ATDC’s Big Bash

atdc_logo.gifAtlanta is a tough market for early-stage companies, and I (along with many others) spend a great deal of time trying to figure out ways to make it better. No doubt. But one of the things that we don’t do enough of is tout our successes – I am guilty of that as well.

On Thursday, May 10th, the ATDC will be holding their yearly showcase event. They’ll be graduating a handful of companies and there will be some good networking and product demos all around. From what I understand, there are nearly 300 people signed up to go, so it should be a pretty big affair.
The graduating companies this year are Cambia, Jacket Micro Devices, FTrans, Qcept, Racemi, and ScanTech.

For more info on the event, click here.

Sidenote: Some of these companies will be at our Capital Connections event coming up in two weeks, so if you are an investor or entrepreneur, and want to get closer to them, check it out.

Graduation from the ATDC effectively means that the company is finally sustainable (or they have overstayed their welcome of 3 years – whichever comes first, I believe.) In either case, these companies have all worked very hard to reach this point, and I encourage all of you to head down and congratulate them on this achievement (and to learn more about some of the newer companies.)

I do want to make a few observations, however.

The ATDC is calling this year’s event the Billion Dollar Celebration. According to their promotional material:

Join us to celebrate the Billion Dollars that ATDC companies have raised since 1999!


This number is a little bit misleading though, IMHO.

In my view, they shouldn’t count the 1999-2000 timeframe in the calculation at all. That was the height of the dot com bubble (and some could make an argument that 2001 shouldn’t be counted either, but …). That timeframe easily represents half (if not more) of the billion dollars, and lets be honest, since the vast majority of those companies imploded (or were acquired at ridiculous valuations, and then imploded), I don’t think we should go there.

I believe that the $1B figure also includes acquisitions, exits, and IPOs – essentially, any capital activity that occured against an ATDC company. Unless the activity occured while the company was physically in the ATDC, I don’t think it should count either. Anything that happened to a company after it leaves a business incubator is largely a reflection of their leadership, not who incubated them. Caveat: It may not actually be counted – I’ve no idea, as I haven’t seen the detailed numbers behind the actual calculation. Subtract all that out from the $1B and divide by the five or six remaining years and a slightly different story might emerge. Not a bad story, mind you, just one grounded in a little more reality.

However, I want to offer a slightly different perspective on things. The mission of the ATDC is to incubate companies that will provide economic/job growth for the state of Georgia (as opposed to wealth creation for individual entrepreneurs or investors.) To me, a better metric would be telling us how many jobs have been created (and are currently active) that stemmed from ATDC companies. I would venture to say that there aren’t many jobs still around from the dot com flameout. So how many companies graduated post-2001 from the ATDC and went on to (and continue to) have a substantial impact on the high-tech job market in Georgia?

The answer is: it is too early to tell. Food for thought.

So lets not get hung up on the $1B number. Instead, focus the celebration on the graduating companies and their hard work, along with the new class of ATDC entrants.

In any event, I do like where the ATDC is going. They are beginning to expand their operations and reach, and I like what Lance Weatherby is doing in putting a more transparent face on things there (via his blogging and open outreach to entrepreneurs.) If anything, I’d like to see them get even more funding from the state, so that they can have more of an impact in other parts of Atlanta and Georgia.

Cheers.

6 Comments

  1. Paul Freet · May 3, 2007 at 6:23 am

    Has the ATDC posted the details of the Billion Dollars? I would also very much like to see details of where the numbers come from. Hopefully Tony or Wayne will share that at the event.

    BTW, Racemi is graduating! My baby is all grown up now. :-(

  2. Lance Weatherby · May 3, 2007 at 7:31 am

    Thanks for the props Scott.

    The $1 billion is in VC funds raised. It does not include includes, acquisitions, exits, or IPOs. If you take 1999 and 2000 the total is $620 million, but not much of a marketing angle in that.

    ATDC companies have to become sustainable in order to graduate. Graduation has nothing to do with physical location.

    The detailed fund raising numbers are confidential in nature. So confidential that the file is password protected if you can imagine that. Not our confidence, the ATDC companies. I am willing to share anything that I can that does not break that confidence.

  3. Interesting post but I’m thoroughly confused now. In one of the startup lounge podcasts I recall that Lance said that the billion figure included exits, acquisitions, and what not. In his comment above he use the phrase “does not include includes” so which is it? not that it much matters at all but i’m curious as to which it is.

  4. Lance – thanks for coming on and clarifying things a bit.

    Paul – thanks for stopping by, and I do agree that the details would be interesting to see, but I have to respect Lance’s concern for confidentiality. Of course, many of the fuding activities are public knowledge, but it would be a pain in the butt to compile a list, and it would probably be incomplete.

    KPO-Dan – thanks for coming by as well. I don’t think it really matters much, primarily due to the inclusion of the dot-com flameout years.

    Hope to see you all at the event!

    Cheers.
    Scott

  5. Lance Weatherby · May 3, 2007 at 10:47 am

    KPO:

    Strike through include number one and I think that sentence makes sense.

    The number for F&F, angel, VC, and M&A is $1.9 billion in the 1999 – 2006 range.

  6. Jeff Haynie · May 4, 2007 at 9:40 pm

    Another interesting measure: Let’s take the total amount invested (minus acquisitions, etc) and then figure out the estimated IRR based on the dollar total of acquisitions/exits. I have no idea what they would look like – but that would be an interesting measure. Are we creating companies that create significant value or investing a lot of money in companies that create little value? (I really couldn’t even speculate on this).

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