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July 5, 2022
Written by Andrew Smith

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Cities around the Gulf Coast have emerged as robust tech ecosystems, and centers for venture funding.

While these ecosystems began developing over the past few years, the pandemic only accelerated the migration of professionals from tech centers like New York and the Bay Area to these locations.

These cities offer opportunities such as a reasonable cost of living, an engaged local community, and the chance to be a part of building something new and meaningful.       

The Gulf Coast venture and startup scene is anchored in two large ecosystems, and two states which have played a part on the national stage over the past few years, particularly in tech. Both Florida and Texas encompass large geographic areas, and host different tech ecosystems (and focus on different verticals), but they act as the pull to the region. The southern cities between them all have their own culture, but there are similarities which separate them from the coasts.

What defines the Gulf Coast, and the entrepreneurs emerging from this region is that the fundamentals of building tech companies are different than traditional tech centers. In 2022 the notion that founders can build tech companies with strong fundamentals around the Gulf Coast is becoming a fact.

A new regional paradigm in tech

The region, and its values, can set the pace for what will be in the coming years.

Capital has started flowing to new regions as well. As Brookings notes: “research by PitchBook and the Washington, D.C.-based investment firm Revolution reported that the share of early stage venture capital dollars going to non-Bay Area startups was on pace to exceed 70% in 2021—up from 60% in 2014.”

While we may be entering an economic downturn, tech companies in areas like the South will not only weather the storm but come out of it stronger due to their prudent allocation of resources.

Our prediction is that these Southern cities where talent builds high-growth startups, including B2B SaaS companies, will continue to develop in the coming years, and they cannot be judged on how they appear today.

While still relevant, the hold that places like New York and the Bay Area will have over the tech community will change, and where talent and capital concentrate will be more decentralized.

The Gritty Gulf Coast

A recent survey conducted by LinkedIn indicates which cities host the fastest growing tech talent, and includes a number of cities in the region: “Sunbelt metro areas now are making the fastest headway. The top 15 includes three Florida hubs, three more in North Carolina, two in Tennessee and two in Texas.”

In Texas where Golden Section is based, Houston has been an active startup ecosystem for several years, and an innovation hub for decades! While we focus on B2B SaaS companies, there are other strong verticals such as esports, hardware, and space tech in the city. The large number of hospitals in the city have also made it a location for digital health.

Dallas is also notable in building its tech presence. Austin has been a source of talent and growth stage startups for some time, with the pandemic only driving more tech professionals from the Bay Area to Austin. But because Austin has gotten so mainstream and expensive, professionals are seeking new locations.

Regardless of the higher relative cost of living and more and more people moving there every day, Austin and Miami do serve as anchor cities for the region.

A deeper dive into the region shows Floridian cities such as Tampa and Sarasota have built impressive ecosystems. Miami is also an example of how the city under the leadership of mayor Francis Suarez has done the once unthinkable; make southern Florida a legitimate place to build a high-growth startup. First the investors flocked to Miami, and then the startups followed… web3 related companies have built a robust ecosystem in the city.

In between Texas and Florida, cities such as Birmingham, Alabama have built ecosystems touting unicorns such as Shipt. This region also includes initiatives such as Startup Nola, and like many metropolitan areas, New Orleans has invested in developing a tech ecosystem.

A bit north in the region, Oklahoma has significant entrepreneurial activity in places like Oklahoma City and Tulsa, which has emerged as a tech center by launching several startups and VCs, and a focused effort by the city to develop a talent ecosystem. Arkansas’s tech activity is centered around Bentonville and Fayetteville, with local companies such as Walmart helping develop the local ecosystem.

For those outside the Gulf Coast region, the activity here may not even be registering. And that is what makes founders in these cities so driven, because they want to stake their claim.

The founder profile

There are factors such as diversity, stronger community ties, and personal attachment to a region (as opposed to a major coastal city, where transient professionals come to self-actualize), which defines the DNA of founders from the Gulf Coast.

These are values which Golden Section looks for in entrepreneurs, along with a focus on investing in companies with strong fundamentals that are looking to solve real problems.

This profile of the founder, or early employee, that is looking to just win the lottery is for the coasts. Along the Gulf, there is a focus on building sustainable companies at reasonable valuations geared toward the long haul.

From Texas to Florida, and along the Gulf Coast, tech communities in this region have their own unique DNA and can build the next wave of successful high-growth startups.

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