How This Southern City Is Becoming a Mecca for Startups
WHY YOU SHOULD CARE
Because an innovation triangle in Alabama could present fresh opportunities for entrepreneurs.
The Innovation Depot, like the city it calls home, won’t astound outsiders in a passing glance. The business incubator in downtown Birmingham has ascendant windows, metallic fixtures, translucent-paned offices and an in-house artisanal diner — all the feel of startup culture, without the luxurious accoutrements of a similar venue in Silicon Valley.
No, to appreciate what’s happening here, you need a more workmanlike mentality. Look past the easy pizazz of slick marketing, and see what truly is a diamond in the rough. More than 100 startups are located in this sprawling 140,000-square-foot complex, the largest in the Southeast: Inside, some 900 tech savants attempt to solve the greatest challenges in fintech, health care and the global workforce.
A few miles away, another epicenter has formed around MAKEbhm, where studios, co-working spaces, creative classes and retail outlets coexist — only the entrepreneurs here are largely craftsmen, working with wood, ceramics and printing on their way to building new businesses from old traditions. In September, the University of Alabama at Birmingham and the U.S. Department of Commerce teamed up to receive over $600,000 in grants to drive promising ventures. And just a few years back, Fast Company named Birmingham the top city for millennial entrepreneurs, in part for its livability and affordability.
Logistically, it’s much easier to get work done here. The business climate, there is this attitude of ‘yes.’
Cliff Spencer, Birmingham-based furniture maker
“It doesn’t matter as much today where you’re running your business from, as long as you have high connectivity,” says Devon Laney, president of the Innovation Depot, who notes the tech startup program’s 100-gigabit broadband access. “If you think of it in terms of burn rate for a startup company, if you raise $3 million and you’re in an East Coast or West Coast city, that’s going to give you less than a year’s worth of runway. In a community like Birmingham, that’s going to give you two to three years of runway.”
All these gears in motion point to one emerging reality: Startups are flourishing in the Deep South. An innovation triangle is emerging, from Birmingham north to Chattanooga, Tennessee — nicknamed “Gig City” for its high-speed broadband network — and east to the logistics and business hub of Atlanta. All within a couple hours of each other, they form a powerful talent-and-tech network. While states like Alabama, Tennessee and Georgia haven’t always been known for their opportunity, the arrival of innovative new industries is slowly changing that calculus too, with OZY and Opportunity Nation discovering in December that the South is actually one of the best regions in the U.S. for those seeking the American Dream.
“Logistically, it’s much easier to get work done here. The business climate, there is this attitude of ‘yes,’” says Cliff Spencer, a furniture maker who operated in Los Angeles for a dozen years but relocated to Birmingham and started Alabama Sawyer. The company mills lumber from urban state forests into furniture and home accents, and in November it took home two Made in the South awards from Garden & Gun magazine. “We caught on that there’s this sort of renewal happening, and there’s a lot of excitement around that, and pride in the city and in possibility,” Spencer says.
So why then is Birmingham’s rise as a modern tech town flying under the radar, while Salt Lake City or Austin, Texas, or even Blacksburg, Virginia, garner national attention? After all, not everybody has missed the signs of the city’s cultural ascendance. For instance, the thriving culinary scene has attracted multiple James Beard-award winning chefs, and Food & Wine magazine recently relocated here from the Big Apple to be closer to the action. “Birmingham is a city of high risk, high reward,” says 36-year-old mayor Randall Woodfin, a progressive Democrat elected in October. Essentially, people come to chart their own identity: “All the pieces are in place. Now you have a willing partner from the city.”
That hasn’t always been the case, which is partly why the city’s current boom has gone unheralded. Long known as the Steel City, that branding served it well before steel’s decline in the ’70s, but today evokes a more outdated image. Decades after church bombings rocked Birmingham during the height of the civil rights era, a perception that Alabama doesn’t embrace forward-thinking still lingers — which wasn’t helped by last December’s contentious U.S. Senate race. Having grown up on a farm in northeast Alabama, Laney remembers when he traveled the country as a business consultant, and how people would hear his accent or where he was from and “the expectations were almost lowered automatically” because he was from the South. “We are constantly battling that perception,” Laney says. “One of the largest challenges is getting over that initial hesitance in getting individuals to even look at Birmingham as a potential home for their company.”
Toward the end of 2016, a wave of funding hit some of Birmingham’s top startups, proving that at least at the top level, investors weren’t shying away from backing Alabama-based entrepreneurs. Grocery delivery service Shipt received $20 million in series A funding, logistics manager Fleetio raised $750,000 from private investors and software company Swell Fundraising earned $500,000 in angel investments. It’s in early-stage seed funding that the city still struggles, suggests Kasey Birdsong, who was born in Huntsville and founded Birmingham-based startup Planet Fundraiser.
However, the serial entrepreneur — Birdsong has also aided in the creation of Gameday Girl Stuff and MyChurch Circle — says that challenge has been met in the past few years: “There are a lot of people paying it forward, who have had successful exits in the past and are really pouring back into the tech ecosystem.”