With so much venture capital invested in Silicon Valley, it’s easy to forget that startup founders can be anyone and can come from anywhere.
This week, Crunchbase News took a look at early-stage startups in the southeastern region of the United States, covering young companies in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.
The five startups that we decided to include in this list are the companies that raised the largest Angel, Seed, Series A, or Series B rounds that have taken place in 2018 so far. The included startups are from five different states, and work in various industries. Below, they are ordered by amount raised in their last funding round.
Reston, Virginia: StreetShares
Founded in 2014 by U.S. Air Force veteran Mark Rockefeller and South African Air Force veteran Mickey Konson, StreetShares is a veteran-focused financial solutions company operating out of Reston, Virginia. The veteran-run FinTech company provides veterans with small business funding, lines of credit, and simpler to attain alternatives to VA small business loans for vet-owned businesses.
Since its inception, the company has raised a known total of $231.3 million from Silicon Valley, New York, and Washington D.C. based investors alike. It’s latest Series B which brought in a total of $23 million was led by a $20 million investment from Maryland-based Rotunda Capital Partners along with $3 million from other investors including Connecticut-based Stony Lonesome Group. StreetShares Director of Content Marketing Shauna Pulayya told Crunchbase News that the company will use the funds for enhancing their business loans, lines of credit, government contract financing and investor products to give customers a more streamlined digital and customer-focused experience.
Atlanta, Georgia: Greenlight Financial Technology
Dubbed “Transaction Alley,” Atlanta is the FinTech capital of the United States with 70 percent of all payment transactions handled in the city. It’s no surprise, then, that one of the five early stage startups that raised in 2018 is Atlanta-based FinTech startup Greenlight.
The company offers debit cards to parents aiming to keep track of their kids’ transactions and limit risk, while also teaching them financial responsibility. The debit cards are monitored through a mobile app, and allow parents to transfer funds and freeze accounts instantaneously when necessary and choose specific stores, categories or website for purchasing.
The company has raised a known total of $23.5 million since it was founded in 2014. It raised a $16 million Series A in 2018 led by Atlanta-based TTV Capital making up the majority of that known total. The team told Crunchbase News that it is is passionate and optimistic about the growth of Atlanta’s tech scene.
“We think Atlanta is one of the best kept secrets of the startup scene in the U.S. because there’s excellent talent fueled by solid universities, the cost of living is significantly lower, and it’s home to one of the best airports for business.”
Auburn, Alabama: Vitruvias Therapeutics
Vitruvias Therapeutics, a pharmaceutical company based out of Auburn, Alabama was founded in 2013 by Bryce Harvey and Carl Whatley.
“Nationally, we are among the very few recent generic companies who have started-up in the last four years,” Whatley told Crunchbase News. “The generic market has experienced significant price erosion in the last 18 months. This market dynamic has given start to a small group who are focusing on differentiated products that are difficult to make, and in several cases are in shortage.”
According to its website, the company focuses on developing generic pharmaceuticals that are “either (i) complex APIs (active pharmaceutical ingredient) that are difficult to source, or (ii) finished dosage forms that are inherently difficult to manufacture.” The company has raised a known total of $12.5 million from outside investors with the vast majority of those funds sourced from its $11.5 million Series A led by JW Asset Managers announced in January, 2018. According to Whatley, the fund will be used to to complete eight additional generic drug development projects, which are in various stages of development, and that the company expects to have a positive EBITDA by 2019.
As far as startups in the southeastern U.S. are concerned, Whatley thinks that the desire to build startups in the area is “quite robust” but that there are “several factors that prevent the idea-driven entrepreneur [from taking] the first step.”
On of those factors, he said, is that ambitious entrepreneurs lack a community of VCs and startups from which to learn the process and grow their ideas. “Successful VC backed companies are few down here and the mentors needed to guide these beginners are few in number.”
The second factor he says affects young entrepreneur hopefuls and early stage startups? Difficulty with local fundraising. “There is a tremendous lack of seed or early stage VC money available. And by lack, I mean virtually none.”
Tampa, Florida: Peerfit
Peerfit is a Tampa-based company that has endeavored to “redefine corporate wellness programs” by offering a program that connects companies to local fitness and wellness studios. Though it started in Tampa, Florida is no longer its largest market. Peerfit now serves companies all over the United States including in cities like Miami, Seattle, New York, and San Diego.
Unlike consumer-focused options like ClassPass and Groupon, the company’s platform integrates with the data reporting and reporting processes of participating companies. “We took what we feel is a consumer grade solution and made it pass the high bar needed to work with insurance companies and employers in terms of integrations and security and provide the data they need to measure their investments.” Peerfit CEO and Co-founder Ed Buckley III, PhD told Crunchbase News in an email.
Founded in 2011, Peerfit has raised a known total of $14.2 million across four funding rounds with its latest Series B round bringing in a total of $10.3 million. “Businesses which are interested in consumer loyalty will be a major growth area for us in the coming months,” Buckley wrote.
And though the company has primarily sourced its capital from private individual investors, they have had interest from VCs in New York and Silicon Valley. However they decided to eschew the route of other tech companies. “We felt the right path was one with a smaller cap table of people (not groups) who could fuel our growth and still give us the autonomy… to control the company on our terms,” he wrote.
The CEO does think that VCs should be looking to the Southeast more often and that as resources to support startup growth have increased, more potentially successful novel concepts have emerged.
“If the old saying was ‘New York City, if you can make it here, you can make it anywhere’ I think the same goes for the Southeast. It isn’t easy to be a tech company here, and if you manage to survive and thrive here, you can darn sure make it anywhere,” he wrote.
New Orleans, Louisiana: ZLien
Zlien was founded in 2008 by construction lawyer Scott Wolfe with the goal to “even the $1 trillion construction playing field” by making payment processes faster. The company aims to “kill off liens and unjust outcomes” and allow companies and contractors to carry out partnerships and business deals with less focus on the regulations and requirements that slow those processes down.
Zlien has raised a known total of $16.7 million. It’s latest Series B funding round brought in $10 million with a lead investment by Austin-based S3 Ventures. Zlien has attracted investment from Silicon Valley and other investment hubs like Austin with VCs like California-based Altos Ventures and Brick & Mortar Ventures also showing interest in the company. Zlien CEO Scott Wolfe told Crunchbase News that fundraising outside of New Orleans was tricky, at first.
“One of My tactics in fundraising outside of New Orleans has been to be patient, to focus first on building a good business with good fundamentals, and to naturally develop relationships with capital providers across the country,” he wrote in an email.
As for general investment in the south, he thinks that VCs in Silicon Valley should direct more attention to the region.
“As Silicon Valley begins to funnel more money into the B2B space, they’re going to encounter a lot of industries that aren’t strongly represented in the Bay Area. The South has roots in a lot of different and valuable industries, and can serve as a good home for disruptive companies,” he explained.
He went on to say that the tension between Silicon Valley mindset in developing a product and scaling a business and the mindset outside of the Valley has actually been good for his business. “I found that to be a really, really healthy tension that let us pull from the best of both worlds.”
Zlien’s new funds will be invested in product development, sales, and marketing, according to Wolfe. The company operates in every state, but Wolfe says that the biggest growth opportunities are in California, Texas, New York, Florida and the like, where economic and construction activity are the highest.
Illustration Credit: Li-Anne Dias