BIRMINGHAM, AL (WBRC) - Alabama ranks second to last in the country for startup activity, according to The Kauffman Foundation, a group that studies entrepreneurial success.
Now a recent study on the Birmingham-metro area is raising more concerns about how much support is offered to new businesses, and the consequences of those businesses failing to launch.
"It wasn't until more recently that cities and states began looking at startups as a viable economic development model," the President and CEO of Innovation Depot, Devon Laney, told WBRC.
Laney says only a decade or two ago many policymakers across the country focused on convincing established companies to relocate to their area or finding ways to incentivize the expansion of companies already located nearby.
"Now, encouraging companies to grow from the ground up is seen as a way to have a very large impact not just on the current economy, but for the area's economic future."
In fact, the Building (IT) Together report on Birmingham, notes 20 percent of new jobs are tied to young businesses. While groups like Innovation Depot are making progress to help tech startups, in particular, there is much more to accomplish.
"We are so excited to be on the front-end of knowing what a gem in the tech space Birmingham is," startup founder Ashlee Ammons told WBRC.
Ammons and her mother, Kerry Schrader, are working to raise $1 million in venture capital for their business, Mixtroz, which helps people connect at live events through a smartphone app.
"You want to network at a conference, but you don't want it to be awkward or creepy," said Schrader during a Skype interview from the home she's trying to sell in Nashville. The businesswomen are relocating to Birmingham after winning $100,000 in a pitch competition and being accepted into Innovation Depot's Velocity Accelerator Program.
Laney says raising seed money for worthy businesses is just one of three goals the entrepreneurial ecosystem should work towards. Another key component to creating a friendlier culture for startups is growing the area's skilled workforce.
A tight labor market makes it difficult to fill not only tech positions but also sales and middle-management positions. People with the experience or training that startups need are frequently unwilling to leave their current jobs for fear of the new company failing.
Third, economic development groups have to increase the visibility for startups and help them achieve better access to large corporations in the area, says Laney.
"Supporting startups is more than just saying 'we're going to sponsor an event.' It's actually using the startups, using the products, using the services, hiring them as vendors, that moves the needle for these startup companies," said Laney who points to Mixtroz as one great example of a startup now being used by big companies like Alabama Power and groups at UAB.
He says for organizers at large events in the area, rather than contracting an established out-of-state company or software, Mixtroz should be top-of-mind for jobs that include maximizing an attendee's experience and collecting data on who participated.
"I think in Birmingham you have a lot of people who really believe in the city and want it to be re-energized," said Ammons. "Something we've discovered for Mixtroz, as a minority woman-owned business, Birmingham is an ecosystem that feels us and we feel them equally, so that's where we're going to go. There's no reason, as an entrepreneur to stay glued to somewhere that doesn't see your vision."
Click here for a list of startups currently working at Innovation Depot.