A study by professors at the Georgia Institute of Technology reveals that Atlanta’s reputation as a high-tech center masks a decade of erosion. Though it leads the U.S. in the physical resources that attract and sustain high-tech industry, Atlanta companies haven’t meshed within the local economy. The result is an industry profile described by the study as “at best, stagnant.” The findings offer a wake-up call to Atlanta and a roadmap for other regions looking to grow high-tech industry. For example:

• Forty percent of Atlanta’s high-tech start-up companies leave the state within three years, with California, New York, New Jersey, and Florida serving as their most common destinations. “Instead of building great high-tech companies, Atlanta has become a feeder system for great high-tech companies in other states,” says study co-author Dan Breznitz, assistant professor in the Schools of International Affairs and Public Policy within Georgia Tech’s Ivan Allen College of Liberal Arts.
• Although Atlanta features top research universities, a large educated labor pool, a wealth of new technologies and entrepreneurs, a vibrant creative class, and generous venture capital financing, the city lacks the cohesive business social structure needed to sustain high-tech companies.
• Little contact exists between the IT executives in Atlanta’s most promising start-ups and those at the city’s Fortune 500 and other established technology companies. CEOs, attorneys, and managers in Atlanta IT companies don’t sit on each other’s boards and don’t communicate.

Atlanta’s not alone. A study by researchers at the Center for an Urban Future, a Manhattan think tank, gives New York City similarly low marks for turning scientific discoveries at local research institutions into start-ups and economic growth. In his blog post about the study, Business Week columnist Bruce Nussbaum writes, “My own experiences working with NYC officials to introduce an Exec Ed program run by Parsons School of Design and the Rotman School of Management to retrain ex-Wall Street bankers to be innovative entrepreneurs was a dismal failure.” The city’s Economic Development Corporation “is full of lawyers and one-time business consultants from McKinsey” who don’t understand innovation, he charges. “NYC needs to harness its expertise in social media platforms, design thinking, and design to develop new delivery systems for its health and education industries.”

Findings from the Center for Urban Future report suggest:

• Although New York City is home to several of the world’s leading universities and research centers, few have become catalysts for entrepreneurship and local economic development. Instead, most of the city’s universities fail to support efforts to spin off tech ventures and to sustain engineering programs. Some schools are preoccupied with licensing research technologies to existing firms outside New York rather than spinning off companies with the potential to create local jobs.
• Although New York City’s research institutions are particularly strong in the life sciences, the city was home to just one biotech company that received VC funds during the fourth quarter of 2008 and the first quarter of 2009. During the same period, 13 biotech firms elsewhere in the New York City metro region received VC funds while Silicon Valley had 41 such firms, the Boston area had 33, and San Diego had 17.
• The city’s leading universities and nonprofit research institutions generated 21 startups in 2007, compared to 59 for institutions in Boston. Columbia University was a bright spot, producing 12 startups — more than all but four universities in the U.S. — and New York University spun out six companies. However, Mount Sinai School of Medicine, the Albert Einstein College of Medicine at Yeshiva University, and Memorial Sloan-Kettering Cancer Center — all leaders in attracting NIH research grants — produced just three start-ups combined.
• New York City lacks a critical mass in engineering programs, according to the report — a major concern since the mix of engineering and science often provides a critical spark for commercializing technologies. In 2007, Columbia was the only New York City institution to rank among the top 100 U.S. universities for R&D expenditures in engineering, placing 50th.
• New York City’s tech entrepreneurs have comparatively few options for early-stage financing. Of the nation’s top 55 VC firms in 2007, only two were based in New York City while Silicon Valley was home to 27 and Boston to 11.
• Like Atlanta, New York City lacks a high-tech “ecosystem” that allows for frequent, casual interactions between the web of people who form the core of any dynamic tech sector, including scientists, engineers, entrepreneurs, VC and angel investors, tech transfer officers, and patent lawyers.

The Center for Urban Future report is accompanied by the city’s first-ever Innovation Index, a package of 49 charts and graphs that compare New York to other cities and regions on a broad range of indicators measuring both existing science and technology assets and the city’s level of success at commercializing these assets.

Sources: PhysOrg and BusinessWeek

Posted September 30th, 2009 under Tech Transfer

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