You inspired me.

I agree with your sentiment. As I lamented to an out-of-town VC friend of mine this morning, the vast majority of the “deals” we are seeing in Atlanta right now are outside firms coming into gobble up local success stories. There is very little in the way of startup activity (aside from the ocassional Damballa).

Not sure what the JBoss folks are going to do with regard to their operations. My guess is that they would remain here, but who knows.

Cheers.
Scott

$420 million, and I don’t think anybody in Atlanta invested a dime in them. Sigh.

I agree. Throwing something up online and “hoping” that any sustainable “community” will spring forth, is a pipe dream. Impossible? No. Just improbable.

To build a community of loyal customers takes time, blood, sweat, & tears. Sometimes, it requires capital as well, though not always.

There is a misconception, I think, among some entrepreneurs, that a few months of hard work will turn out to be a seven or eight figure exit when they sell their “web 2.0″ play. Impossible? No. But again, improbable.

The good old-fashioned rules of business have not evaporated – they are still there.

Cheers.
Scott

I’ll have to take some time to digest your comments on Web 2.0, but you may be on to something.

Web 2.0 startups are inherently easier to get off the ground than traditional startups. As one Atlanta VC told me the other day, most Web 2.0 startups can be launched on a shoestring budget – and he’s right. Scaling is another issue, perhaps, but launching can definitely be done on the low end. So the need for capital is reduced dramatically for those sorts of plays.

Also …

VCs are trending toward later stage investments – have been for a while. The total number of deals (nationally) is down, but the deal sizes are up quite a bit. And of course, in order to attract these types of investors, you generally have to be beyond the product phase, and well into the revenue-generating phase. This would preclude most of them from even looking at Web 2.0 startups.

Of course, Web 2.0 plays alone aren’t going to accelerate the Georgia investment scene. We need more than that. This is partially why I am so excited about Carbon Motors – from what I gather from my discussions with them, they are attracting quite a bit of attention from local investors – this would be a very good non-tech play for them.

I think it would be interesting to see what would happen if Atlanta got “the big hit” you describe. Part of me sees that as being a potential catalyst, and the other part of me sees it as being an “exception”, or an “isolated event.”

Until then, I would probably start my capital search elsewhere, and attract investors outside the state. There is still plenty of money out there – just most of it resides outside of Georgia!

Cheers.

Here are my thoughts:
1) Many, if not most of the Web2.0 companies that are getting funded are ideas and technology, not businesses. I’ve seen a number of comments from the entrepreneurial blogosphere that we’re seeing the start of a Web2.0 bubble. To the extent that Atlanta/Georgia are missing out on that, good for them.
2) Up until about a year ago, the mantra was “you have to have revenue”. I’m currently in a startup that is working on building revenue and avoiding raising capital. The last startup I was at had the founder shovel in a lot of the capital. And, I have friends who are working on businesses (Web2.0 and otherwise) in their spare time because they feel like they have to have revenue before they can raise cash. Again, this isn’t necessarily a bad thing.

Does this mean that we’re missing out on some investments? Yeah. But Atlanta has traditionally been a cautious city when it comes to money. And despite Steve Fleming’s best efforts, GT hasn’t yet become the startup mecca that we all might have hoped. So I doubt this is going to change anytime soon, unless the VCs get lured into the Web2.0 bubble, in which case they’ll get smacked upside the head just like last time.

So here we sit. Most of the ambitiously mobile entreprenerial types have left, going to cities where VCs are willing to invest. The VCs sit on their money, rather than aggressively chasing and improving on the “half-baked” ideas out there. Thus reinforcing the perception that Atlanta is not a VC-funded startup friendly town, driving more of the entrepreneurial types away, causing the risk-averse VCs to hold back even more, until there’s really no point in having a VC community at all.

This comment is becoming much longer and more dark than I had originally planned. Let’s end it on a reasonably optimistic note. What we (Atlanta) need is one big hit. One company that makes some revenue, demonstrates an ability to scale and gets some media attention. That will help get the VCs out of their shells and encourage more innovation and more funding. But until we get that hit, I think we’re hosed.