Morris Manning & Martin, LLP

Why Silicon Valley Loves Atlanta

02.05.2016

By: John Yates and David Calhoun

Originally appeared in the Atlanta Business Chronicle on February 5, 2016.

Re-published with permission.

We just returned from a whirlwind tour of Silicon Valley and San Francisco meeting with venture capital and private equity firms — with aggregate capital to invest in excess of $10 billion. There’s good news for us from the West Coast — “Silicon Atlanta” is a prime destination for Valley investors in 2016.

In our decades of travel to the West Coast, this trip was the most successful and optimistic for Atlanta’s tech community. After meetings with 30 investors and entrepreneurs — including former Georgians who moved to the Valley — there were several common themes around why Valley investors love Atlanta.

1. Atlanta’s top talent— “It’s all about talent.” That’s a refrain echoed by investors in every meeting. Atlanta is seen as a haven for highly qualified and reasonably-priced talent in engineering, sales and marketing, and customer service. Several venture capitalists shared stories of outrageous salaries being paid in the Valley, and fierce competition for talent from industry giants like GoogleFacebook and Apple. Atlanta talent is considered a bargain.

2. Lower cost of doing business— As one investor remarked, “Atlanta …provides a unique opportunity for our portfolio businesses to scale faster with lower operating costs.” He shared the fact that leasing office space in the Valley at $110 per square foot (along with high occupancy rates) was strangling many California startups. We pitched Atlanta as a more hospitable environment with lower costs, office space availability and outstanding incubators and accelerators nurturing our startup community.

3. Customers are king— The Valley’s ecosystem is fine-tuned to connect companies with capital. It has more VCs per square mile than any location on the globe. On the downside, many investors bemoaned the absence of large companies to serve as early customers. By contrast, Atlanta’s significant Fortune 100 presence is viewed positively for our community. Startups need customers, and Atlanta has a pool of large companies seeking innovative solutions.

horizon; navigating through regulatory obstacles; providing access to complementary parties, such as investment banks or accounting firms; and remaining vigilant in our pursuit of cost-effective, quality counsel.

4. Silicon Valley/Atlanta connections— There is a new avenue to find great connections to the Valley: former Atlantans now in California seeking their fortune. A number of Atlanta entrepreneurs have moved to the West Coast to work for early-stage companies or investment funds. Several of these pioneers expressed a keen interest in helping Atlantans find points of entry into the Valley’s ecosystem. And former Atlantans are now affiliated with funds seeking investments in our city.

5. Bootstrapped businesses— Atlanta’s attractiveness is also based on tech companies that have grown organically as opposed to raising institutional financing. These so-called “bootstrapped” companies are particularly interesting to Valley funds wanting to make large investments in businesses without being burdened by existing investor shareholders. Our community’s growing bootstrapped businesses have gained the attention of Valley investment firms.

6. Showcasing Atlanta’s strengths— At every meeting, investors had the same advice: Atlanta should loudly broadcast its strengths to the Valley. Often, investors were surprised to learn of our prominence in attracting Fortune 100 headquarters, recent tech financings and sales at high valuations, and the state’s new crowdfunding regulation to permit early stage investing. Other states — most notably Oregon, Texas and Utah — were mentioned as worthy competitors for Valley investors’ attention. Atlanta’s prominent role as the capital of the South gives us a unique competitive advantage over our rivals, and we were encouraged to spread the word.

All signs indicate Atlanta should be the destination point for Valley investors — and SFO to ATL flights should increase as Atlanta’s star continues to rise on the West Coast.