The southeast has been called “a vibrant ecosystem teeming with a herd of the billion-dollar tech businesses.” What’s next for the tech industry in the South?
Despite the South’s impressive roster of tech companies — nearly 10,000 in total, according to Crunchbase — the region’s tech scene has largely flown under the national radar. However, thanks to the recent influx of venture capital (VC) activity centered around Atlanta, the region is finally starting to receive the recognition it deserves. Take TechCrunch, which recently labeled the region “a vibrant ecosystem teeming with a herd of the billion-dollar tech businesses.” That’s high praise from one of the tech industry’s most prominent publications.
“The tech sector in the South is really robust, growing, and varied,” explains Dave Sozio, Managing Director of the Technology, Media, and Telecommunications Group at Regions Bank.
From Dallas to Durham, the region is home to a variety of fast-growing tech hubs, many of which are drawing in impressive numbers of tech workers from near and far. According to Sozio, this inflow of tech workers is being driven primarily by several factors: opportunity, cost of living, and quality of life.
Some of this growth can also be attributed to the number of well-established tech companies that have chosen to plant their roots in the South. Both Tesla and Oracle sent shockwaves through the industry when each announced their respective plans to relocate from Silicon Valley to Austin.
Tech Dealmaking in the South
In addition to attracting tech talent, the region has also attracted the attention of investors. Even as the Bay Area saw a big decline in angel and seed deal counts in 2020, Atlanta experienced a 13% increase, with the city’s companies raising $2 billion in VC funding, according to PitchBook data.
“While there's increased flow of venture capital into companies in Austin and Atlanta, it still pales in comparison to the activity in Silicon Valley, both by dollars and number of deals, to the West Coast,” Sozio points out. “There are just a greater number of startups in Silicon Valley than there are in the South, and there are a lot more people, entrepreneurs, startups, founders, and investors on the ground.”
Despite these differences, he notes that the favorable cost of living in the South may continue to drive the growth of the region’s tech industry.
“What I think will be interesting to observe in the future is the impact on the cost of living differential between the tech hubs in the southeast and Silicon Valley, because it’s pretty pronounced,” he explains. “Over time, I think it’ll be interesting to see how it changes the dynamics of both places.”
What’s Next for Southern Tech?
From VC activity to M&A, Sozio is optimistic about the continued rise of tech in the South. To learn more about what’s next for southern tech, listen to Episode 14 of Commercial Insights with Regions Bank: The State of the Tech Industry in the South: From Rising Tech Hubs to M&A.
