A report released by the Boston Consulting Group on Jan. 23, 2024, disclosed staggering figures that position Atlanta as a city trailing behind its peers in metrics related to entrepreneurship, innovation, and VC funding.
Based on more than 50 interviews with stakeholders across the region, the document includes case studies from multiple comparable cities such as New York City, NY, and Austin, TX, according to The Atlanta Journal-Constitution.
The study revealed that in addition to an over 40% drop in VC funding from 2021-2022, the city saw a significant decrease in the number of companies founded. The final tally for the number of startups in 2022 came in at 158 —approximately a 64% decrease from its 2017 high of 444.
Additionally, between 2018 and 2022 Atlanta was only able to provide enough tech jobs to employ around 20% of its 13,000 graduates who majored in tech fields. The lack of job opportunities in the city has led many graduates to search for employment in cities such as New York; Austin; and San Francisco, CA, the report suggested.
Referencing the “flywheel effect,” a vitally important indicator of a city’s ability to grow and sustain businesses, the report proposed that epicenters of entrepreneurship such as New York or San Francisco have well-established avenues for tech and entrepreneurial growth.
Meaning, according to the report, these locations provide additional funding to support more startups, thus creating jobs that draw talented professionals from all over the country. In turn, those talented professionals often become entrepreneurs who seek funding from existing sources or local, successful business owners.
For Atlanta to start a “flywheel” and become a self-sustaining, competitive tech ecosystem, it will need to invest more in startups. Per the report, “Achieving a top 5 spot requires roughly 2,000 startups to be launched annually.”
The authors of the study acknowledge that this is an ambitious goal, but a necessary one if Atlanta hopes to keep up with other cities.
“Closing the gaps in Atlanta’s innovation ecosystem requires a body or institution capable of coordinating a broad range of stakeholders across Atlanta, acting as a center of gravity for rapid entrepreneurship growth while protecting and strengthening the cultural identity of Atlanta,” the authors stated.
Atlanta is on par with its peers in several areas, including the number of incubators and accelerators, formal mentorship programs, and startup-focused events, according to the research presented in the report.
However, attendance and participation in these programs and events are not always guaranteed.
The report noted that “despite hosting a startup-related event roughly every two weeks during the year, attendance at Atlanta’s largest events is well below those in peer cities.”
The report also pointed out that VC funds and incubators are spread out and not connected within the region.
Mayor Andre Dickens, who established the city’s first Office of Technology and Innovation last year, says that there is work to be done.
“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. The venture capital is where we’re lagging,” he told The Atlanta Journal-Constitution.
Based on the report, it is clear that if the city wants to maximize its diversity, keep its core pool of rising tech entrepreneurs, and convince non-residents to call it “home” then it has to prioritize the growth of the businesses within its community.
