The annual Venture Atlanta kickoff event officially launches the Venture Atlanta season and serves as a preview for the big Venture Atlanta conference in October. This year’s sold-out event, sponsored and hosted by Invesco QQQ, gathered 200+ investors and entrepreneurs to connect, network, and gain valuable insights from two exciting panels covering the future of startup funding in Atlanta. In the first panel, Building AI in the Southeast, moderator Andrew Davis sat down with Sema4.ai CEO, Rob Bearden, to discuss the state of venture capital in relation to AI. Here’s what you missed:
Building AI in the Southeast
Why Now Is the Perfect Time for AI
Rob Bearden, who has built and scaled multiple companies such as Hortonworks and Cloudera, shared his journey and insights into why the present moment is ripe for innovation in Atlanta.
“In 2014, we saw a big shift called AI. [Enterprises] had all this data under management, insight into their customers, products, and supply chain, but they required humans to take that insight and do something with it.”
Rob Bearden, CEO and Founder of Sema4.ai
For him, the biggest change was the adoption of Large Language Models (LLMs). They allowed him and his team to go from just insights to taking prescriptive actions from LLM plans based on their data.
Due to this change, he decided to start his most recent commercial venture, Sema4.ai. The goal? To completely transform operating models and create value for companies that wasn’t even possible two or three years ago.
Near-term and Long-term Benefits of Building AI Startups
According to Bearden, the near-term implications of building AI startups will redefine personal organization and communication, while enterprises will revolutionize their interactions with customers, streamline supply chains, and radically enhance product distribution efficiency.
In the long term, Bearden sees multi-billion-dollar companies being built and run with less than 100 people on staff due to the automation capabilities of AI. Plus, these companies that adopt AI will take significant leaps ahead of the competition. He knows this from his experience being on the ground floor at Oracle.
“The Fortune 500 companies that embraced ERP in the early days outperformed their peers by 15-18% in terms of operating margin growth and stock performance.”
Rob Bearden, CEO and Founder of Sema4.ai
He thinks we are going to see that same trend for companies that adopt AI. Enterprises will leverage AI, data, and their applications to evolve operating models for products, supply chain, and customer engagement.
Attracting Capital Outside Silicon Valley
As a highly-experienced startup founder, Bearden was asked about the differences and advantages of the state of venture capital in Silicon Valley vs. Atlanta.
“I think our opportunity in Atlanta is as good or better because AI has had a leveling effect for everything and everybody.”
Rob Bearden, CEO and Founder of Sema4.ai
Essentially, there are no barriers in Atlanta preventing companies from being great.
Bearden says our secret biggest advantage, however, is the number of Fortune 500 companies within driving distance of the city; Atlanta has almost 2x the number of Fortune 500 companies as San Francisco and LA put together. These companies give startups the chance to do a “pressure test” on their products, seeing how they scale under the immense usage of an enterprise.
What Atlanta Needs to Reach the Next Level
Despite Atlanta’s existing strengths, Bearden offered specific steps that may boost Atlanta’s tech ecosystem growth.
- Resist Early Exits: Founders shouldn’t sell too soon. Stick around to see your company's full potential. And for VCs, keep the funding flowing, especially in those crucial Series A, B, and C rounds.
- Enhance Government Support: Bearden commended the Georgia Department of Economic Development for their success in attracting capital and industry, particularly within manufacturing. However, he emphasized the need to expand these efforts by subsidizing capital specifically targeted towards Series A, B, and C financing rounds.
- Strengthen Corporate Partnerships: Bearden highlighted the underleveraged opportunity of deeper integration between startups and Atlanta’s Fortune 500 companies. To him, virtually any software product could achieve $100 million in annual recurring revenue without ever leaving Atlanta.
Recommendations to Founders
Bearden and Davis provided actionable advice for entrepreneurs considering Atlanta as their launchpad:
- Be Aggressive and Clearly Define Your Value: Identify precisely the problem your product solves and be clear about the value or unique "unlock" your solution provides. Some examples: enhancing top-line revenue, improving bottom-line efficiencies, or transforming customer engagement.
