Beyond the Bay: Atlanta Is Not an Island
How community and complexity shape tech startups in the ATL
A City of Enigma
Like its name and the legend of the lost city it shares its first six letters with, Atlanta is not easily circumscribed. It’s a city of contradiction, surprise, and eclecticism steeped in sometimes complicated, to say the least, Southern American traditions.
Within that lush and often conservative environment, the ATL’s startup and tech ecosystems have been developing both symbiotically and also rebelliously for the last two decades or more.
According to Kevin Sandlin, who runs a sort of meta-blog called Atlanta Tech Blogs, Atlanta is both a conservative, risk-averse town, and it’s also adventurously naive.
“The tolerance for risk is way lower. The difficulty isn’t a lack of capital, but a lack of risk tolerant capital. It’s not like Silicon Valley…. [Raising capital] is not an impossibility, but you really have to demonstrate that you can get customers,” Sandlin said.
While risk-averse investment dollars might make it harder to try new things, that hasn’t stymied Atlanta’s growth. In a lot of ways, that conservatism has forced young entrepreneurs to be more creative, more disciplined, and more community oriented.
“The way I describe Atlanta is we’re a teenager: We’re young, energetic, and too stupid to know what not to do. We’re going to go out and do some stupid stuff; we’re going to shoot for the moon. We’re just stupid enough to try something that someone else isn’t going to try.”
— Kevin Sandlin
Paying It Forward
When David Cummings sold Pardot to Salesforce in 2012 for $95.5 million, “within two months, he had already purchased a building to help build a community,” according to Atlanta Ventures’ Jon Birdsong.
Cummings, the third partner (alongside Birdsong and A.T. Gimbel) at Atlanta Ventures, founded Atlanta Tech Village in that building. Initially envisioned as a co-working and networking hub — a sort of localized WeWork for tech startups in Atlanta — it’s quickly become much more than that. Atlanta Tech Village is at the epicenter of the entrepreneurial community-building that’s going on in the ATL.
“[Atlanta Tech Village] has knocked down a lot of walls and doors by being very intentional and successful at driving a culture of paying it forward and helping people out,” Sandlin, who also runs a weekly meet-up for entrepreneurs at Atlanta Tech Village called Pitch Practice, said.
“It’s very pay it forward,” Birdsong agreed.
While it takes more than a village to raise and nurture an ecosystem of entrepreneurs willing to take risks, share new ideas, and support others, it’s certainly helped to have this particular village in Atlanta.
“Community within the Southeast is particularly important. Culturally, in the South and in Atlanta, the genuine nature of people willing to help each other is strong — not that it’s not in other places as well — but it’s particularly strong in Atlanta,” Gimbel said.
“Community is in our DNA.”
— Jon Birdsong
It Takes Two Villages and a University
Community commitment isn’t just displayed prominently on Birdsong, Gimbel, and Cummings’ company website; it’s also embodied in their related endeavors.
In 2012, Birdsong started Atlanta Startup Village, “the largest tech meet-up in the Southeast,” according to him. Birdsong’s monthly meet-up takes place within Cummings’ Atlanta Tech Village, further emphasizing the importance of mutual support and cooperative missions.
“We understand and know the value of what community brings to the entrepreneurial journey — it’s not just fluff and high level verbiage,” Birdsong said.
According to Jacqui Chew, licensee of TEDx Atlanta, Atlanta Startup Village is one of her favorite things about Atlanta Tech Village because it’s a chance for startups to “share their presentations in a friendly environment for questions and feedback.”
(Plus, there’s usually free beer.)
A lot of credit goes to Georgia Tech for contributing to that youthful and vibrant entrepreneurial energy. The public institute of technology, located just north of downtown Atlanta, provides a major talent pool for incubators like ATDC and Prototype Prime.
The ATDC operates under the Enterprise Innovation Institute, which is the economic development arm of Georgia Tech and is consequently funded by Georgia taxpayer dollars. As such, it takes no equity in the companies it incubates — it really just helps with education, connections, and discipline.
According to ATDC Interim Director Jane McCracken, “ATDC — the Advanced Technology Development Center — is the state of Georgia’s technology incubator. A program of the Georgia Institute of Technology, it was founded in 1980 and ranked by Forbes as one of the top global incubators two years in a row. It’s economic development mission is to support entrepreneurs in incubating sustainable startups in Georgia that create next-generation tech companies and well-paying jobs.”
Because of that localized economic development mission, companies involved with the ATDC have to be headquartered in Georgia and must be technologically driven with a high growth potential. As a result, what happens at Georgia Tech and the ATDC stays in Atlanta.
“I would say that since the late ‘90s, Georgia Tech has been seminal, completely seminal. The folks who founded Scientific Atlanta, which was acquired by Cisco, many of them were Georgia Tech grads. Georgia Tech alum have built and launched quite a few successes and a surprising number of them stay,” McCracken said.
