Long on Hot-Lanta

After spending a few days in Atlanta, i have decided that Atlanta is the last untapped niche in the US for the venture industry. Stanford and MIT have created a vast amount of great venture returns for those willing to take risks. Additionally, RTP has served a few small investors well. But I think the opportunity in Atlanta can be the third largest VC market in the future. Here is why:

Silicon Valley and Boston are each driven by one technology institute, Stanford and MIT. Georgia Tech is one of the best engineering schools in the nation. They create more patents per R&D $ spent than either Stanford or MIT. They also graduate more total engineers than either school and specifically more RF engineers than either school.

Lastly and most importantly, Georgia Tech students have the profile of great entrepreneurs that have come out of both schools. Many students are from overseas including India, China, and Eastern Europe. These people are more inclined to start companies and take risks. Many of these people also have very advanced engineering degrees which are needed for high tech startups.

What GT doesn't have is a real venture capital community. They have a few small seed stage and angel groups but they don't possess enough capital to drive a company from concept to exit. A true Sequioa or KPCB model in Atlanta would be effective. Many of the venture companies have received capital from Boston and Silicon Valley based VC's. Local VC's have not been active in a lot of opportunities. Take for example the following recent deals:

IISS: KPCB (Recent $2bn acquisition by IBM)
Stealbox: Sierra Ventures
Air2Web: Carlyle Group
N2Broadband: Highland Capital
JBoss: Matrix and Accel ($400M acquisition)

These deals show that the market is ready for a true VC fund ($400M) that can invest $10-20M in the lifecycle of companies and there is no better talent than Georgia Tech to do so.

KD is bullish on Atlanta and the opportunities within. Long on Hotlanta.