Note – This podcast is 100% AI, generated with Google’s Notebook ML based on information we provided from articles we published about Vic.
Link to the episode:
Lisa Calhoun
Welcome to the Atlanta StartUp Podcast. I’m Lisa Calhoun, your host, and this is a very special edition. We are releasing our Q3 2024 AI Startups in the South Report, and so I’m completely biased. I wrote the report, so there’s no way you’re going to hear me talking about it. I decided to enlist AI. So what we have in this edition is a wonderful couple of AI hosts that I provided a copy of the report to, and they take it away. And so for the next 18 minutes, please listen to the best of the best in digital personality hosts sharing with you the latest information from Q3 2024, year to date, I’ll tell you what this report is, chock full of facts. We covered just under 400 AI startups in the South. I’ll let you take a listen and see what you think.
Male AI Voice
We always hear about Silicon Valley being the hub for AI, but is it really the only place to be?
Female AI Voice
And this new report from Valor Ventures has us wondering, is there somewhere else, somewhere unexpected, that’s got what it takes to become the next Silicon Valley for AI?
Male AI Voice
Exactly. And their report is called AI in the South, and it’s got people talking because they’re making a bold claim.
Female AI Voice
They’re saying the South is going to be the leader in this whole applied AI thing.
Male AI Voice
Yeah, applied AI. What exactly is applied AI, and why is the South supposed to be so good at it?
Female AI Voice
Applied AI is all about using AI to solve actual problems that businesses are facing right now.
Male AI Voice
Interesting.
Female AI Voice
Think like optimizing supply chains to get products out faster and more efficiently.
Male AI Voice
Okay, I see.
Female AI Voice
Or taking all that data companies have and using it to understand their customers better. Making smarter decisions, that kind of thing.
Male AI Voice
So less about robots taking over the world and more about making businesses run smoother.
Female AI Voice
Yeah, exactly. And what makes the South so well suited for this, according to Valor, is they’ve got a few key advantages going for them.
Male AI Voice
They do lay out some pretty compelling arguments in this report.
Female AI Voice
The first one is the talent pool.
Male AI Voice
I was blown away when I saw that Georgia Tech is apparently producing more AI graduates than almost any other university.
Female AI Voice
It’s true, and they’re not just graduating with general AI knowledge. They’ve got those specialized skills that businesses need right now, like machine learning and computer vision. JLL research actually ranks them as the top source for AI talent.
Male AI Voice
Wow! Okay, so there’s the talent. What else is driving this whole Southern AI boom?
Female AI Voice
Well, they’ve also got data, and tons of it.
Male AI Voice
Data – the fuel for the AI engine.
Female AI Voice
Think about it. The South is home to a huge number of Fortune 500 companies, Coca Cola, FedEx, UPS. I mean, these companies have been collecting data for decades.
Male AI Voice
Yeah, that’s true.
Female AI Voice
They’ve got mountains of this stuff.
Male AI Voice
So they’re sitting on a gold mine of data, and now with AI, they can finally unlock its true potential. Okay, so we’ve got a talented workforce and a treasure trove of data. What’s the third ingredient in this recipe for AI success?
Female AI Voice
That might be the most interesting part. They’re all about buying over building.
Male AI Voice
What do you mean?
Female AI Voice
So Southern companies, they’re experts in their industries, whether it’s manufacturing, logistics, healthcare, they may not be software experts, and that’s okay. They’re realizing that they’re more likely to invest in and partner with AI startups that have already developed cutting edge solutions, rather than trying to build everything in house.
Male AI Voice
So they’re playing to their strengths.
Female AI Voice
Exactly. They’re smart.
Male AI Voice
They’re recognizing the value that these AI startups bring to the table, and they’re willing to embrace it.
Female AI Voice
Absolutely! And Valor Ventures has a really interesting perspective on all of this. They’re not just talking about this trend. They’re on the ground. They’re tracking nearly 400 AI startups across 92 cities in the South using their own AI-powered platform.