- Deeply Understand Your Business Model: Map your customer journey meticulously, from initial awareness and engagement to product consumption and payment. Develop a detailed operational plan defining clear deliverables across all business functions, including sales, marketing, engineering, product development, finance, and administration. Set measurable, frequent goals to quickly identify successes and areas needing adjustment each month.
- Measure Rigorously and Pivot When Necessary: Regularly measure the efficacy of your solution. Continuous, iterative feedback from customers is crucial for timely adjustments to your strategy, whether it’s refining go-to-market approaches or optimizing product delivery.
Q&A Highlights
How do you find interested investors in the pre-seed stage?
For founders seeking pre-seed funding, Davis emphasized leveraging local resources, particularly angel networks facilitated by institutions like Emory University and Georgia Tech. He encouraged extensive networking with investors directly aligned with your current stage and with those who might refer you to the right contacts.
“Networking broadly is your best bet. Even connections who may seem initially misaligned with your stage can often provide valuable introductions.”
Andrew Davis, Senior Vice President of Strategy & Investments at Cox Enterprises
How can first-time founders learn to lead at an experienced executive’s level?
Bearden shared targeted advice for first-time founders aiming to execute at a high level:
- Trust Your Instincts: As a founder, your instincts are crucial. Trust your judgment and your vision.
- Leverage Experienced Mentors and Partners: Engage closely with experienced mentors, investors, and venture capital partners who have achieved success. Their insights can significantly enhance your efficiency and effectiveness.
- Set Clear, Aggressive Goals: Clearly define your desired outcomes with specific, short-term milestones. Bearden suggested breaking down goals into four-week intervals, applying this disciplined approach across product development, engineering, sales, and customer feedback.
- Invest in Top Talent: Prioritize hiring exceptional talent, recognizing that outstanding team members significantly elevate execution. Bearden emphasized that investing in top-tier talent, despite potentially higher upfront costs, is critical.
“You can never overpay for A-level talent.”
Rob Bearden, CEO and Founder of Sema4.ai
How much time should you spend on fundraising vs. product development?
Addressing the critical balance between fundraising and product development, Bearden and Davis offered practical guidance:
- Prioritize Financial Stability: Bearden underscored the fundamental rule for startups: never run out of money. Allocating sufficient time and resources to fundraising is essential, but founders must swiftly transition back to operational execution once capital is secured.
- Efficient Fundraising: Bearden emphasized that if founders clearly and concisely articulate their value proposition, fundraising should be a streamlined and efficient process. Difficulty in raising funds can indicate deeper issues that may need addressing within the business model or market strategy.
- Leverage Your Team: Davis highlighted the reality that founders' time is a finite and valuable resource. He encouraged founders to delegate aspects of fundraising, leveraging the strengths and skills of capable team members.
What is one piece of advice you’d tell yourself when you first started?
Reflecting on lessons learned, Bearden and Davis shared valuable insights for early-stage founders:
Bearden’s Advice:
- Clearly define and deeply understand your product’s unique value proposition, the specific problem it solves, and its differentiation from competitors.
- Actively seek experienced talent who have previously navigated similar growth paths. Incorporate their insights and advice often.
Davis’s Advice:
- Maintain perspective during the entrepreneurial journey. The high moments will never be as high as you think. And the low moments will never be as low.
The State of Venture Capital
In the second half of this event, Kim Seals, General Partner at The JumpFund, sat down with three incredible speakers to talk about Atlanta’s state of venture capital in 2025. Panelists included:
- Mark Flickinger, General Partner and COO at BIP Capital
- Joe Mancini, Co-Founder and General Partner of Front Porch Venture Partners
- Sean Banks, Partner at TTV Capital
AI Investment Trends
Sean Banks opened the panel discussion by talking about the nuances of building AI startups. While many businesses claim to be AI-driven, investors must differentiate between companies genuinely developing core AI technologies and those using AI to enhance existing business models.
