Tech investment in Georgia, Southeast, off to fast start in 2021

Credit: John Schnobrich on Unsplash

Credit: John Schnobrich on Unsplash

The COVID-19 pandemic has done billions of dollars in damage to the U.S. economy, but it’s also spurred a record level of investment in tech firms in Georgia and throughout the Southeast, a new analysis says.

Investors pumped more than $2 billion into startup companies in Georgia in the first half of 2021, already more than all of 2020′s $1.9 billion, according to the 2021 State of the Startups in the Southeast report by Atlanta-based venture capital firm Panoramic Ventures.

In nine Southeast states, stretching from Virginia to Mississippi, investors poured $8.04 billion into new companies in the first six months of 2021. That is closing in on the $10.02 billion total in 2020 and the $10.32 billion in 2019.

Panoramic Ventures COO Mark Flickinger said the amount of money flowing into the Southeast is accelerating because the national attention that the growth and success of startups in places like Atlanta and Miami is attracting. Also, there’s an increasing number of new investment funds.

Some fund managers waited on the sidelines last year because of the turmoil caused by the pandemic, he said.

But this year, fund managers are jumping back in, Flickinger said. Many of the startups are addressing challenges created by the pandemic, such as employees working from home.

“Everybody’s daily workflow was gone overnight,” he said. “It blew all of that up.”

A number of startups already were working on improving communications and logistics and making work more mobile. Some of those companies accelerated projects that would have otherwise taken years, Flickinger said.

“People are saying, ‘OK, that worked. What else can I replace with technology to make my team better, more efficient, more effective?’” he said.

He expects that trend to continue. That’s good news for second-tier tech hubs like Atlanta, which attract fewer investment dollars than the big three — Silicon Valley, New York and Boston. Just as the pandemic forced companies to recognize that their workforces can be located just about anywhere in a state or country, it forced investors to recognize that top companies and talent can be found outside of the big three regions, Flickinger said.

Atlanta was recently ranked the top city for tech talent in the Southeast.

Some highlights of the Panoramic Ventures report include:

  • Georgia ranks third among Southeast states in capital investment made since 2016, with $9.86 billion. Florida drew $12.9 billion and North Carolina, $12 billion, though about one-third of North Carolina’s investments were in one very large company.
  • Georgia ranked first in mega-deals — investments of $80 million-plus — with 22.
  • Georgia has the most “unicorns” — startups that have reached valuations of $1 billion or more — with seven, compared to Florida’s six and North Carolina’s five.
  • Georgia’s three strongest sectors are financial technology, such as payments, banking and purchases; software as a service, such as logistics and sales; and biotech.
  • Companies in the Southeast are attracting larger investments. The average amount in 2016 was $3.6 million. So far in 2021, it is $10.5 million.