In the next three years, about 2,000 tech startups will have to be launched in Atlanta annually for the city to become one of the top five tech ecosystems in the nation as measured by venture capital funding, according to a new report conducted by the Boston Consulting Group.
The authors estimate this is the number of new startups necessary by 2027 to bring capital to the region, create thousands of jobs and scale the ecosystem into the upper echelon of tech hubs.
It’s an ambitious goal that the city is currently far from reaching. In 2022, Atlanta produced only 158 startups, according to the report, and the city currently ranks 12th in the United States in VC funding.
There also are concerns or misperceptions about the region’s livability that hold Atlanta back, the report said.
“If we create that right environment, then within Atlanta to us [it] seems quite reasonable that we should be producing [that] many startups net a year,” said Parmeet Grover, managing director and senior partner at BCG. He has been studying this issue for the past nine years and was one of the lead authors of the report.
The study is based on more than 50 interviews with stakeholders across the region, an analysis of multiple quality of life and business metrics and 11 case studies of different cities’ approaches to entrepreneurship and innovation.
Atlanta’s current tech scene is well-known for more under the radar technology like payments processing, marketing, cybersecurity and software that helps companies operate. The city is sometimes referred to as “Transaction Alley” because an estimated 70 percent of all global financial transactions go through companies headquartered in the region, according to the Georgia Department of Economic Development.
The city also counts Mailchimp and Calendly as two of its big homegrown startups. The former was acquired by Intuit in 2021 for $12 billion and the latter was most recently valued at $3 billion. Atlanta has also attracted major corporate offices from Google, Microsoft, Salesforce and other West Coast players that have expressed desires to tap into the diverse engineering and technology talent graduating from Georgia Tech, the city’s historically Black colleges and other area universities.
And metro Atlanta has a sizable corporate community with 17 Fortune 500 company headquarters. Big corporations often invest in and buy services and products from startups. As those smaller companies gain scale, those same big firms often acquire these emerging companies, providing an exit for founders and injecting capital that might be used again in the startup ecosystem.
Becoming a top five hub is a major goal of Mayor Andre Dickens, who established the city’s first Office of Technology and Innovation last year.
“Atlanta has a lot of tech jobs because we have a number of great companies here, but we want to increase the amount of investment,” Dickens told The Atlanta Journal-Constitution. “The venture capital is where we’re lagging.”
Some of the reasons Atlanta’s tech ecosystem isn’t in the top five is because of the broader perception of the city’s livability and the local universities not playing a large enough role in generating new startups, according to the report. Atlanta universities produce more the 13,000 tech graduates every year and Emory University and Georgia Tech have yearly research expenditures exceeding $2 billion a year, yet they lag behind peer institutions in the amount of that research that is translated to patents.
Additionally, the entrepreneur support system is too widespread and women and minority founders aren’t equitably represented. From 2019 to 2022, 94 percent of Series A funding in Atlanta (typically the first investment capital a company raises after seed and angel investing) went to white founders, though the region is only 43 percent white, the report found.
Grover and his colleagues believe addressing these gaps starts with what is initially being called the Startup Mill — a proposed public-private partnership of tech stakeholders that would have a physical presence and “would be the catalyst that brings the key stakeholders oriented in this common goal of becoming top five and doing everything it takes,” Grover said.
BCG will be an “integral part” of the Mill, which is still in the very early planning stages. Alongside the consulting group, the Georgia Tech Foundation and the City of Atlanta are some of the initial members, though more will be added.
Grover also hopes to establish an investment fund within the Startup Mill. Though discussions are still ongoing about the entity’s structure, Grover said the vision is to potentially raise $300 million for their first fund and BCG may be a limited partner.
BCG employs more than 1,000 people in the metro and a number of their clients are large Fortune 500 companies and governments. They conducted this research pro bono and are helping implement some of the recommendations to give back to the community where they work, according to Grover.
Notable tech employers in metro Atlanta
The Atlanta area is home to a number of high profile companies or major offices from global tech firms. Here is a sampling of some of those big names:
Amazon
Anthem
Calendly
Cisco
Equifax
Fiserv
Global Payments
Intercontinental Exchange
Kabbage
Mailchimp
Microsoft
NCR Atleos
NCR Voyix
Sage
Salesforce
Visa
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