Don’t chase AI trends without fully understanding the tangible benefits delivered to customers. He drew parallels to previous technology trends, such as blockchain and cryptocurrency, highlighting that the most successful companies were those focused on delivering direct, practical advantages to end users rather than merely capitalizing on popular trends.
“The ones that did very well utilizing distributed ledger technology (DLT) were not the ones necessarily who were hot crypto or token companies, but they were the entrepreneurs who could recognize that the end customer was going to get a benefit because of that DLT, not because it was crypto.”
Sean Banks, Partner at TTV Capital
Venture Capital Trends in the Southeast
While there has been a contraction in the Southeast’s venture capital market in 2023 and 2024, Mark Flickinger is optimistic about the state of venture capital in Atlanta.
2024 saw approximately 30% fewer dollars invested than the peak years of 2021 and 2022, yet the region is still performing above 2018-2019 levels. Flickinger expects renewed growth in 2025 as the venture ecosystem continues to mature.
Comparative Analysis: Atlanta and the Southeast
Joe Mancini shared insights from Front Porch Venture Partners' recent survey, emphasizing Atlanta's role as the regional hub for venture activity.
“Right now, Atlanta is a solid 8th in the nation for venture activity.”
Joe Mancini, Co-Founder and General Partner of Front Porch Venture Partners
He noted that surrounding cities like Birmingham, Chattanooga, and Greenville have significantly increased their startup density due to Atlanta's growth.
The survey Mancini conducted also indicated that early-stage startup capital investors demonstrated greater optimism due to the encouraging investment practices of early-stage investors. Additionally, the data revealed that investors with a broader focus beyond software sectors were notably more bullish than those exclusively investing in software ventures.
Fundraising Realities
Banks addressed practical fundraising strategies, emphasizing the pitfalls founders face due to extended fundraising cycles. He warned against the investing practices that occurred in 2021 and 2022, including the reliance on SAFE notes, which can cause substantial dilution if valuations drop.
“You should also be asking yourself, ‘Will the money I raised get me to cash flow profitability?’ You don’t want to be beholden to a situation where you have to raise capital or go out of business, because that’s the worst place to be.”
Sean Banks, Partner at TTV Capital
Banks advised founders to:
- Clearly define milestones tied to each fundraising round.
- Ensure capital raised can sustain the business to cash-flow positivity if future rounds are uncertain.
- Consider measured growth and profitability as viable, less risky alternatives to aggressive fundraising.
Atlanta’s Path to Becoming a Top-Five Tech Hub
Mancini emphasized that the state of venture capital and Atlanta’s continued success as a tech hub rely heavily on growth and collaboration.
He pointed out that investors in Atlanta currently enjoy the advantage of acquiring stakes in high-quality, high-growth recurring revenue businesses at approximately a 30% discount compared to other major markets nationwide.
Highlighting the sentiment of a notable local investor, Mancini confidently stated, "Atlanta has all the ingredients needed to become a top-five tech hub; we just can't mess it up."
Flickinger concurred with the 30% cost advantage of Atlanta, noting that operating a business in Atlanta similarly offers substantial cost efficiencies. He advised founders and investors to approach capital strategically:
“Only take the necessary capital to get to your next fundraising stage. Take the capital and do something with it over the next 12 to 18 months.”
Mark Flickinger, General Partner and COO at BIP Capital
Flickinger says this increases your probability of success as a founder, and you retain more of your business along the way.
Obstacles to Becoming a Top-Five Venture Market
One of the obstacles to innovation in Atlanta? Banks says “executive apathy”.
“Atlanta is an executive graveyard in a lot of ways. The quality of life is good, the weather is good, money goes far, and there are a lot of places to play golf. The obstacle you run into is apathy.”
Sean Banks, Partner at TTV Capital
Banks says this is a different mindset than Silicon Valley. What Atlanta needs to see is founders who have had successful exits coming back and reinvesting in the ecosystem from the seed stage and onward.
