What Birmingham Gets Right About Innovation & How to Replicate it in any City

By Amy Nelson

In my role as CEO of Venture for America, I’ve had the opportunity to spend time in more than 20 emerging entrepreneurial ecosystems around this country. People ask me all the time: what place has surprised you the most? It’s an easy answer: Birmingham, Alabama. I think the Magic City has exactly what it takes to continue building meaningful companies and attracting world-class talent.

And Steve Case agrees!

Venture for America partnered with the Rise of the Rest® Road Trip and we’re thrilled that Birmingham is their 3rd stop on the tour this Spring. Rise of the Rest® is a nationwide effort powered by Revolution to showcase founders in emerging startup ecosystems across the U.S. On May 9th, the Rise of the Rest® team will descend on the Magic City to showcase the startup ecosystem and invest $100,000 from Revolution’s Rise of the Rest Seed® fund one a local startup!

I’ll admit, when I was first introduced to Birmingham, I was a skeptic. When Thrive Capital Partner, Birmingham-native Jared Weinstein, and former Alabama Power Company EVP, Steve Spencer, invited me down to Birmingham, I told him that expanding our VFA program to the city was a longshot. By the time I returned from that trip, my mind was made up: we’d be foolish to miss this kind of opportunity. Since then, the city has become VFA’s fastest-growing market. I’ve never seen a place quite like the Magic City. So, what makes Birmingham so magic?

They know what they are good at.

Much has been written about industry clusters, and Birmingham is a fantastic example of relying on an area’s historical strengths to build a new generation of businesses. Shipt, a Birmingham-based grocery-delivery service and Instacart competitor, had one of the biggest exits of 2017: a $550 million acquisition by Target. That’s no accident: logistics companies like Altec and warehousing operations for a multitude of Fortune 500 companies have long dominated the Birmingham market, and next-generation companies like Fleetio and BLOX are poised to take up this mantle to great success.

Another area where Birmingham shines is healthcare. UAB is a tremendous asset, occupying 100 square blocks of real estate and acting as the largest employer in the state, and companies like HealthSouth, Medical Properties Trust, and Blue Cross Blue Shield add to the local knowledgebase. We have been fortunate to partner with companies like Pack Health and TheraNest which are led by some of the most impressive entrepreneurs I know.

There are also exciting innovations happening in the food and beverage space, which is unsurprising for a city that has more James Beard award winners per capita than any other. Eugene’s Hot Chicken, HERO Doughnuts, and Domestique Coffee are just the beginning of a new wave of food and beverage companies coming out of the region.

They support each other.

Co-working spaces and business incubators are a dime a dozen. I’ve been to many in the Midwest and South that are eerily empty; real estate is cheap so spaces are overbuilt. They may have memberships but no one seems to actually work there. Folks pay lip service to “collisions” but it turns out no one actually knows what the team down the hall is working on.

Not so at Birmingham’s Innovation Depot, which boasts 100+ startups under their roof. Building community is a tricky thing, but the Depot has a palpable spirit of camaraderie and genuine mutual respect that sets it apart from its peers. I’m only an occasional visitor, but every time I’m at the Depot I’m greeted with the warmth and enthusiasm of a lifelong friend. Every founder I’ve met in Birmingham speaks about the city and ecosystem with passion – these are not folks who will be compelled by the siren-song of Silicon Valley. That kind of environment fosters true collaboration and a drive to build something bigger than yourself.

What Innovation Depot got right was the mix of real estate (single person desks to companies of up to 50), programming (labs and accelerator programs like Velocity that use the mentorship and resources of the community), and community building (beyond happy hours). For example, unlike most university innovation centers, which are cordoned off from the outside world, UAB has its Innovation Lab located at the Depot, where students and faculty benefit from direct contact with industry.

They invest locally.

Capital is always a challenge for every entrepreneur, but in Birmingham, funds are beginning to flow. Successes like Shipt are inspiring more angel investors to keep their dollars in the Birmingham ecosystem. Founders here can focus on what’s important: building companies that solve customer’s problems, not raising money.

Alabama Power Company (APC) was VFA’s lead donor when we took the leap into the Birmingham market in 2015. Folks find this puzzling all the time, but it makes perfect sense: APC can only sell power in a very specific territory; their business relies on attracting new customers to that place and retaining the old ones. That means investing in the future: great opportunities means more talent in the region, and high-tech and manufacturing companies are outsized consumers of their product. It’s forward looking in a way that other utilities are not, and it’s paying dividends.

Launched in 2017, Alabama Capital Network (ACN) is a community economic development organization facilitating growth locally in Birmingham and more broadly in Alabama’s entrepreneurial ecosystem. ACN is bridging the funding gap faced by local and state-wide companies in the early growth phase of business by investing directly in companies and connecting them with a network of investors, mentors, advisors, service providers, and corporations.

Philanthropy is also getting into the game. As one of the most philanthropic cities in the country, it’s no surprise that organizations like Innovate Birmingham and Velocity have come out of the gate with major support. Foundations like the Community Foundation of Greater Birmingham are focused on putting their money into entrepreneurial and tech-centered programs that will help strengthen the future of the city, like Venture for America and Innovate Birmingham.

Like all other cities, Birmingham faces its share of challenges, and entrepreneurship is by no means a silver bullet, but seeing wealth being generated in the urban core of Birmingham (as opposed to the suburbs) gives me a sense that things are moving in the right direction. A generation of leaders is emerging committed to making Birmingham a place rife with opportunity for all its citizens, and I’m thrilled that Steve Case and the Rise of the Rest® team will have the opportunity to experience the greatness of the Magic City.


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