Male AI Voice
Well, hold on, they’re using AI to track AI startups.
Female AI Voice
Yeah, they called it Vic.
Male AI Voice
That’s pretty meta.
Female AI Voice
It is, right? They’re using AI to find the best AI, and from what they’re seeing, there’s a lot to be excited about.
Male AI Voice
I’m hooked. So they’re tracking all these startups. What’s the landscape looking like?
Female AI Voice
Well, it seems like Austin, Atlanta and Miami are emerging as those major AI hubs in the South.
Male AI Voice
That makes sense. We hear a lot about those cities being tech hot spots in general.
Female AI Voice
Yeah. And while those are the big ones, they’re seeing activity in smaller cities too, all over the South.
Male AI Voice
So it’s not just concentrated in a few places.
Female AI Voice
No, this is spread out, which is interesting, because it suggests that this isn’t just a fad or something. It’s really starting to take root across the entire region.
Male AI Voice
So what kind of AI are these Southern startups building?
Female AI Voice
One of the most interesting trends they highlight in the report is the focus on enterprise sauce.
Male AI Voice
Enterprise sauce.
Female AI Voice
So we’re talking about software solutions that are specifically designed for businesses, not for consumers. These aren’t the next big social media apps.
Male AI Voice
No, we’re talking about tools that help businesses optimize their operations, analyze their data and streamline their processes.
Female AI Voice
Things that maybe aren’t as flashy, but that can have a huge impact.
Male AI Voice
It’s about solving real world problems like we were talking about before.
Female AI Voice
Exactly! These Southern AI companies are focused on making a real difference. They’re not just in it for the hype.
Male AI Voice
So it sounds like they’re building the backbone of how businesses across various industries will operate in the future, a future driven by AI.
Female AI Voice
I think you’re right, and it’s a different approach than what we often see, especially compared to like Silicon Valley.
Male AI Voice
You think so? How so?
Female AI Voice
Well, Silicon Valley, it’s all about moving fast, breaking things and chasing the next big thing.
Male AI Voice
Yeah, that’s the stereotype, at least.
Female AI Voice
Meanwhile the South, it feels more grounded, more practical, more focused on building solutions for the long haul.
Male AI Voice
More about building lasting impact than chasing headlines.
Female AI Voice
Yeah, exactly.
Male AI Voice
It’s less about disruption for disruption sake and more about finding smart, sustainable ways to use AI to solve real problems. And it’s this focus on applied AI, on those real-world solutions that Valor seems to think will give Southern startups a major advantage in the long run.
Female AI Voice
Especially as more and more businesses realize the need for AI solutions.
Male AI Voice
So while Silicon Valley is busy building the metaverse, the South is focused on building the AI-powered businesses that will actually power our economy in the years to come.
Female AI Voice
And I think that’s a story worth paying attention to.
Male AI Voice
definitely feels like there’s something special brewing in the South.
Female AI Voice
Yeah, it’s exciting,
Male AI Voice
But it’s still early days, right? What are some of the challenges that they’re going to have to overcome to really solidify their position as the next big thing in AI?
Female AI Voice
That’s the million dollar question, isn’t it?
Male AI Voice
It is. And luckily, valor Ventures has some thoughts on that too. They don’t shy away from the challenges in their report.
Female AI Voice
That’s what I like about them. They’re not just cheerleading. They’re giving a realistic assessment of the landscape both the good and the bad
Male AI Voice
Exactly, warts and all.
Female AI Voice
And one of the biggest challenges they highlight is a familiar one – investment, or the lack thereof, at least compared to other regions, right?
Male AI Voice
Because if the South is truly poised to become a major player in the AI space, shouldn’t investors be lining up to throw money at these startups?
Female AI Voice
You would think so, wouldn’t you?
Male AI Voice
Well, it seems like maybe they haven’t quite caught on yet, at least not to the extent that they have in other places.
