July 30, 2009 in ATDC News

Why Are We Doing This?

This is a cross post from Stephen Fleming’s personal blog Academic VC.  Stephen is a Vice Provost at Georgia Tech and the acting director of ATDC.

So by now you’ve seen the press release about reorganizing ATDC, VentureLab, and the SBIR Assistance Program under the single banner of ATDC. And that we’re throwing open the doors of ATDC to all technology entrepreneurs in Georgia.

This is different.

ATDC is almost thirty years old. (We’re going to have a thirty-year birthday bash next year; be sure to come!) And, throughout most of ATDC’s history, it’s been a very exclusive club. We usually get a couple of hundred applications a year, and usually accept about a dozen into membership.

That’s a lousy way to make friends… since, by definition, we’re telling a couple of hundred entrepreneurs per year that they’re not good enough to be in our club.

But it’s a great way to validate that the applicants who survive the process are solid companies. Companies worth investing in. Maybe even companies worth catching an airplane from Boston or California to invest in. The ATDC "seal of approval" meant that a company was automatically worth visiting when a VC was coming to town to see what was cooking in Atlanta.

And that model served ATDC well for a long time. Since there were never more than a few dozen members at any one time, the ATDC staff could provide some serious personal service to the entrepreneurs: Consulting. Coaching. Making connections. And, since this was such a high-touch model, it was nice to squeeze everyone in as neighbors… originally the O’Keefe building, then the "storage warehouse" on Tenth Street, and finally a set of three top-notch facilities. ATDC currently manages the second floor of the Centergy building, a set of life sciences "wet labs" in the ES&T building, and a corner of the Georgia Tech Savannah facility.

Then the market changed. Lots has been written about this elsewhere, and I assume you’ve read it… but everyone in the angel/venture capital chain took one step to the right, then sat down. It became a lot harder for a new company to attract VC money. At the same time, in certain sectors, it became much less necessary to attract VC money. For Internet deals: borrow every dime you can, write code like crazy, push the infrastructure up into the cloud, live on ramen noodles until you get someone, somewhere, to pay for something, then finance growth out of cash flow until investors (or acquirors) come looking for you. No VC required. Heck, maybe no offices required. If you’re in the cloud, you’re not keeping your servers under lock and key, and if you don’t need a PBX (hello, Skype and cellphones)… you can run a pretty substantial operation via laptops and coffee shops.

Then you factor in Atlanta traffic. ATDC has always had "remote members"—in fact, today, about 40% of ATDC’s members are not bricks-and-mortar tenants—but, honestly, they’ve always been second-class citizens. They don’t get the same intense hands-on experience as the tenant companies. But if you live in Suwanee, or Alpharetta, or Kennesaw, the idea of driving to Midtown every day can be pretty soul-killing. (Not to mention if you live in Newnan, or Gainesville, or Bainbridge! More about that later.)

So, over the last few years, the ATDC model of "run ’em through a gauntlet and only the best will survive" has become less relevant. Some companies—some good companies—have chosen to bypass the gauntlet and simply not apply.

VentureLab

Let’s switch gears and talk about VentureLab. I’ve been running VentureLab for a little over four years now. It’s a different model. First off, VentureLab only works with technologies belonging to Georgia Tech. (There are minor exceptions for student projects, but not enough to affect this argument.)

So the "gauntlet" to get in is different… at the time of admission, VentureLab tries to determine if any startup could exist in your target space, not if yours is the potential winner. That’s very different. If we decide that there’s room for a startup, everything is focused around assembling the resources to build a successful one… business plan, management team, seed capital… all those things that companies already needed to have to survive the ATDC admission process. It’s not a coincidence that the VentureLab exit criteria looked a lot like the ATDC entrance criteria.

Too many of you have heard me tell my tired joke that "If ATDC is an incubator, then VentureLab is pre-natal care." And it works. But… it’s high-quality, high-cost pre-natal care that you can’t have. (Unless you’re based on Georgia Tech intellectual property.) Look at the quadrants below.

quadrant002

If you have Georgia Tech intellectual property, VentureLab would work with you at the earliest seed/concept stage. (We’re not just talking pre-revenue… we’re talking pre-incorporation and pre-patent-application!) And, if you survived to the relative maturity of "early-stage" (I’m stealing definitions from Lance Weatherby’s blog here), you’d be a great candidate for ATDC.

But if you’re weren’t based on GT intellectual property? Look above, at that vacuum in the lower left.

Nature abhors a vacuum, and innumerable groups, linkages, and organizations have sprung up to help fill this one. (That link is to a blog post talking about those groups, and an animated version of that incredibly cluttered chart in the lower left.)

quadrant003

Today’s announcement changes all that. We’re not trying to take the place of any of those organizations—they’re the symbol of a thriving Atlanta startup ecosystem, and we’re not arrogant enough to think we’re smarter than the crowd. But we are going to make ATDC available as an umbrella… if any of those organizations can benefit from using ATDC as a clearinghouse, or a sponsor, or just a place to meet—let me know.

quadrant004

(The VentureLab function for Georgia Tech startups doesn’t go away… and neither do the employees… and neither does the GRA VentureLab money. It’s now just one more program managed by ATDC.)

SBIR Assistance Program

I’m already nearing 1000 words, so I’ll keep this short. How many of you are even aware of the Federal government’s mandate that the eleven most profligate Federal agencies need to devote 2.5% of their R&D spending to small companies? Companies like yours?

How many of you have ever applied for it?

How many of you would even know where to look?

The state of Georgia pays for a free SBIR Assistance Program (which also helps with STTRs; don’t ask) that has helped dozens of companies land tens of millions of dollars in Federal grants and contracts. But you’ve never called them, have you? Now, by merging this program into ATDC, every member will get asked "Have you looked at the latest solicitations? Any of them sound interesting? Need some help figuring out how to submit a proposal?"

Getting some of your taxes back from Uncle Sam with no loss of equity, and no incurring of debt. What could be better?

Scale

This post is already too long, and I’ll come back to some of these topics in the future. But the challenge for the new expanded ATDC will be all about scale. Budgets are tight. We can’t provide the same high-touch consulting services to 400 companies that we can to 40. And we certainly can’t offer startup-friendly real estate deals to ten times as many companies; you won’t all fit in our space!

We have some good ideas about this, but it will mean leveraging community involvement as a force multiplier. Some of you reading this will be helping out other entrepreneurs younger or less-experienced than you. Some of you already do this. Some of you will be asked to start.

And some of you won’t be in Midtown Atlanta. By figuring out how to decouple our services from our real estate, we’ll be figuring out how to offer access to ATDC in places other than Midtown (and Savannah). We’ll want to see ATDC "circles" in Gwinnett, and Alpharetta, and Athens, and anywhere else in the state where there’s sufficient entrepreneurial activity to justify it. Stay tuned for more information on how this will work. I can tell you right now—we’ll need your help.

Whether you’re a first-time entrepreneur needing someone to talk to, or you’ve already exited three companies and are willing to help the next generation, or somewhere in between… If you’re a Georgia entrepreneur and this sounds interesting, please visit the new ATDC Web site at http://bit.ly/svYw6 and sign up!

Disclaimer

There’s a professional disclaimer on this site, but I should probably repeat it here:

Any material posted on this site or other personal sites reflects my personal opinion and does not necessarily represent the position of Georgia Tech, the University System of Georgia, or the State of Georgia.

But, for those of you who are asking "Why are we doing this?"… you’ve just read my answer.




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