Recently I was talking to an entrepreneur about the Atlanta startup community and I was arguing that it’s a hidden gem for reasons I’ve mentioned before (here, here, and here). He brought up a different opinion that I hadn’t heard: Atlanta is great for early stage startups but not idea stage. One way to think about the stage of startups is that idea stage startups are pre-revenue to a few hundred thousand in revenues while early stage startups are a few hundred thousand to a few million in revenues.
Here are a few reasons why idea stage startups struggle in Atlanta:
- There aren’t anchor technology companies like Google and eBay that acquire startups and recruit talent to the region
- The lore of local college drop outs building billion dollar companies doesn’t permeate the regional universities
- Regional universities focus on job placement at Fortune 500 companies and continue the culture of big company = safe employment
- The number of technical and business co-founders that can keep their lifestyle and not take a salary due to a previously successful exit is tiny
- The access to extremely risky capital for idea stage startups is minimal
So, the theory goes that even though Atlanta has the largest engineering school in the country with great technical graduates, a low cost of living, direct flights at an affordable cost to almost anywhere in the world, and a huge population of ambitious young professionals, if your startup can’t afford to pay market-rate salaries, you’re going to have a hard time taking the idea stage startup to early stage startup.
What else? Do you think Atlanta is great for early stage startups but not idea stage ones?