Ashish Bahl, Chairman & CEO of Acculynk, participates in a roundtable discussion on Bold Ventures Radio

Why does Georgia get less than one percent of the Venture Capital money available in the US? Why is Georgia considered a second-tier market by the funding machine?



These questions and more were discussed and debated at a technology roundtable that aired on a recent episode of Bold Ventures Radio. We invited Tino Mantella, executive director of TAG, Ashish Bahl, CEO of Acculynk, and Urvaksh Karkaria, tech reporter at the Atlanta Business Chronicle, to share their insights on the state of entrepreneurship in Georgia.



Below are edited excerpts of the perspectives that these gentlemen shared during that intriguing discussion. Click here to listen to the conversation in its entirety.



BVR: Ashish, from your perspective as a CEO, and this is your third company, what does funding look like today?



Ashish: I think the environment is doing interesting things. This type of environment provides a great weeding out process. Any company that comes out of the last 18 months standing on its feet is going to be a strong company that will stay in Atlanta, create good jobs, and get higher-levels of investments.



The Atlanta venture pool is relatively dead in the local market, and strategic partners, which are companies that have an inherent interest in the technology that an entrepreneur is creating, that were once strong players have been distracted trying to get through the restructuring of their companies and the economy. The strategic partners typically have been a good source for early funding, and that's not the case anymore. With the VCs not participating and the strategics evaporating, that reality creates natural challenges for entrepreneurs.



Two solutions exist: Get the crowd from New York, Boston and the West Coast to be more active in Georgia, but they aren't that interested in early-stage companies here because many companies haven't been mentored enough to play in a big market. An investment from those geographies in early-stage companies is the exception not the rule in Atlanta.



The second solution for early-stage companies are High-Net-Worth individuals who have stayed in Atlanta.



Ironically, private equity deals in markets that the high-net-worth individual knows, and that may be the technology version of the high-net-worth individual's bricks & mortar business, they tend to be willing to write an entrepreneur a $200,000 check to get started. For example, if you're an automobile dealer and your sales are off and you want to do something that is tangential but doesn't require capital structure to your business, you may be interested in writing a $200,000 to get a technology going that will help your industry. And that scenario is happening in Atlanta. There's traction here. It's important, though, that the entrepreneur have some skin in the game and that the technology have vertical focus for this to work.



If an entrepreneur can do an angel round with someone with experience in the bricks & mortar version of the displacing technology that may work. And then do the venture round later.



BVR: What do you think it's going to take to get out of this funding rut?



Tino: It will take time. we do primary research, and it shows that VCs in other parts of the country will invest in other places. In Massachusetts, for example, VCs indicated that they invest more outside Massachusetts than inside. Our research shows that VCs would be open to investing in Georgia, if they knew more about it. So we have to raise the awareness of the Atlanta entrepreneur community.



Memorable Quote: "91% venture-backed companies in GA are backed by companies out of town. Not local money." Urvaksh Karkaria, technology reporter Atlanta Business Chronicle



Ashish: One of the solutions is that there needs to be an early-stage infrastructure that is trusted by Boston, New York and the West Coast, so that they can then come in later with the big VC money. Last year an informal group I belong to collectively put out $10 million in early-stage investment. We would vet the idea and if we liked it, we'd jump in. Not only can we offer the funding, but we can offer the shepherding to the management team and be a liaison with the big VCs who know us and there is a credibility there.



BVR: What can be done through legislation to support entrepreneurship in Georgia?



Ashish: What we've seen done elsewhere, in other cities, is that there are state-owned pension funds that can be invested in alternative investments. Currently in Georgia, zero percent of money is being invested by pension funds into entrepreneurial companies. A forward-looking legislative reform would have this at the top of its list for job creation..



This roundtable discussion was fascinating and delved into the history of funding in the Atlanta market. To hear more of the interview, please click here.

Clark Gilder, Atlanta Technology Angel, talks to Bold Ventures Radio

Clark Gilder, CEO of Global Standard Financial, Inc. and investor at Atlanta Technology Angels, recently shared insight on Bold Ventures Radio about the Atlanta business market from a funding standpoint, what Atlanta's greatest small business challenges are, how Atlanta differs from places like Silicone Valley and what angel investors are looking for when considering funding businesses in Atlanta.

Not only did I find his insight helpful but it also was very eye-opening about the potential we have in Atlanta. Read on for more details.

BVR: Where does the Atlanta market stand from a funding/technology/entrepreneurial perspective?

CG: Atlanta has a great pool of tech talent because of all the education we have in the area...GA Tech, Emory, Georgia State and even the University of Georgia nearby. In addition, we have groups like TAG and ATDC who really are helping guide technology development in the city. The missing ingredient is the capital. Some investors still are hesitant about entering the Atlanta market, particularly in funding seed capital for the small business start-ups.

Entrepreneurs in Atlanta have great ideas but still need help getting to market. One key way to get to market quicker is to "fail fast" - test your idea, figure out and correct your problem before approaching investors for major funding. Companies like Sixthman used their earlier failures to their competitive advantage and now are blowing the competition out of the water, so to speak. (See later blog about CEO Andy Levine's interview about Sixthman.)

BVR: What are the biggest challenges for the Atlanta start-up market?

CG: According to Clark, one of the biggest problems Atlanta's technology entrepreneurs and businesses face is traffic (he noted with a small laugh). Often businesses are located in one area, but the talent may live or study in another part of town. It's difficult to convince the best of the best to move. One way around this (and you'd be very successful if you figured it out) is to create networking hubs around the city where people within a certain industry can live and work.

Another major challenge is lack of support from our legislators. Atlanta is totally behind the tax-favorable curve for small businesses and start-ups. Currently there are no tax credits for early-stage risk capital, nor are there tax incentives for outside VCs to bring money into Atlanta. Write to your state legislator or to the governor to ignite this needed change and to get Atlanta up to speed with other flourishing markets.

BVR: What are other differences, besides the legislative challenge, between Atlanta and technology-based markets like Silicone Valley?

CG: "Risk-taking is desired and revered in SV, Clark said," but that climate doesn't necessarily exist in Atlanta. We have a tremendous foundation here, but we have to learn it's ok to try and fail, as long as we learn from our mistakes and try again...making it worth it. That's how innovation occurs.

On the plus side, Atlanta has a much-more diversified economy than SV, so there's not as much boom and bust. Again, this should foster a culture of trying and innovating. Entrepreneurs need to take advantage of the biotech, medical, music, movie and media industries that are thriving here. Apply technology to these markets and watch the sparks fly.

BVR: What are angel investors, like those at Atlanta Technology Angels, looking for when considering investing?

CG: People are the most crucial element to any business. Investors want to see a company has a quality team in place, or at least the realistic ability to put it in place, in order to create and produce the best product.

Investors also obviously are looking at the product itself. They want to know the market exists for that product and how long it will take for the product to bring in money. Angels and other investors want to know what the burn curve is and to see a business plan and a proven idea through market research. ATA, in particular, is looking for the whole life cycle of the business. What's the goal - to build a lifetime business or a wealth building business? If the latter, Clark says they want to know what the exit strategy is, who the target aquirer might be, and what the end result is.

The best way to do all this research, to build this wealth of knowledge, is through other people. That's what TAG, ATDC and other business organizations are for. Learn from others' mistakes. Use their knowledge. Try! Try! Try! After all, isn't that what being an entrepreneur is all about?