Female AI Voice
It seems like there’s a bit of a disconnect there, a lag between the potential and the investment dollars flowing in.
Male AI Voice
So let’s talk about that. What’s the investment landscape looking like for the Southern AI startups, and why aren’t more investors jumping on this opportunity?
Female AI Voice
Well, that’s where things get interesting. It’s not just about the total amount of money being invested in AI. It’s about where that money’s going. You know, what stages of growth those companies are in.
Male AI Voice
So are you saying that Southern AI startups are getting left out in the cold when it comes to funding?
Female AI Voice
Kind of Yeah, the report suggests that there’s a real need for more early-stage funding in the South, specifically what they call seed funding.
Male AI Voice
So for those of us who aren’t venture capitalists, explain what seed funding is and why it’s so important, especially for these young AI companies
Female AI Voice
Seed funding is that very first often quite small amount of money that a startup needs to get their idea off the ground.
Male AI Voice
It’s that initial boost to get things moving Exactly.
Female AI Voice
And for AI companies, this can be even more crucial, because often the tech they’re developing requires a lot of upfront investment in things like, you know, computing power, data sets, hiring specialized engineers all that.
Male AI Voice
It’s not like they just build an app in their garage and launch it on the App Store.
Female AI Voice
Exactly. AI is a different beast, and that’s where that seed funding comes in.
Male AI Voice
So what’s the situation in the South when it comes to seed funding? Are there enough investors willing to take those early bets on these AI startups?
Female AI Voice
That’s what the report digs into. And what they found is that while there are definitely investors interested in the South, there’s still a pretty big gap compared to other regions like Silicon Valley, especially when it comes to that early-stage funding.
Male AI Voice
So you’re saying that there’s a potential gold mine of AI innovation happening in the South, but investors aren’t quite throwing money at it the way they are in other places. Why not? Why aren’t they seeing the opportunity?
Female AI Voice
That’s the million-dollar question. I think part of it is just inertia, right? Silicon Valley has this long history of, you know, minting tech unicorns, so naturally, investors are drawn there.
Male AI Voice
It’s the familiar, the known quantity. I get it.
Female AI Voice
But what Valor is arguing is that investors who are willing to look beyond the usual suspects, who are willing to take a chance on something new, they have a real opportunity to get in on the ground floor of something big in the south.
Male AI Voice
So it’s almost like an arbitrage opportunity for investors. The value is there, the potential is there, but the market hasn’t fully caught up yet
Female AI Voice
Exactly! And because there are relatively few as. Established VC firms in the South that are focused specifically on that early stage AI funding. It creates this really interesting dynamic also. Well, on the one hand, it’s a challenge for the startups, because they have to work harder to find those investors who are willing to take a chance on.
Male AI Voice
It’s more competitive to secure those early funds.
Female AI Voice
Exactly, but on the other hand, for investors who are willing to do their homework to really understand the landscape and identify those promising companies early on, the potential returns could be huge.
Male AI Voice
So high risk potentially higher reward.
Female AI Voice
Exactly.
Male AI Voice
But you mentioned something earlier about how valor sees this as more than just about financial returns. What did you mean by that?
Female AI Voice
So Valor, they’re not just saying, hey, come invest in the south, because you’ll make a ton of money.
Male AI Voice
Though. I’m sure they wouldn’t mind if that happened.
Female AI Voice
Yeah, of course. But what they’re emphasizing is the opportunity to help shape the future of an entire industry, to be a part of something bigger than just, you know, the bottom line.
Male AI Voice
So it’s about investing in companies that are tackling those real-world problems, those meaty challenges that have the potential to really move the needle on things like healthcare, manufacturing, even things like what agriculture.
Female AI Voice
Exactly! All those industries where the South has such a strong foundation.
Male AI Voice
It’s about investing in companies that are building the tools and the technologies that are going to shape how we live and work in the years to come.
