That underrepresentation means that not only are startups from the region missing out on the visibility and connections to capital, but those who live in the tech hubs are also not exposed to the fact that the South and other regions do indeed have innovative, investable companies.
One way to change that is to flip the script — bring the investors here. The model has been popularized by AOL founder Steve Case and his venture firm Revolution’s Rise of the Rest bus tour across the country, and is being replicated in similar fashion by other groups.
The latest group, the Comeback Cities tour organized by a group of politicians and sponsored by Bloomberg Beta, brought over a dozen venture capitalists through the South on a rapid-fire three-day tour.
This is actually the second region the Comeback Cities tour has visited. In February, they spent time in the Midwest, hitting two cities in Ohio, two in Michigan and one in Indiana.
Along with learnings, that tour resulted in a very concrete deliverable: a $2.25 million fund focused on startups in the Midwest, dubbed the Comeback Capital Fund. Bloomberg Beta, the venture capital arm of the business giant, is an LP in the fund, along with over 30 Midwestern and coastal investors.
The leader of Comeback Capital, VC Scott Shane, joined the southern tour, along with partners from Bloomberg Beta, Combine VC, First Round Capital, Google Ventures, Hustle Fund and more. They started in Charlotte, NC, moved on to Columbia, SC, and wrapped up in Atlanta.
“It’s really easy to generalize about places you’ve spent almost no time. But really, the tour makes you realize… every place is a snowflake,” Bloomberg Beta’s Roy Bahat told Hypepotamus. While in Atlanta, the group was hosted by Invest Atlanta and spoke to representatives from incubators such as the Advanced Technology Development Center (ATDC) and digitalundivided, local firms and funds including TechSquare Labs and Engage, and leaders of the HBCU consortium at the AUC.
“As entrepreneur Paul Judge told our guests, Atlanta’s startup strength comes from our city’s ‘three c’s’: our companies, colleges, and culture,” says Noelle London, Invest Atlanta’s Assistant Director of Innovation and Entrepreneurship. “With half of our investor delegates visiting Atlanta for the first time, this two-day program was invaluable in terms of giving them a first-hand look at the people and assets that make Atlanta a top-tier startup city.”
During the last leg of their tour, as they toured Atlanta Tech Village and headed to the airport on a chartered bus to make their flights back to New York or California, the group shared some of their initial thoughts.
On initial perceptions
The group agreed that each of the cities they visited was very clearly in a different stage of growth when it comes to their startup and tech ecosystem.
”Charlotte seemed like a fairly robust community… they’re beginning to see a connection between angels there,” says Rob Hayes of First Round Capital. In Columbia, he noticed a “disconnect” between corporate and investor support and very early-stage companies, but says he was impressed by the educational institutions.
The whole group agreed that Atlanta, the largest city of the three, showcased a highly-connected startup ecosystem.
“The thing that struck me about Atlanta is the coordination and quality of execution between the stakeholders here — educators, the public organizations, private, even the government,” Hayes says. “Silicon Valley has been around for so long that it grew up before government had to get involved. I’ve never seen before what I’ve seen in Atlanta.”
“Silicon Valley has its own way of collaborating, where you kind of self-select your own circles. And that’s probably because there’s so much there, but what I’m observing here is there is scale but everyone, all the way from incubators to large corporations… are working together,” echoes Nitin Pachisia of Unshackled Ventures.
Adam Michela of Combine says that he could see how startups could not only get off the ground in Atlanta, but “actually stay there.”
Pachisia also says that he was surprised about the lack of attention Atlanta garners from national press or investors.
“I think if you compare all the cities we went to, and that includes Detroit and Chicago, it’s amazing that this area doesn’t get talked about as much,” he tells Hypepotamus.
On connecting with diverse talent — and diverse companies
One stated intention of the southeast tour was to explore cities that have high percentages of people of color represented in their entrepreneurial ecosystem. In Atlanta, they met with representatives from digitalundivided, an incubator for black and Latinx women, as well as educators in the AUC HBCU (historically black college and university) system.
Along with learning more about the HBCU system, many of the investors noted the diversity in the industries and pain points that startups in the Southeast are tackling. Unlike Silicon Valley and New York, the majority of startups they met with were B2B, and often based on what Shauntel Garvey of Reach Capital describes as “coming out of lived experiences.”
Lan Xuezhao of Basis Set Ventures agrees. “The companies here are solving problems that aren’t obvious, but they really are huge problems. And they’re all problems that are close to them, close to their customers.”
Shane explains that this is something they have noticed on both tours. “There’s a theme that underlies all of this, which is that each of these places has these strengths in certain areas.”
On next steps
Though the group had not yet developed any concrete plans — and probably deserved a good night’s sleep — at the end of the tour, all of them, at a minimum, will bring their observations and insights back to the venture capital hubs.
“I think the next six months will have to tell what tangible results will come out of this, but those learnings, those will stick,” shares Pachisia.
London expresses positive thoughts about future partnerships. “We look forward to working with many of [the investors] in the future as we continue to make Atlanta a supportive place to build a world-class startup,” she says.
And many did express interest in furthering their investment activities in the region. While some of the firms represented do have portfolio companies in these cities, others have none.
“Being on this tour made me more comfortable about investing here,” says Lan.
Michela went one step further: “For me personally, I’ll be investing here. I’m going to find a way to get back here” he says.
Featured photo provided by Invest Atlanta