Q&A Highlights
What are your thoughts on venture studios?
Banks answered that while he likes Venture Studios, he implores entrepreneurs to choose an investor who isn’t a generalist. You should find somebody who knows your industry very well.
Mancini says that if you are in a venture studio, be thoughtful around the economics for downstream investors and the founding team. It can get complicated going through future funding rounds. Otherwise, the focus, intensity, and creativity that come from venture studios are beneficial.
How do you deal with moving goalposts from investors?
Flickinger took this question head-on, saying the market for fundraising for newer companies is tougher than ever before. To break through, however, you need to talk to a lot of people.
“Yes, you’re going to hear a lot of no’s. But you need to talk to a lot of people, so one person doesn’t hold the future of your business.”
Mark Flickinger, General Partner and COO at BIP Capital
He emphasized that business fundamentals never go out of style. If you're building a business that's creating value and solving a problem, you can articulate that. Eventually, someone will see the story the way you see it, and they're going to say yes.
Which industry verticals have the most opportunity for growth?
Mancini answered by saying through his research, each vertical has the most success in a different market.
But he sees opportunity across the board.
“AI in the pocket of founders is going to dramatically bend the cost curve of innovation at the earliest stages and make it such that you don't ever have to raise as much money as you used to.”
Joe Mancini, Co-Founder and General Partner of Front Porch Venture Partners
My company is profitable. Should I continue raising money or bootstrapping?
Flickinger started by talking about the advantages of bootstrapping.
“You get to keep all of your company, and you get to do it how you want to do it. There's no one saying it should be X, Y, or Z.“
Mark Flickinger, General Partner and COO at BIP Capital
He added that it’s important to ask yourself, “Does the value of me taking money from a venture capitalist outweigh what I can do on my own?”
Banks jumped in by saying the most important thing to remember is that not everybody needs to take venture capital. He then gave an anecdote about how his college roommate and his wife started a company together. Private equity was knocking on their door for 30-40% of the company. They needed $750,000.
Banks gave the advice that they probably have the money, they just don’t know it. They ended up borrowing against their life insurance policy. Now, their company is cash flowing $3 or $4 million a year, and they own 100% of it.
His final thought: Consider alternative funding sources that might be hiding in plain sight.
Experience the State of Startup Investing in Atlanta
This panel was just the start of the Venture Atlanta season. If you want to see more innovation in Atlanta, attending Venture Atlanta is a must.
Venture Atlanta is the Southeast’s largest venture capital conference. From pitch competitions to thought leadership sessions by some of the biggest names in tech, we bring together founders, investors, and more each year.
Want to learn more? See some of the highlights from Venture Atlanta 2024. If you want to experience Atlanta’s biggest venture conference for yourself, register for Venture Atlanta today!
Frequently Asked Questions
What is the current state of venture capital in the Southeast?
The current state of venture capital in the Southeast is complicated. While recent years have seen contraction, many experts are optimistic about more growth, cash flow, and investments as the market expands.
How is AI transforming startups in Atlanta?
AI is transforming startups in Atlanta by enabling automation, enhancing operational efficiency, improving customer engagement, and creating opportunities for rapid scalability and innovation across various industries.
What are the key fundraising strategies for early-stage startup capital?
Key fundraising strategies for early-stage startups include clearly defining your value proposition, leveraging local angel and VC networks, setting measurable milestones, and building relationships with investors aligned with your industry and growth stage.
Is Atlanta a good place to build a startup in 2025?
Yes, Atlanta is one of the top ten cities in the United States to build a startup in 2025. Atlanta offers access to Fortune 500 companies, top tech talent from the local universities, a growing VC ecosystem, and relatively low operating costs.
What sectors are gaining the most investor interest in the Southeast?
Sectors gaining the most investor interest in the Southeast include AI, fintech, healthtech, logistics, life sciences, and enterprise SaaS.
