Atlanta region cementing reputation as tech hub

OneTrust also landed in August at No. 1 in the Inc. 5000 list of fastest-growing private companies in the U.S. in 2020, with a revenue growth over three years of 48,377%. The four-year-old company was started by Kabir Barday, who graduated from Georgia Tech in 2009 with plans to buy a pizza franchise. OneTrust has an estimated valuation of $2.7 billion.

The metro area still trails tech behemoths such as Silicon Valley, Boston and New York. Gwinnett County high school graduate Joe Gebbia Jr. co-founded home rental giant Airbnb — after he moved to San Francisco. Airbnb debuts Thursday on Nasdaq and is expected to be worth tens of billions of dollars.

Atlanta also has a few hurdles to continue moving up in the hypercompetitive world of tech hubs, such as improving public schools. Meanwhile, would-be Southeastern contenders such as Nashville and Charlotte are rising fast behind it.

But the metro area has a deep base of top universities such as the engineering school Georgia Tech, along with 23 Fortune 500 companies, which are always investing in the next big thing. The city has grown a solid collection of business incubators, has easy international connections via the airport, and competitive costs of living.

And it is leading all other tech hubs in diversity, thanks to the Atlanta University Center and the city’s substantial Black middle class as tech companies and nonprofits try to promote inclusivity, experts say.

Alan Dabbiere started or helped start three Atlanta tech companies that reached valuations of more than a billion dollars — unicorns in entrepreneur-speak — and believes the city is on the cusp of more success.

“I think Atlanta is getting to critical mass now that we are seeing more people spin out as entrepreneurs,” said Dabbiere, who hired Barday at one of his startups before Barday founded OneTrust.

Dabbiere said Atlanta created its momentum by growing an ecosystem of tech entrepreneurs and investors rather than looking to outside help. And the local companies that found success, like his, or others such as MailChimp and Kabbage, left tech-savvy founders with money to invest in new companies.

For instance, he brought the logistics company he cofounded, Manhattan Associates, to Atlanta from Los Angeles in 1995, grew it and took it public. While running the company, he hired John Marshall, and the two went on to co-found AirWatch, a mobile security firm, which became Dabbierre’s unicorn No. 2. At AirWatch, the men hired Barday. Dabbiere is now the co-chair of OneTrust.

Atlanta’s successes have also attracted big players such as Microsoft. It is expanding its data center in south Fulton county, and a group affiliated with Microsoft purchased 70 acres in Atlanta this summer, according to people familiar with the matter. Microsoft has been silent on plans for the Westside property.

More than $7.1 billion has been invested in tech startups locally since 2015, according to research by BIP Capital, an Atlanta-based venture investment firm. Only Florida ($9.7 billion) and North Carolina ($8 billion) had more investments among Southeastern states in that time. But those states’ investments were scattered among several locations, such as Charlotte and Raleigh-Durham in North Carolina. Georgia’s companies are concentrated in metro Atlanta.

The National Venture Capital Association’s 2019 data ranked Georgia 10th among states in the number of companies funded, 153.

Dave Cummings, who came here in 2002 to start automated marketing company Pardot, is an entrepreneur and investor. After selling Pardot in 2012, Cummings partnered with others to found the business incubator Atlanta Tech Village. It offers entrepreneurs space, training, mentorships and exposure. More than 300 companies have launched out of the hub, raising $826 million in investments, the company’s website says.

Cummings is plowing some of his own money into local companies like Greenzie, a startup that is building autonomous lawn mowers that he likens to “a Roomba for your back yard.“ It already has customers for athletic fields and is planning to move into highway rights-of-way and lawns.

“One of the best things on the horizon — exemplified by the Deloitte list — is the number of high quality, growth-stage startups,” Cummings said. “I think in the next two to three years we will have a number of exits (sales), which will generate large amounts of money. That will translate into more wealth in the community and more angel investors.”

Credit: Steve Schaefer

Credit: Steve Schaefer

Meanwhile, Southeastern competitors like Charlotte, Raleigh-Durham, Tampa Bay and Nashville are beginning to show the quick, consistent growth that Atlanta exhibited a decade ago.

CBRE, the real-estate services and investor consulting firm, recently released its annual Tech-30 report tracking the top tech hubs in the U.S. It scored Atlanta at No. 9 in the nation in tech talent, Raleigh-Durham at No. 10 and Charlotte at No. 28. Orlando came in at No. 29 and Tampa at No. 33.

Charlotte, Raleigh-Durham, Tampa and Nashville added larger percentages of millennials to their populations, a key demographic driver to startups, than Atlanta since 2015, CBRE’s data says.

Mark Buffington, the head of Atlanta’s BIP Capital investment firm, is a Georgia Tech graduate who pursued his business for 10 years in the San Francisco area before heading home in 2006 to become one of the city’s early drivers of startups.

He said there is room in Atlanta’s mature startup environment for more capital and that one area the metro region needs to improve is schools.

“When we try to bring in top-tier talent, it’s one of the big hurdles we run into. They say, ‘There is no way I would send my kids to public school there,’” he said.

Despite that, he ranks Atlanta already near the top nationally.

When he left California to start financing startups in Atlanta, his friends said, “What? You’re going to do venture funding where?”

“They are not laughing anymore,” Buffington said.