Southeast capital is good for the southeast

November 10, 2009

A study co-authored by Dan Breznitz, assistant professor at Georgia Tech, indicates that Atlanta leads the nation in infrastructure required for start-ups, but that those start-ups often leave once they achieve a certain critical mass.  Among the reasons cited for this phenomenon included raising capital from outside the southeast.  VCs provide critical connections to their portfolio companies – suppliers, customers, management talent, potential acquirors – and if those VCs are on the coasts it increases the odds that successful growth will end up moving the company to the coasts.

The Atlanta Business Chronicle reports that the Atlanta startup community is taking steps to build more ‘social bonds’ that would lead to more local financing:

Growing a serial entrepreneur community will help embed technology companies in Atlanta, said John Yates, tech-industry rainmaker and partner at Morris, Manning & Martin LLP.

“It’ll be the serial entrepreneurs who will be the angel investors in those early businesses, will be on the board of directors and will help bring venture funds to town,” Yates said. “They’re going to be the glue that’s going to keep those tech companies right here in town.”

…the study’s findings regarding a lack of social bonds is not new. And in the past year, the community has rallied to do something about it. Community boosters, for instance, have organized discussions between emerging technology companies and Fortune 500 firms to identify problems in search of a solution.

“The purpose is to give the big companies a chance to communicate to the smaller companies, ‘This is what we’re interested in,’ ” Blake said. “The goal is to create a demand-pull rather than a supply-push to the innovation process.”

Other local initiatives include StartupChicks, which fosters entrepreneurship among women, and Startup Riot, a pitch-fest that connects entrepreneurs with investors. Ignition Alley, a new co-working space in Atlanta, hopes to get entrepreneurs out of their bedroom offices and into a shared working space, where they can network and bounce ideas off each other.

The Breznitz study’s findings helped shape the reinvention of the Advanced Technology Development Center (ATDC). In its new avatar, the tech business incubator at Georgia Tech has moved from a “private club,” which helped incubate about 15 companies annually, to a more inclusive organization that works with more than 200 firms, said Fleming, who is also ATDC’s interim director.

“One of the things that we are trying to do with the ATDC reboot,” he said, “is to bring in more entrepreneurs [and] build more linkages between them.”

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