#StartupsEverywhere Profile: Devon Laney, President and CEO of Innovation Depot
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Birmingham has evolved from its industrial past to become an emerging hub of software companies that will be a stop on the Rise of the Rest tour next month. This week we spoke to Devon Laney, who believes that community buy-in and a state tax credit program which spurred real estate development downtown contributed to the ecosystem’s growth. However, he adds that a state grant matching program could further develop Birmingham’s innovation economy.
What’s your [personal] role in the Birmingham-area startup ecosystem? How did you get involved working with startups in Birmingham?
I’m currently the President and CEO of Innovation Depot, the epicenter of startup and entrepreneurial activity in the tech space for the Birmingham region. We’re also the largest entrepreneurial support organization in the Southeast and one of the largest in the country with 106 companies that employ 900 people working out of the facility. Our strong relationship with the University of Alabama at Birmingham (UAB) continues to be an industry best practice for public/private partnerships for technology based economic development.
Can you tell us more about what your organization does?
Innovation Depot is a nonprofit that has been around for about 30 years, making us one of the first traditional incubators in the country. We’ve since evolved; I came to Innovation Depot in 2005 to help expand what was then a stand alone incubator into a holistic hub of entrepreneurial activity and a community resource. The programs we now run are aligned with specific areas of opportunity in our community such as workforce development, seed capital, startup acceleration, and education. It’s key for our ecosystem to have all of these various pieces under one roof.
What’s the most exciting thing that has happened for the Birmingham ecosystem in the past year?
There has been a perfect storm of consistent activities and exposure. One of our startup companies, Shipt, was acquired by Target for $550 million. That really elevated the profile of Birmingham as a startup hub in the Southeast. It showcased the city’s ecosystem and demonstrated to people that we could compete with any other on the coasts.
That was the pinnacle of the momentum that has been building here over the last three years. It was a high profile event that brought a lot of eyes to Birmingham and elevated it on the national stage, resulting in the Rise of the Rest tour announcement and other major developments.
What makes Birmingham an ideal place to start a company?
Technology has leveled the playing field across the country. You don’t have to necessarily be located near a traditional center in order to build a successful company. What makes Birmingham exceptionally appealing:
The costs to start and grow a business are low here. If you’re a startup and you raise $3 million dollars, that money goes much farther in a place like Birmingham than in New York or Silicon Valley, giving companies a longer runway. The infrastructure here is just as good as anywhere. At Innovation Depot, thanks to our partnership with UAB, we now have access to a 100 gigabit fiber network and one of the State’s most powerful supercomputers. We’ve also launched a coworking space, called Ignite, within Innovation Depot. Neither the infrastructure or the desks are any better in Silicon Valley than they are in Birmingham.
Another competitive advantage is that in a place like Birmingham, you are able to establish your reputation and develop relationships much more quickly than in more saturated markets. The rapid pace at which companies like Shipt were able to achieve success speaks to this fact. People are relocating here from places like Austin and Seattle because they struggle to break through or gain traction due to this saturation.
Birmingham is in the center of all other major population centers in the Southeast and is proximal to other regional markets and the resources that exist there. These ecosystems together constitute a critical mass.
What is the biggest challenge the Birmingham ecosystem still faces?
There is a struggle to find experienced, senior startup leaders. If you go to the Valley or the Northeast, there are seasoned entrepreneurs who have had multiple exits. We just haven’t had that volume of successes yet and lack the density of entrepreneurial leadership as a result. Finding people with the right technology skills is also a challenge. That’s part of the reason Innovation Depot has partnered with developer bootcamps and IT training programs. If startups can’t find the right people to help them grow, we have to do our best to increase the population of technology-enabled workers. That’s huge for continuing the growth of our ecosystem.
Our region has suffered from a lack of early seed capital and a method for deploying it. That’s part of the reason we launched Velocity, our own accelerator program that’s funded by philanthropic contributions from the community. This helps diminish the risk so at the end of the program, the Birmingham angel investor community can step up and make an investment. We’ve raised the comfort level of the community for investing in startups.
Birmingham has historically suffered from image. People have preconceived notions of Birmingham and the South in general. Innovation Depot tried to counter these false narratives and seeks to help the city brand its startup sphere. Where there is no identity, that gives us an opportunity to establish one.
What industries have historically thrived in Birmingham? How has this shaped the startup ecosystem there?
When I came to Birmingham, the city was very industrial with lots of manufacturing, steel, and iron. Financial services are also very big. I thought there would be an abundance of technology that enables advanced manufacturing but our biggest successes have been around healthcare IT and then B2B/B2C SaaS companies like Shipt. I’ve been surprised and impressed by the diversity in the types of companies.
Are there specific policies or government initiatives that have enabled startup growth in Birmingham?
We have certainly taken advantage of some federal funding opportunities from the Small Business Administration and the Economic Development Agency that helped us launch and build our accelerator program.
From a state perspective, we had a historic tax credit that spurred a lot of the real estate development downtown, which has helped our graduating companies stay close physically for infrastructure, relationships, and resources. This undoubtedly complemented the growth that we were already seeing in the startup space.
How involved are your government representatives in the Birmingham startup space?
We have a brand new mayor who is very focused on promoting innovation and entrepreneurship. There’s hopefully a lot that’s going to happen in the near future as these ongoing local and statewide conversations develop.
A few years ago Bruce Katz of the Brookings Institution visited Birmingham and was taken aback by how our city had all of the assets required for growth centralized in our urban core. This served as a wake up call for the community to leverage these resources and drive the development of a technology ecosystem for the purposes of economic development. To this end, Innovate Birmingham, a collaborative initiative between a number of organizations (both public and private) was launched. This is the most motivated and aligned I’ve seen this region around a common goal.
From a policy perspective, do you have any “wish list” items for the Birmingham ecosystem?
A grant matching program from the state government, the University of Alabama at Birmingham (UAB) is a top NIH grant recipient, receiving more than $238 million in 2016. So much of the technology in biotech, medical device, and cybersecurity space is being developed within UAB and a matching program could certainly help push some of that along. State tax credits around angel investing and other types of investment in early stage companies could also help free up some capital.
Are there some startups to watch coming out of the Birmingham-area?
FLEETIO - Fleet operations management software. Automatically tracks drivers and monitors their safety using mobile devices.
Planet Fundraiser - Makes charitable giving and fundraising work for everyone by helping businesses nearby choose a percentage that they’d like to donate on purchases made.
Theranest - Practice management software for therapists, psychologists, social workers, and counselors. Allows small practices to streamline their operations and go paperless.