Female AI Voice
I think they put it best in the report when they say, and I’m paraphrasing here, that investing in Southern AI isn’t just about backing companies, it’s about backing a vision for the future.
Male AI Voice
That’s a powerful message.
Female AI Voice
And it seems like it’s resonating. They’re starting to see more and more investors, you know, those with a longer-term vision, starting to pay attention.
Male AI Voice
That’s encouraging to hear. Though I’m curious, it’s not just about throwing money at the problem, right? What about the support these startups need once they’ve secured that initial funding?
Female AI Voice
Because money alone doesn’t guarantee success.
Male AI Voice
No, definitely not.
Female AI Voice
And that’s another area where Valor sees a big opportunity for investors to make a real difference.
Male AI Voice
Okay, so what do they suggest?
Female AI Voice
Mentorship, guidance, connections, that kind of thing. They argue that these startups, especially those in the early stages, need more than just capital. They need access to experienced individuals who can help them navigate the often very complex and very challenging world of building a successful business.
Male AI Voice
So it’s not enough to just write a check. Investors need to be actively involved in nurturing these companies, sharing their expertise, and helping them overcome the inevitable hurdles that come with starting and growing a business.
Female AI Voice
Exactly! And they highlight this concept of a supportive ecosystem.
Male AI Voice
Meaning like a network of mentors, advisors, investors, and other entrepreneurs who are all invested in seeing each other succeed.
Female AI Voice
Exactly. And that’s something that Silicon Valley has arguably in spades, but it’s still developing in the south.
Male AI Voice
And you’re saying that investors have a key role to play in building that ecosystem.
Female AI Voice
Exactly by providing not just funding, but also guidance, connections, and support. Investors can help to create that virtuous cycle where success breeds more success.
Male AI Voice
one successful AI startup can inspire a dozen more. It’s a compelling argument, but let’s shift gears a bit and talk about the founders themselves, those brave souls who are taking the leap and starting these AI companies in the South. What does the report have to say about them and the challenges they face?
Female AI Voice
another fascinating aspect of this whole story. And Valor, they have some pretty strong opinions about the mindset that Southern AI founders need to adopt if they want to compete on a global stage.
Male AI Voice
So they need to be thinking big, aiming for the global market from day one.
Female AI Voice
Exactly, and that can be a challenge, especially when you’re starting out in a region that’s maybe not as globally connected as some of those other tech hubs.
Male AI Voice
So what do these Southern AI founders need to do to overcome that hurdle and really make their mark on the world stage?
Female AI Voice
Well, Valor outlines a few key recommendations for founders, and it boils down to this. Don’t be afraid to think outside the box, or maybe think outside the region, you know.
Male AI Voice
So don’t limit yourself to just looking for customers, investors, or talent within your own backyard.
Female AI Voice
Exactly. They specifically talk about the importance of staying connected to what’s happening in other AI hubs around the world, going to those conferences, building relationships with people from different backgrounds and different perspectives.
Male AI Voice
This is about learning from the best, no matter where they are.
Female AI Voice
Exactly, and not being afraid to bring those ideas back to the South, and, you know, adapt them, remix them, make them your own.
Male AI Voice
It’s about taking the best of both worlds, the strengths of the South, that practicality, that focus on real-world solutions, and combining it with that global perspective, those cutting-edge ideas that are coming out of other AI hotspots.
Female AI Voice
Exactly. It’s about finding that sweet spot where innovation meets impact.
Male AI Voice
I like that innovation meets impact, and it seems like Valor is really putting their money where their mouth is when it comes to supporting these Southern AI startups, both with funding and with mentorship. But I wanted to circle back something you mentioned earlier about the importance of diversity within this ecosystem. Can you elaborate on that a bit? Why is diversity so crucial for the success of Southern AI?
Female AI Voice
That’s a topic that’s close to valors heart, and it comes up throughout the report. They actually have a really interesting philosophy that they call the inclusion premium.
