Why the Southeast Is a Great Place to Launch a Startup

When considering where to launch their startup, many entrepreneurs naturally think of the “Innovation Hubs” of Boston, the San Francisco Bay Area, and New York City. After all, that is where the deals are, right? Well, they’re not the only places where companies are being launched and receiving game-changing investments.

Each year, our firm publishes The State of Startups (SM) in the Southeast report which delivers a comprehensive overview of the venture capital and startup ecosystem in the southeastern United States. This year’s report once again shows the Southeast to be an attractive place to invest in startups relative to the more established and capital-intensive Innovation Hubs. Furthermore, our 2019 report reveals that the overall rate of maturation of the venture ecosystem in the Southeast is exceeding that of the Innovation Hubs, with more dollars than ever being invested in early and growth-stage southeastern companies.

While most large and established growth equity funds are already investing in the region, we’re also seeing more capital being deployed by Southeast-based investors. In 2018, 25 percent of the top five most
active VCs in each of the nine southeastern states the report examined were from the Innovation Hubs. In this year’s report, that number has fallen to 18 percent. Local funds are getting larger and, therefore, have a bigger market presence in the region. Regardless, if your company is successful, venture capital abounds. In fact, the aggregate revenue multiple for deals done in the Southeast since 2014 has grown 40 percent over the same analysis done last year.

But access to funding isn’t the only reason why the Southeast is a great place to start a business:

Ready Talent Pool. No matter how innovative your product or service
is, companies must attract and retain top talent to be successful. Strong
university systems that can provide the human resources your startup needs are located throughout the Southeast, from the University of North Carolina and Vanderbilt University to the University of South Carolina, Georgia Tech, the University of Georgia and many, many more.

Lower Cost of Living. The Southeast offers a lower cost of
living, especially when compared with large cities in the
northeast and California. This is true not only as it relates to housing,
goods, and taxes, but also for the cost of doing business as well. The
Southeast tends to offer greater affordability in terms of commercial real
estate leasing and the cost of acquiring talent, for instance.

Easy Access to Anywhere. Located in Atlanta, Hartsfield-Jackson
International Airport is a global gateway offering nonstop service to more than 150 domestic and 70 international destinations, including major commercial centers in Europe, Asia, and South and Central America. Even if your business isn’t located in Atlanta, you can still drive there from many other southeastern cities in just a few hours to catch a direct business flight.

Vibrant Ecosystem. A lot of things are required for fostering new businesses, including factors we’ve already discussed like access to talent and the availability of capital. Research universities, such as those in the Research Triangle, technology incubators, and accelerators are also important contributors to a vibrant startup ecosystem. The Atlanta Technology Development Center at Georgia Tech is a good example of the latter, although robust ones exist in most all of the nine southeastern states our report examined.  

Other contributing factors include startup-friendly civic and state governments which often provide free marketing assistance, help
entrepreneurs make connections, and offer tax breaks. These things are harder to get in the more established Innovation Hubs where there are so many businesses being built.

You’ll Be in Good Company. Lots of Fortune 500 corporations were “born and raised” in the Southeast—think The Home Depot, Delta Airlines, The Coca-Cola Company, UPS, FedEx, and more. The region also has its share of “unicorns,” which are privately-owned companies that have reached a valuation of $1 billion or greater, including such names as Epic Games, JetSmarter, Magic Leap, SmileDirectClub, and others.

It’s clear the Southeast is increasingly being recognized as a great environment for entrepreneurs in the early stages of building a business. The bottom line: Don’t overlook the region. Overall, 8,383 investments totaling $28 billion have been made in southeastern startups since
2014.

For more information on the region’s startup scene,especially as it relates to venture funding, read our 2019 The State of Startups(SM) in the Southeast report. The report is free and can be accessed here.

Statistics Source: BIP Capital. The State of Startups(SM) in the Southeast. October 2, 2019.

To listen to the on The State of Startups(SM) in the Southeast for 2019 with Mark Flickinger, visit: https://youtu.be/LlZghFoknc0

About the Author:

Mark Flickinger is COO of BIP Capital, a venture capital firm that
takes a partner approach with its investments by providing both operational and strategic direction to help promising early-stage businesses accelerate farther and faster. By providing financial, operational, and other resources, the firm equips its portfolio companies to achieve and stay on a glide path of growth.

Flickinger holds a bachelor’s degree from Princeton University,
and earned an MBA from the University of North Carolina’s Kenan-Flagler
Business School. Starting as an undergraduate, he spent a decade competing as a member of the U.S. National Rowing Team.

Flickinger has served on numerous boards at entrepreneurial
companies and also works in a key partner role at BIP Capital with a focus on post-investment talent acquisition and operational management. Connect with him on LinkedIn and follow him on Twitter @BIPCapital.