The state continued to see activity and strength in its startup and innovation scene in 2021 with new startups entering the market and more deal and funding activity.
But as a new year has arrived, there are challenges on the horizon.
A report from the Alabama Innovation Commission identified several key areas to focus on next year such as capital access, talent retention, commercialization, bridging digital divides and creating a knowledge economy.
Two of the top challenges identified are talent retention and capital.
Patrick Murphy, Goodrich endowed chair in innovation and entrepreneurship at UAB Collat School of Business, said the venture finance community is evolving in important ways in Alabama with a growing focus on angel funds that will make a significant impact.
The ongoing pandemic could lead to a brief time when cash flow might be low, depending on the business, but the biggest struggle is expected on the hiring front, said Franz Lohrke, the Lowder Endowed Chair in Entrepreneurship and professor of entrepreneurship at Auburn University.
“Continuing to find good, talented people is going to be hard and finding people that have the skills needed to really scale these companies up because we’re at a great time where you have a lot of companies that are looking to scale and grow quickly, but we need more people who know how to do that,” said Innovation Depot CEO Drew Honeycutt. “That’s going to be the key is continuing to get people to train through certificates and different programs so they know how to go and help assist a company in growing quickly.”
Murphy said the next generation of entrepreneurs will be cultivated not only through university classes but also through teaching and mentoring from organizations.
Despite potential challenges, Honeycutt said he expects new companies created in 2020 and 2021 to hit their stride in 2022 and a number of companies to spin out from UAB and step up their commercialization efforts.
And one of the top sectors to watch is health tech.
Haley Medved Kendrick, director of the Bronze Valley Accelerator, said with the strength of the health market in the state, along with the ongoing health crisis, the health-tech sector will continue to gain visibility. In addition, she said instead of focusing on being a copy of Silicon Valley, the state can play to its strengths in the aerospace and biotech sectors.
“One of the big problems people tend to fixate on is why we can’t be the next Silicon Valley. You hear that a lot: ‘Let’s build another Silicon Valley or Kansas City in Birmingham’ ... and the problem is that you can’t do that because you have to work with the resources and the talent and the capabilities that you have,” Lohrke said. “Silicon Valley evolved historically for very specific reasons, and those don’t exist everywhere. You don’t have these big companies locating there and venture capital firms growing up after that success.”
