Editor’s note: If you caught one of the articles last week summarizing the American Underground’s annual report of the state of startup as it exists within their universe, you may have felt better about where we’re headed as a startup region. But is that the entire story? WRAL TechWire Insider columnist and entrepreneur Joe Procopio offers his own analysis exclusively for our subscribers.
DURHAM, N.C. – If you caught one of the articles last week summarizing the American Underground’s annual report of the state of startup as it exists within their universe, you likely got the notion that all is well for entrepreneurs here in the Triangle. If you actually read the report, a breezy, taut, and quite informative infographic covering everything from dollars raised to pizza consumed, you definitely felt better about where we’re headed as a startup region.
But you might have missed the bits between the data points, and those bits, when connected with a sense of context developed over the last dozen-or-so years of entrepreneurial upswing that started at the Bulls ballpark and has now spread to the far reaches of the Triangle and even in some sense to the outposts of Charlotte to the west and Wilmington to the east, tell you that the American Underground has accomplished something bigger than the deltas in the numbers.
That’s my job, to find the story told by the bits between the data points.
If I were to be dramatic, which is something I’m not really known for (until you get a couple of beers in me, then the stories come out), I’d tell you that in 2014, American Underground changed the definition of entrepreneur in the Triangle. But like I said, I’m not dramatic (seriously, a couple of IPAs and I start naming names), and that change didn’t happen overnight, or this year. It’s an evolution that’s been going on for at least those dozen years of context. But it did get hammered home in this report.
And I’ll tell you how.
First, let me clear up a notion up before the grizzled local startup vets, of which I am one, flame me. While it’s never been easier to be an entrepreneur in the Triangle, it’s also never been easy to be an entrepreneur in the Triangle. That hasn’t changed.
There’s still not enough money – that dream of five to ten local $20-million-plus funds is still quite a ways off. There’s quite a bit of support now at the seed level, but the A and B rounds are still quagmires. Big exits are once-or-twice-a-year and they could use more press when they happen. A Valley startup can announce BlackBerry support for one of their product extensions and still receive more press than a seven-figure-raise here that doesn’t involve a Valley firm.
And here’s another pet peeve of mine that doesn’t get enough attention. We’re still not attracting and retaining enough established and prospective talent.
But I’ll tell myself the same thing I tell them when they tell me I’m being too rainbow-dreams-and-unicorn-farts about the Triangle scene. I started a company here in 1999. I didn’t bump into another local entrepreneur until 2001.
“Physical expansion is a big risk, as well as a big headache. It involves resources, commitments, and if it goes wrong it can take your whole organization down. This is true for any startup.”
This is what I wrote just over two years ago when it finally came out that American Underground would be breaking ground on AU at Main, something Adam Klein and I had been talking about since that summer.
In that same article, Klein talked about expanding the top of the funnel for Triangle startups without expanding the bubble.
“We want to build companies that can create a strong customer base,” Klein mused. “The programming will revolve around customer acquisition, and if the companies build a product that people want to buy, that will attract investment.”
So back in 2012, AU was making a bet similar to the one I was making with ExitEvent: If you strip away all the noise and create a program that truly helps true entrepreneurs, the cream will rise to the top and everybody benefits.
Granted, their bet was much larger than mine. Klein was talking about an enormous investment in building out space and resources for, as was his stated goal at the time, 200-plus startups in downtown Durham in 2015.
That doesn’t sound so crazy now.
When I first started the ExitEvent Startup Social, a monthly agenda-free get-together limited to verified entrepreneurs, I said “no” a lot. The word “verified” was the issue here. On the plus side, I already personally knew a ton of the working entrepreneurs in the Triangle. On the down side, if I didn’t know them personally, there weren’t a lot of ways to figure out if they had skin in the game.
2011/2012. A lot of dudes and women were bouncing from event to event with an idea and a smile, sometimes with nothing more than a Twitter handle and an elevator pitch that always ended with, “We’re the next (insert hot social property here), but better.”
It was a confusing time.
At the same time, the “scene” was also dotted with plenty of newly-minted support orgs that would gladly take money and/or tout these wantrepreneurs as the next big thing in the Triangle in return for eyeballs or whatever their motivation was to fuel their own definition of support, regardless of whether or not that startup had revenue. Or customers. Or a product. Or a prototype.
It was a confusing time.
So if I was going to spend my time — writing an opinion piece on a startup, introducing an entrepreneur to someone influential, even making sure I had enough beer for every entrepreneur who wandered into a Startup Social — I was going to make damn well sure that said entrepreneur had something going for him or her beyond a hoodie and a Facebook page.
Now take that back to the exponentially larger bet that AU was making. If they were going to spend millions building out the infrastructure, they needed to make sure it wouldn’t all come crumbling down on startups with no growth prospects.
You need skin in the game to be at American Underground. This isn’t a big public pitch party with a prize at the end. You need to pay the rent. Literally.
Now look at that infographic again.
None of those 180 companies across the three AU campuses are getting a free ride. They may not all go public, but they’re all verified. And that verification had to be more than just making sure that there’s a plan or a prototype. If AU is wrong about the legitimacy of the entrepreneurs they house, they take a financial hit.
Those numbers in the inforgraphic — $20.7 million raised, 23% female-led, 323 new jobs created, $675K dumped into the local economy – they mean a lot more because they’re legit. What’s more is this is still the third inning of a nine-inning game. In other words, this is still the top of a very real, very full-of-potential funnel.
The Triangle startup scene in 2015 is not going to be about how many companies attend Startup Socials or join one of American Underground’s three campuses.
It’s going to be about what comes out.
Editor’s note: Joe Procopio is a serial entrepreneur, writer, and speaker. He is VP of Product at Automated Insights and the founder of startup network and news resource ExitEvent. Follow him at @jproco or read him at http://joeprocopio.com