Male AI Voice
The inclusion premium. Okay, I’ve never heard of that. Tell me more.
Female AI Voice
So their belief is that, and again, I’m paraphrasing here, but they believe that diversity isn’t just like a nice to have or, you know, some kind of moral imperative. They see it as a fundamental driver of innovation and, ultimately of economic growth.
Male AI Voice
Interesting.
Female AI Voice
they argue that when you have a more diverse group of people working on a problem, you’re more likely to come up with creative, effective solutions.
Male AI Voice
Because you’ve got different perspectives, different life experiences, different ways of looking at the world, all coming together.
Female AI Voice
Exactly, and in a field like AI, which has the potential to impact pretty much every aspect of our lives. It’s absolutely crucial that the people building these technologies reflect the diversity of the people who are going to be using them.
Male AI Voice
So it’s not just about fairness or representation. Those are obviously important. It’s about making sure that the AI being developed in the south is actually useful and relevant to as many people as possible.
Female AI Voice
Exactly. It’s about making AI that works for everyone.
Male AI Voice
And how does that philosophy, that inclusion premium? How does that actually play out in what valor is doing?
Female AI Voice
Well, for one thing, they’re very upfront about the need for greater diversity among AI startup founders themselves, they acknowledge that historically, the tech industry has had a problem with representation, and they’re actively working to change that.
Male AI Voice
So how are they doing that?
Female AI Voice
One example is their startup runway program.
Male AI Voice
You mentioned that earlier.
Female AI Voice
Yeah, it’s this really cool initiative they started a few years back that provides mentorship, resources, and connections specifically to underrepresented founders in the South.
Male AI Voice
Underrepresented meaning like women, people of color, people from underprivileged backgrounds, that kind of thing.
Female AI Voice
Exactly.
Male AI Voice
So they’re really trying to level the playing field and create opportunities for those who might not have had them otherwise. It’s about breaking down those barriers to entry and making sure that everyone has a shot at building the next big thing in AI.
Female AI Voice
Exactly. And it’s not just about who’s building the technology. It’s also about what they’re building. Valor encourages its portfolio companies to think critically about the potential impact of their technology on different communities and to design their solutions in a way that benefits everyone.
Male AI Voice
So it’s about building AI that’s not just innovative, but also inclusive and equitable.
Female AI Voice
Exactly. And I think that’s what makes this whole southern AI movement so exciting. It’s not just about, you know, building cool technology for technology’s sake. It’s about using AI to solve real problems, create opportunity and build a better future for everyone.
Male AI Voice
It’s a powerful vision, and it sounds like valor Ventures is playing a key role in making that vision a reality?
Female AI Voice
Well, we’ve covered a lot of ground today. We talked about the South’s surprising rise as an AI powerhouse, the focus on applied AI, the investment landscape, the importance of mentorship and a global mindset, and of course, valor ventures, commitment to diversity and inclusion. It’s been a fascinating conversation. But before we wrap things up, I want to give you the last word. What’s the one big takeaway you hope our listeners will remember from this deep dive?
Male AI Voice
You know, I think if there’s one thing I want people to take away from this, it’s that the future of AI isn’t written yet. I like that. It’s not just going to be some Silicon Valley story. There’s a whole lot of talent, creativity and ambition brewing in the South, and they’re just getting started.
Female AI Voice
So keep an eye on the south, because they might just be the ones to write the next chapter in the AI revolution.
Male AI Voice
Could have said it better myself, this report from Valor Ventures, AI in the South, has given us a lot to think about. If you’re as intrigued by this as we are, we encourage you to check out the full report. We’ll have a link to it in the show notes.
Female AI Voice
Definitely worth a read.
Male AI Voice
And as always, thank you for joining us for another deep dive until next time, stay curious out there.
DOWNLOAD THE FULL REPORT HERE:
https://valor.docsend.com/view/25sic3tauqpxikcg
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