Georgia startups have raised almost $3 billion in 2021, according to the PitchBook-National Venture Capital Association Venture Monitor report for the third quarter.
That fundraising amount — $2.98 billion exactly — smashes the previous record with three months left in the year. The next highest raises were $2.3 billion in 2019 and $2.1 billion in 2020.
The city’s low cost of living, tech talent pool, international airport and diversity of industries and people create a foundation for a successful technology ecosystem. The data reflects those strengths and indicates a strong recovery from the pandemic.
Each quarter in 2021 has hovered around $1 billion, according to the PitchBook report. If the trend continues, 2021 could break 2019’s record by almost double.
The past five years have shown a continued upward trend for capital coming to Georgia startups. In 2016, the state brought in $506 million. Most of those deals are concentrated in the Atlanta market.
That trend is a testament to the resources that Atlanta has for entrepreneurs. As founders build successful startups, they often reinvest into the innovation ecosystem. David Cummings founded the Atlanta Tech Village incubator after selling his company Pardot, a marketing automation firm.
The timing of Atlanta’s growth corresponds with an influx in capital across the nation. About $239 billion was invested in 2021 so far, according to the report. More investors are choosing to put their dollars in venture capital funds, and those funds had a bottleneck of capital they needed to invest after the pandemic slowdowns. Valuations also are up, especially in the Southeast. Those factors have increased the deal flow overall.
While Atlanta benefits from those national trends, the city has also spent decades building its innovation ecosystem to compete with major tech hubs across the nation.
Georgia Tech’s Tech Square, an innovation district in Midtown, the heart of the technology ecosystem, brings in huge tech developments and a revolving door of growing startups. The Atlanta University Center is seeing more tech and entrepreneurial resources pour in from institutional investors, which could create a similar innovation district in the West End.
Atlanta leads the Southeast in terms of capital flow and innovation. Miami, Florida, has the next highest raise at $2.4 billion in the first three quarters of 2021, according to the report.
Georgia accounts for about a third of all capital coming into the Southeast, the report showed. The state also has four of the top 10 highest venture capital deals in the region during the third quarter. Miami followed with three.
In this quarter, crime surveillance startup Flock Safety, software startup FullStory and logistics tech startup Stord all surpassed $1 billion valuations after massive deals. Five startups reached the unicorn milestone this year. Notably, restaurant QR code startup Sunday also made the top 10 highest deal list just five months after it launched.
Despite Atlanta’s growing tech infrastructure and reputation, it still lags in capital sources. The state saw nine venture capital funds raise $441.2 million, more funds than ever before but not on par with 2019’s venture capital value.
The top VC funds in Atlanta are Fulcrum Equity Partners at $275 million, Collab Capital at $50 million and Silicon Road at $31 million.
Georgia has two of the top 10 venture capital funds in the Southeast. North Carolina leads the region in venture capital. The state hosts five of the top 10 funds and raised $869 million in VC in 2021.
The lack of capital sources remains one of Atlanta’s top obstacles to its growth as a tech hub, experts say.
