My guest blog in The SaportaReport about the importance of VC funding in Atlanta & Georgia:
For Job Growth, A Thriving Startup Community is Essential
Posted on November 3, 2014 by admin
By Blake Patton Managing Partner, Tech Square Ventures
Entrepreneurs building technology startups need more than an idea and a great team. Unless you have deep pockets or wealthy relatives, chances are you will require outside investment to turn your passion into a high-growth success.
That’s where venture capital comes in. VC firms are professional managers of risk capital that fund new innovations by investing in promising early-stage companies. These companies aren’t at the stage where it’s possible to secure traditional bank loans or raise money in the public markets.
Compared to other technology hotbeds like California, Massachusetts, New York and Texas, access to capital is a critical challenge for Georgia’s tech entrepreneurs. The state’s share of national venture capital investments in 2013 was only one percent, while the entire Southeast saw just three percent of those dollars. Georgia also trails Virginia and North Carolina in seed and early stage investments.
The lack of capital is not just a problem for entrepreneurs. It affects all Georgians because when it comes to job growth, startups are everything. A recent study by the Kauffman Foundation highlighted the fact that since 1977, most net new jobs in the United States are created by startups. Improving access to capital is critical for keeping our best and brightest entrepreneurs from leaving the state to find the financing they need.
The funding shortage in Georgia is a big opportunity for early-stage venture capital and angel investors. The current level of investment in the state does not match the level of entrepreneurial activity and innovation coming out of our startups and research universities. For local investors, finding deal flow is easier and less competitive here than in other parts of the country. This is why I started Tech Square Ventures, a seed and early-stage fund investing in technology startups. We’re putting our money to work right here in Atlanta and across the Southeast.
Investors outside the region are beginning to take notice, as well. Atlanta startups Ionic Security and Pindrop Security both recently raised money from iconic Silicon Valley venture capital firms Kleiner Perkins Caufield & Byers, Google Ventures and Andreessen Horowitz.
And last week, Atlanta tech startup hopefuls got their chance.
On Oct. 21-22, a full house of local entrepreneurs gathered at the Georgia Aquarium to “swim with the sharks” at Venture Atlanta, the premier technology conference in the Southeast that connects entrepreneurs with the capital they need to grow their business. At the event, 33 local and regional startups presented to more than 125 investors from across the country in hopes of attracting the funding they need to propel them to success.
Atlanta has all the key ingredients for a thriving technology startup ecosystem: talented innovators, world-class research universities and a history of startup success. We have a strong base of FORTUNE 1000 companies here, which makes it a great place for entrepreneurs to find early customers and connect with industry executives for networking and mentoring. But, it also takes capital to fuel that ecosystem, and Venture Atlanta is doing its part.
When local startups succeed, we all win.