the post. Regarding the first, I agree and also think it is important that when we talk about the first issue we need to make sure that people realize that allowing Georgia pension funds to invest in the Alternative Investment Class is important first and foremost for the performance of the pension funds. Georgia’s lack of diversity in this regard has caused our funds to fare worse than those in other states – specifically, over a 10 year period, our funds have underperformed 95% of the large public funds in the country, and this has been directly attributed back to our restrictions in this regard. Yes, it can be argued that alternative investments would eventually help the Georgia startup community by infusing more capital into the overall system, but I think the fact that diversifying our pension funds is sound fiscal policy must be the greater argument when we discuss this issue as a community. There are people who are vehemently opposed to changing these restrictions, and they will not be swayed by an argument that Georgia’s startups need their money. (source: Commission for a New Georgia report summary http://gppf.org/article.asp?)RT=&p=pub/Regulation/pension090306.htm

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1. February 10, 2010
  
  davidcummings
  
  Thanks Melanie. That’s a great point that I haven’t heard before regarding the emphasis on getting better returns for the pension fund as being the first and foremost reason for allowing alternative investments.
  
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February 19, 2010

S. Aponte

Thanks David! This is a really insightful post with thorough dialogue about how we can collectively improve the Atlanta start-up community.

Encouraging investment in the Atlanta area whether it is through Fortune 500 companies, the investment of seed funds or more proactive reinvestment are all valuable options. Additionally, having access to an incubator and/or workspace can be valuable. This clearly does not replace the need for funding and other incentives, but it provides a starting point – a physical space where entrepreneurs can come together, develop ideas, and implement long-term solutions, which will help to encourage a robust start-up community in Atlanta.

The company I work for, Regus, wants to help the Atlanta start-up community thrive. Our flexible workspace solutions cut down on the high cost of rent and overhead, helping business owners and entrepreneurs focus on growing. Our business lounges and office locations are full of entrepreneurs and small businesses getting their start and we have found so many of them are able to connect with other entrepreneurs and share ideas, struggles and solutions. I invite you to visit our website, http://www.regus.com/atlanta, for more information on the services we provide and follow us on Twitter: @regusatlanta.

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March 31, 2010

Rob

Sorry, no amount of effort by the state or any pipe dream that there is any interest in VCs in coming to Atlanta is going to change the fact that VCs are not interested in Atlanta, have not been for some time and will not be for awhile. Noro is the best because they do their due diligence and know this city better than anyone. But, they only developed that knowledge over a long period of time. VCs outside of Georgia do not have the time, money or patience to put up with the 95% of entrepreneurs that know nothing about value propositions, markets, commercializations, etc. to bother with Atlanta. They can go to Silicon Valley, Boston, NJ, VA, make easier money.

What has to be changed is the perception of entrepreneurs in Atlanta to outside investors. An ent. that comes from SV or the other places gets the goodwill of that place to help entice investors. Atlanta, on the other hand, has been a money pit for investors. Why? Because our community is about 15 years behind everyone else. We keep thinking that the state can fix this problem, but it can’t. everytime an organization has a little bit of success, political favors come into play. what was before a machine whose sole purpose was to make money now gets turned into a center for political favors. Those in the know know this to be true, and know the organizations that have been hit by this.

make a better entrepreneur, and even if the state is the worst state for doing business (SV is in california for goodness sakes!!), VCs will come.

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1. March 31, 2010
  
  davidcummings
  
  @Rob
  
  I think there will tons of interests for VCs to come to Atlanta for fast growing, revenue generating businesses in good markets. VCs are not going to come here and fund ideas or pre-revenue companies unless the management team has already been successful.
  
  My solution: more fast growing, revenue generating businesses that can decide to raise to money or grow organic.
  
  I’m confident people will look at Atlanta in 10 years and comment how the technology community has made impressive progress and ranks as one of the top five in the U.S.
  
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March 31, 2010

Rob

David,

I think there will be interest, but not on the scale of the other hotbeds of innovation. fact is, once a company or a person gets a little success, in a lot of cases, the first thing the VC does is move them out of here. why? because the startup and entr. knowledge and connectivity infrastructure is not here, at least not at the level of the other places.

the problem is that you have a whole bunch of people in the startup community with their own self interests that form a lot of different groups and communities.

do you know why silicon valley grew so fast? although there are a lot of theories, one of mine is that it grew because everyone went to stanford or caltech and didnt want to look like an idiot or ruin the schools’ reputation. here, you have a group of about 20 highly seasoned, young entrepreneurs that grow and sell businesses, sorrounded by about a 1000 people that play entrepreneur.

i work with a lot of entrepreneurs and there is one quality trait that is the same throughout of companies that I feel are going to make it. they are all lead by an uber-entrepreneur. someone that knows everything about everything, that spends their life, time and money being better than everyone else. they come into your office and they know the law. they meet with their accountants and they know every dime that was spent. they draft their business plan knowing what their actual product is, they have mapped out their value chain and value proposition, they take the time to meet and court FOR YEARS potential money in the area. they know the purpose of intellectual property and know what they need to spend on and, more importantly, what NOT to spend their money on.

in other words, these men and women are the best of the best, and VCs want them. in SV, Boston, Houston, Virginia, NC, there are a lot of them.

it is changing. people in Atlanta are learning to be better entrepreneurs, but until the old school community is pushed out and the age old “relationships” are broken, Atlanta will always be second tier.

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