Atlanta VC Firms Could Lead Startup Funding in a New Direction

Several local venture capital firms found narrowing their target scope led to broader investment opportunities.

Written by Ashley Bowden
Published on Jul. 28, 2022
Atlanta VC Firms Could Lead Startup Funding in a New Direction
Atlanta’s venture capital industry has grown in recent years. | Image: Shutterstock / Built In

While Atlanta has continued to attract a slew of large-scale corporations, the city’s tech community is primarily powered by its growing startup scene. Its collaborative culture has bred a plethora of young companies striving to solve issues that have gone largely unaddressed or revitalize industries that have been slow to update. As solutions continue to sprout in spaces from targeted healthcare to e-commerce, many investors have placed their faith in the future these companies are building.

Despite the current global slowdown in venture capital funding, Atlanta has seen a spike in venture activity over the past few years. Local companies raised nearly $3 billion by the third quarter of 2021, according to Pitchbook data — a record-breaking number compared to the two years prior — and have already raised $1.6 billion in 2022.

Several new venture capital funds are contributing to the scene’s venture growth, having launched in Atlanta or moved to the city from other locations across the country. This is a notable development for a city that historically lacked many local venture capital sources.

Today, Atlanta is a hot spot for new tech innovations and home to thousands of startups developing new creations. Following these startups, VC firms are coming to the area hoping to tap into the growing tech industry. According to many local VC firms, the best way to take advantage of these numerous investment opportunities is by baiting a single line rather than casting a large net.

Younger firms like SteelSky Ventures and Silicon Road Ventures, as well as vets like 15-year-old Panoramic Ventures (previously known as BIP Capital), have witnessed how narrowing one’s focus can open up a vast range of possibilities.

 

Why Atlanta?

Favor has shined on Atlanta in recent years and the city has blossomed into a booming business hub. Atlanta is leading the pack for the Southeast region of the country when it comes to a robust assemblage of tech innovations and has prominence in the fintech, cybersecurity, healthcare and logistics industries.

Atlanta is also one of the top cities in the country for attracting diverse talent — nearly 50 percent of its population is comprised of Black people.

“I decided to move from New York to Atlanta because I saw the diversity of the talent here and I saw that this is a market that’s also been underserved and overlooked,” Maria Velissaris, founding partner at SteelSky Ventures, told Built In. “And there’s a lot of great talent here coming out of Georgia Tech, coming out of Emory [University], coming out of Morehouse [School of Medicine]. There’s a lot of great innovation here and I wanted to be at the forefront of also helping be a part of a new venture ecosystem.”

These and other renowned colleges and universities spawn much of the city’s talent, including institutions such as Spelman College and Kennesaw State University. Add Atlanta’s accessibility to the mix with the Hartsfield-Jackson Atlanta International Airport and people can travel with ease to and from any other part of the country and most of the world.

“I decided to move from New York to Atlanta because I saw the diversity of the talent here and I saw that this is a market that's also been underserved and overlooked.”

As of late, more people have been adding to the state’s population than leaving, looking to make the most of its affordable cost of living and competitive business scene. This means companies, especially those in the tech sector, have put down roots in Atlanta, and where businesses go, money tends to follow.

“There’s not enough capital to go around. I think that’s always the case. There’s never gonna be enough,” Mark Flickinger, general partner and COO at Panoramic Ventures, told Built In. “But I think [what] people have identified recently — and I think it’s actually been accelerated by the pandemic — is that there’s a lot of really good businesses being built in Atlanta, and they have been being built over the past five to 10 years.”

 

Powered by Diverse Innovators

Rather than investing in any and all tech companies, SteelSky invests in startups focused on women’s health solutions. With locations in New York, Seattle and now Atlanta, the firm expanded into the tech capital of the Southeast when Velissaris took note of the city’s diversity and thriving, innovative healthcare scene.

“I saw the opportunity from both an impact perspective and a return perspective — because this is a big, lucrative market ... and it’s being overlooked,” Velissaris said. “The reason why is because there’s a lack of women with venture capital dollars to allocate and so ... the majority of the investors in the states don’t understand women’s healthcare. They’re not investing in stigmatized products and services for women. So I saw this as a unique opportunity and time to get into this area early so that we could start finding and funding the best companies.”

Velissaris also mentioned how the post-pandemic world has brought to light healthcare discrepancies between different ethnicities. With Atlanta’s widely diverse startup ecosystem, Steelsky has noticed that local innovators are working to engage these communities in the best ways possible.

“The tech industry is only growing at an exponential rate. With the addition of these businesses, the tech world will continue to diversify and create space for those who are making an interesting change in the space.”

Members of underrepresented groups aren’t only benefitting from the innovations of local startups, but many of these individuals are the creative minds behind those innovations. Launched in Atlanta in 2019, Fearless Fund invests exclusively in companies founded by women of color. Including The Labz, a young startup developing virtual events software, and concierge service SaaS platform Travelsist, its portfolio features seven Atlanta-based companies.

“It has always been imperative to support underrepresented founders in this way, but now more than ever is when they need the funding the most due to the uncertainty that was left after the pandemic,” Arian Simone, president and CEO of Fearless Fund, told Built In back in April. “The tech industry is only growing at an exponential rate. With the addition of these businesses, the tech world will continue to diversify and create space for those who are making an interesting change in the space.”

 

A Narrowed Focus Leads to More Possibilities

As the tech industry continues to evolve, another area seeing rapid innovation is the e-commerce and retail space. Such is the focus of Silicon Road Ventures, a firm that’s called Atlanta home since its launch in 2019.

Silicon Road invests in startups developing tomorrow’s commerce solutions. Sid Mookerji, managing partner and founder at Silicon Road, stationed the firm in Atlanta due to the city’s abundance of Fortune 500 commerce businesses, like Coca-Cola and UPS, that help make the scene a viable place to grow early stage companies within the industry.

“So while we’re a vertical fund, we’re fishing in giant pools that are hyper-growth areas.”

So far, the firm has invested in startups innovating in areas like the gig economy — a space that’s been growing consistently over the past few years. This sector is just one of many that fall within the commerce tech umbrella.

“We define [commerce tech] as innovation that’s happening across e-commerce, CPG [consumer packaged goods] and retail,” Ross Kimbel, managing director and partner at Silicon Road, told Built In. “If you drill into that, we have four focus areas. Those are fintech, multi-channel commerce, supply chain and logistics and retail and shopper tech. So while we’re a vertical fund, we’re fishing in giant pools that are hyper-growth areas.”

Countless unique facets exist within the ever-evolving technology space, so attempting to capture each purpose-built innovation is impossible. More venture capital firms have become aware of this fact and are narrowing their focus to make an impact on limitless burgeoning categories.

Atlanta has proven itself to be one such locale for adopting this investment strategy. Aspiring to match markets like Silicon Valley, Atlanta’s collaborative culture is drawing attention as a prime scene to fuel growth. The future of tech will continue to change and the venture capital industry is evolving alongside it to help empower the solutions that will come to shape our lives.

“The Valley is built up in this coopetition world where they invest together and they work with each other, and I think we’re seeing that evolution in the Southeast where people recognize that sometimes we’re competing against each other and sometimes we’re competing [together],” Flickinger said. “As the capital side of the equation matures over time, I think we’ve seen more and more collaborations and partnerships that should help the entrepreneurs and investors.”

Hiring Now
Zocdoc
Healthtech • Information Technology • Software • Telehealth
SHARE