The web extends far beyond just university alumni launching local startups, however.
Prototype Prime is a newer incubator in the greater Atlanta region, and it wasn’t something that co-founder Sanjay Parekh wanted to do at first. It took some goading from the mayor of Peachtree Corners (a northern suburb of Atlanta), who really liked the work Parekh was doing with Georgia Tech students.
“ATDC asked me to be on a panel, and I agreed — people know to expect that I will give my opinion honestly…. Afterwards, the mayor of Peachtree Corners was asking for advice about starting an incubator, and I told him what I thought. The mayor asked me, ‘I want you to come and run this thing,’” Parekh said, “But I didn’t want to do something that competed with friends of mine [the folks at Atlanta Tech Village and ATDC].”
“Competing aimlessly doesn’t really make sense to me.”
— Sanjay Parekh
Follow the Money
A city as Daedalean as Atlanta isn’t without its complexities. While financial technology (FinTech) and software as a service (SaaS) dominate the tech and startup markets, media technologies are still trying to compete for venture capital dollars.
Atlanta Tech Village and Prototype Prime are by no means exclusive about what kinds of startups join their communities, but Atlanta Ventures is understandably geared toward SaaS and ATDC toward FinTech, funneling those types of startups into the ecosystem at large.
It makes sense: Georgia-based FinTech companies process two-thirds of all U.S. financial transactions and the top 20 of those companies bring in around $72 billion in annual revenue alone. If Pardot’s acquisition by Salesforce is any indication (and it is), SaaS is not far behind in strength and visibility, and “it’s more mature and becoming solidified,” according to Birdsong.
“FinTech is extremely important to Atlanta and ATDC. With more than 120 companies that touch a number of verticals in finance and financial services, more than 38,000 FinTech specialists drive the ecosystem in the state of Georgia,” said Jeff Gapusan, ATDC’s FinTech catalyst.
However … “There’s not a lot of venture capital in Atlanta — traditionally in Atlanta and the Southeast, venture capital has not been available for entrepreneurs unless they hit a million dollars in annual revenue. So, they have to be resourceful and incredibly lean. It’s tough to sell an investor on an idea without already having traction,” Birdsong said, echoing Sandlin’s point.
And as hard as it is for FinTech and SaaS startups to get funding, it’s even harder for entrepreneurs operating in a less conservative field: media technology.
Holly Beilin, editor-in-chief of the Southeast-based online community publication Hypepotamus, agreed that the biggest challenge facing young entrepreneurs is “funding — a million percent funding,” but that music technology, film technology, gaming technology, and even sports technology are all at a particular disadvantage.
“There’s not enough money here, and institutional money here is more conservative about the industries that they fund. FinTech, SaaS, cyber-security, marketing technology, and health information technology are what get funded. For young startups that are not in those industries it’s a lot harder,” Beilin said.
“Media tech startups? Oh yeah, they don’t get funded.”
— Holly Beilin
The Proving Ground
Scarcity often forces people to become more resourceful and, theoretically, more driven. Consequently, the curse of conservative venture capital might actually be a blessing in disguise for entrepreneurs willing to prove themselves through entrepreneurial discipline.
“Having been exposed to cities in the heartland, what’s really interesting is the startups there have a force because, by necessity, they have to be a lot more disciplined with the way they use resources. They have to be very capital efficient. It’s very unlikely for a startup to be funded without revenue at the seed stage. I think what’s happening is this is attracting investors from both coasts because they’re seeing strong deal flow in startups with strong business skills,” Chew said.
Parekh echoed this assessment, using Atlanta-based email marketing giant MailChimp as an example of one of many successfully bootstrapped companies in the area.
“I think we have so much ability to do things and scale things at a price point that didn’t exist before. You can get much further before needing to raise money,” he said.
“We’ve got a good situation here in Atlanta,” Parekh added.
The fact that the ATL has become as much of a destination as a launch pad is a testament to how good of a situation it really is becoming. One of our own music tech portfolio companies, Jammcard, expanded there less than a month ago, and founder Elmo Lovano is already experiencing tremendous success in one of the most exciting hip-hop capitals in the world.
From coast to coast, all sorts of industries are paying attention to Atlanta, setting up headquarters, and calling it home. With the support network that’s already been established, incorporating newcomers shouldn’t be too difficult—after all, Atlanta isn’t an island, and it never has been.
“There’s such diversity, there’s such variety…. We are such a melting pot. One in 10 is born here, and the rest of us are not. We’re from somewhere else.”
— Jacqui Chew
#BeyondTheBay is part of our effort to profile and promote startup, tech, and business communities outside of more established regions like Silicon Valley. We love discovering what makes each entrepreneurial ecosystem special. You can check out our New Mexico profile here and our Portland profile here.