December 9, 2009 in ATDC News

Final Thoughts on Dan Breznitz’s “Atl Startup Scene”

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As many of you know, Prof Dan Breznitz from Georgia Tech, recently published a research paper on Atlanta based start-ups over the last decade. He covered topics such as venture capital, community support, cross pollination of companies, and the migration of home grown start-ups out of our region. Much of his findings are not suprising. Yes, we all know there is a dearth of venture firms in the southeast and yes, there are a number of cases of start-ups moving to what appears to be greener pastures. On the surface, I can understand why one can reach these conclusions. After all, Atlanta is no Silicon Valley.

Then I started thinking about my time here in Atlanta, can’t believe it’s nearly been a decade. You see, I’m a transplant from Boston. Plucked directly out of the number two entrepreneurial region in the country, at it’s height. I guess I can argue I’m one of the few that can really give a fair perspective on the Atlanta startup community and how it compares to other areas in the country. I lived and breathed the start-up scene both in Atlanta and Boston. The key ingredients to a successful start-up region are:

– great technology university/universities

– talented resources (developers/business entrepreneurs)

– available funding

– supportive entreprenurial community

– local acquiring companies

If you compare Silicon Valley/Boston to Atlanta I believe you’ll find only one major difference, local acquiring companies. Atlanta has a great technology university in Georgia Tech, talented resources (we’re home to more fortune 500 companies than almost any other region), funding has always been available for the right deal (in or out of town money), and great support system (there are entrepreneurial networking events going on every week, ATDC, Startup Riot, Startup Gauntlet, Open Coffees, ATA “So You Think You Can Pitch, Shotput Ventures, GRA/TAG Business Launch, Startup Chicks, Startup Lounge, Venture Atlanta, and the list goes on).

Look back ten years at all press releases on technology acquisitions in the US, you’ll find 90+% are by companies based out of Silicon Valley or Boston and that the acquired company is local to that area. We’ve had our chance with companies such as ISS and Scientific Atlanta. They could have opened the flood gates to this area with security and video acquisitions. A few years ago, I counted we had upwards of thirty security start-ups in Atlanta. ISS and SA have since been acquired themselves by IBM and Cisco. Hopefully, they develop an appetite for acquiring local companies. In addition, companies such as Cox and Time Warner/Turner could be prime as well buying companies in the internet and media space. Once local acquisitions occur by local companies, local venture capital will return. Venture capitalists prefer investing in their backyard. They also know acquiring companies only buy in their own backyard (minimizing integration risk).

The most important thing we all can do in fostering start-up growth in Atlanta is plug in our local technology Fortune 500 companies into the start-up scene. In nurturing this most important relationship, we could find this to be the single most catalyzing event for Atlanta. It’ll take some time and education. After all, Silicon Valley was no Silicon Valley twenty years ago.

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