Months before his business intelligence AI product launched, Pryon founder Igor Jablokov was meeting with top-level decision-makers at some of the largest enterprises in the world. He solicited feedback for how his platform could help businesses across industries — logistics, finance, transportation, retail and more.
Those conversations were made possible through one of Pryon’s investors, the Raleigh-based founder told Hypepotamus in an interview after bringing his startup out of stealth. That was Atlanta’s Engage, a corporate-backed venture fund and innovation platform.
The $18 million fund is managed by Tech Square Ventures and backed by 11 major corporations— names such as Delta, Invesco, Cox Enterprises, The Home Depot, and UPS among them — as well as the state of Georgia through its Invest Georgia fund of funds.
“To be able to go and work on product-market fit, not just with one major company, but all 11 [in the Engage program], in a very time- and space-efficient process, I can’t even describe how valuable that was,” Jablakov shares, hinting at several pilots that were signed based off of Engage-facilitated connections.
That’s the point, says Daley Ervin, who came on this year as Engage Co-Managing Director to focus on connecting the corporate partners with the startup ecosystem.
“Beyond the investment, Engage’s corporate partners give our startups “an unfair advantage”, not only in terms of signing contracts, but also lending their industry expertise and networks to really help founders grow their companies,” says Ervin.
The fund launched in 2017 and brought in its first group of portfolio companies, which are structured in cohorts, that fall.
The real deal flow: signing contracts
While Jablakov keeps his pilot partners close to his chest, other Engage startups are not so tight-lipped.
Jonathan Allen, CEO of customers insights company Gauge Insights and an Engage cohort 1 company, cites several clients that have come about as a result of the program — Delta, Cox Enterprises, AT&T and Georgia Pacific. Those are major names for a startup that has raised half a million dollars.
Bee Downtown, a corporate beekeeping-as-a-service company, has sprinkled their colorfully-painted beehives across Atlanta’s corporate campuses, landing Chick-Fil-A, Cox, Delta, Home Depot, and more as clients.
Meanwhile, The Mom Project, a digital talent marketplace for women, launched its first Women’s Work Initiative in Atlanta with the help of partners Georgia-Pacific, AT&T and Invesco. Several additional Engage backers use the startup’s portal to post jobs and fill open roles.
In total, Engage companies have signed over 45 paid contracts with enterprise partners in the last year and a half.
Engage Co-Managing Director Thiago Olson says this is one of the biggest factors his team considers when evaluating companies — if the startup can benefit from building relationships with the enterprise partners, and vice versa.
Olson also shares that the average stage of Engage companies have matured with each cohort. Many of the companies the fund brings in now already have long client rosters and solid revenue figures.
The new cohort, for example, has an average run rate 2.5 times higher than the average of the first, with four times the amount of prior funding.
There have been several large capital raises post-Engage, as well. Just this week, 3D printing startup Fast Radius took in a $48 million Series B led by UPS. Corporate benefits platform Peerfit closed an $18 million Series C in March; two weeks earlier, freight media and data company FreightWaves saw notable strategic investors like Hearst and warehouse provider Prologis join its $21 million Series B.
In total, Engage portfolio companies have raised over $250 million since joining the portfolio (this figure doesn’t count the latest cohort).
Engage has joined in on roughly a dozen of these later rounds, continuing to support the portfolio long after the formal program ends.
Tracking economic growth
After its Series A, FreightWaves CEO Craig Fuller announced his intention to invest almost $4 million in a new headquarters and expansion in their hometown of Chattanooga. That adds up to about 260 new jobs, he says.
If Engage’s mission is to foster new company growth, job creation occurs in tandem. Its portfolio companies have filled 160 new jobs in the last two years alone, with the potential for growth far beyond that.
Based on Engage’s portfolio, this growth will be largely consolidated in the southeast. Over one-third of the startups are headquartered in Atlanta, over three-quarters in the southeast.
Connections developed during the program have also kept founders coming back. Seven companies not originally based in Atlanta have established a local office.
Take Maggie Louie, CEO of cybersecurity startup DEV/CON. She founded the company in Memphis, but has since moved herself and grown much of her team in Atlanta, the startup’s now-headquarters.
The Mom Project, Homee and others have built second offices and hired employees in Atlanta.
Engage provides a different model — not quite traditional VC, not corporate venture arm, not accelerator or incubator. And creating your own mold requires continuous development and re-invention.
While Engage will retain its cohort investment model, it is also developing specific programming for its corporate backers. At the end of 2018, Ervin hosted the first Engage Expert Council, where key leaders from partner companies shared insights and best practices on a specific topic — in this case, cybersecurity.
These Expert Councils will be created across a range of disciplines, says Ervin.
They’re also helping the companies bring startup thinking to other groups of employees. Engage hosted a Startup Bootcamp for UPS employees engaged in the company’s internal innovation program, Upstarts.
With David Lee, VP of Innovation & Head of UPS Ventures, and Georgia Tech’s ATDC, the Engage team taught the corporate employees startup concepts like customer discovery, idea validation, design thinking, and minimum viable product testing.
It’s about providing value to all stakeholders — startup, corporate, academic, and community — says Ervin.
The latest startup cohort has already dug into the work of Engage, meeting with corporates and the Engage team to build those valuable connections. Olson is enthusiastic about the group’s potential.
The Spring 2019 Engage Cohort:
ENGAGE Talent (Charleston, SC): AI software helping to identify, evaluate, and engage with passive candidates while leveraging data to retain key talent
GreenPrint (Atlanta, GA): Sustainability as a service for companies focused on offsetting CO2emissions and creating a net-positive impact on the environment
Verusen (Atlanta, GA): Artificial intelligence to harmonize materials data and predict inventory in manufacturing supply chains
Vital Vio (Troy, NY): Safe, bacteria-killing advanced LED white light technology that continuously kills and protects against germs
Sapient (Philadelphia, PA): Energy management system that allows buildings to quickly deploy smart outlets, enhanced by machine learning, to optimize energy consumption at the plug level
Stratifyd (Charlotte, NC): Customer analytics platform that captures all customer interactions and turns them into actionable business intelligence
TCPoly (Atlanta, GA): Advanced thermally conductive plastics to enable cost-effective, high-volume additive manufacturing of functional parts