Why You Should Start a Company in ... Atlanta

Not too long ago, about fifty years, Atlanta was the size of Little Rock, Ark. About a hundred years before that, it was burned to the ground. Atlanta has proven it can grow (adding 1.1 million residents in the last decade alone). Now, it’s building toward a sort of tech hub in the southeast, against a backdrop that includes the busiest international airport in the world; a healthy cluster of corporate giants in Coca-Cola, UPS, Delta and The Home Depot, among others; and a spur of entrepreneurial activity that put Atlanta in the top ten on this year’s Kauffman Entrepreneurial Index, which tracks new business creation.

But in a place where half the population isn’t from there, identity is a work-in-progress—the New York Times called Atlanta "corporate stronghold, a Southern belle and a hip-hop capital"—all at once. Add to that: home to Internet security expertise and a key drug in HIV treatment. Alan Taetle, general partner at venture capital firm Noro-Moseley Partners, spoke with Fast Company about what makes Atlanta’s startup scene unique.

What makes Atlanta great for startups?

Any startup community needs three great things. It needs leadership. It needs world class universities where intellectual property is being developed, and then it needs a ready and able workforce. Atlanta has all three of those things. On the university side we have Georgia Tech and Emory to being with. Georgia Tech has a broad platform of technologies that they deliver and Emory has great life science capabilities. Then on the leadership side, we have a lot of leaders in Atlanta that stem back from a software company in the 1980's called MSA. For example, Tom Noonan, who was the CEO of Internet Security Systems, was a sales person at MSA. And the CEO of one of my portfolio companies, Vocalocity, was also at MSA. So we have the roots of having some old software companies and having some leadership from those software companies continue to lead current investments as well. Then on the work force, Atlanta has a plethora of 25- to 34-year-olds. It's considered one of the best places to live for that age bracket. So we have a young, well-educated, plentiful workforce to pick from. Then, finally, we have one of the best airports in the world. So as all of these companies become global much earlier, you can get from Atlanta to India, China, anywhere around the world much more easily than you can from many other cities.

What types of startups do well in Atlanta?

We're really good at enterprise software from a long standing background. But in terms of startups we have strong expertise in internet security. From Internet Security Systems, which was acquired from IBM, there's been at least 15 companies that have been spawned from Internet Security Systems. And Georgia Tech has an internet security center that's one of the world leaders in internet security research as well. Atlanta is also a great place to start a payment processing or financial technology company. First Data, Global Payments, we have a long legacy link systems of having true payment processing expertise, and banking software expertise. Then finally UPS, so we have a lot of logistics capabilities as well. So on the IT side those are the three areas. On the life science side we have a strong history in the bio tech space. For example, at Emory one of the main drugs in the HIV cocktail was actually developed at Emory.

Does Atlanta breed or attracts entrepreneurs?

People who come to school at Georgia Tech will stay and start companies. Or people will come to get their PhD at Georgia Tech or Emory and stay and start companies. But if you look at it, not many people grew up here. I'll give you an example. Let's just say Cardlytics which is a company that just raised $18 million, we don't have an investment in it, so I don't have a biased, but these two entrepreneurs came from Cap One in the Midwest, and they just picked a city on the east coast they thought was the best place to start a company, and they picked Atlanta because of the ease of transportation and because of the payment processing expertise. That's sort of a classic Atlanta situation, if you will.

Add the cost of living in Atlanta, what you can buy in terms of a house or a lot, or the quality of life in terms of how long it takes you to commute to work in general is fantastic in Atlanta. Then the ease of getting places, if you have any sort of company that has a software development arm in India, China, or Atlanta it's a great hopping off point compared to other markets. When you can get to Tel Aviv, and Mumbai, and Beijing, so easily compared to other markets, our airport is truly a competitive differentiator for the city.

What's happening in the ecosystem that makes it sustainable?

We have one of the oldest business incubators in the country, and one of the most successful at Georgia Tech. It's funded by the state of Georgia a well. It's called the Advanced Technology Development Center, and I think you actually came to me through Lance Weatherby who is a venture catalyst there who does a terrific job. You know, ATDC is an institution that just knows how to cultivate and build companies. It's broadened it's reach. It used to be that the incubator would only take on companies that were physically housed in the Georgia Tech buildings. But now they have a much broader outreach program for startup companies and they provide resources for startup companies. So that by itself is a great enduring business creator that the city has. We also, in this world of cloud computing, Atlanta is one of the best locations to have data centers. From a real estate connectivity percent perspective, the cloud will do nothing but benefit Atlanta. I think we are going to continue to attract data centers.

What kind of exits do you anticipate out of Atlanta?

There are some really promising companies that I see that can have a billion dollars worth of value. I'll give you three that come to mind. Suniva, they are making a next-generation chip for solar panel. They've gotten a ton of funding from some world class investors, including NEA. The professor who designed the technology is out of Georgia Tech. They've already built two production plants, so they are doing extremely well. Secure Works, an internet security company where my firm is an investor. It's the largest pure-play stand alone player left in the internet security space. It's a major security service provider. Then I look at Sharecare as a new company that is started by Jeff Arnold who started Web M.D. and How Stuff Works. Sharecare is a next-generation Web M.D. I would never bet against Jeff. Those three by itself, I think all of them are billion dollar opportunities.

 

For more from this series:

  • Why you Should Start a Company in...Austin
  • Why you Should Start a Company in...New York
  • Why you Should Start a Company in...Los Angeles
  • Why you Should Start a Company in...Chicago
  • Why you Should Start a Company in...Boston

Laura Rich is a freelance writer and co-founder of Recessionwire.

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