Birmingham Ecosystem

2023 Annual Assessment Of The Birmingham Entrepreneurial Community: Winter Is Here

Today, we are releasing our 2023 Funded Startup List. As expected, Birmingham saw a material dip in the number of funded startups this year. Here are the 2023 top-line numbers compared to 2022:

2023:

TOTAL FUNDED STARTUPS: 94
STARTUPS WITH A ROUND IN 2023: 30
2023 EXITS: 3 

2022: 

TOTAL FUNDED STARTUPS: 105
STARTUPS WITH A ROUND IN 2022: 38
2022 EXITS: 3

As has been our custom for the last four years, we have provided commentary on the market. This year took a little longer than usual because I think that early-stage financing in Birmingham is changing in a material way, but I’m not sure how it will completely change. It’s a tricky market.

So, first: does the number of funded startups really matter? Yes. In a nascent entrepreneurial economy like Birmingham’s, the number of startups really matters: simply put, we need more shots on goals. Failure is built into the growth startup system, and if you use the common metric that only one out of ten startups actually succeed, having 94 funded startups (2023) instead of 105 (2024) translates into one fewer financially successful company for Birmingham — e.g., one less Pack Health, INFLCR, Therapy Brands, etc.

More importantly, perhaps, is that I believe the decline in numbers indicates a retrenchment from the investing side. Throughout 2023, we consistently heard that investors were expending capital to shore up existing investments. Bridge rounds were the norm. This represented a loss for investors not just because they expended additional capital but because less money got recycled into the system. In other words, the amount of reinvested capital is dwindling, perhaps because, in the last couple of years, cash exits have been less than pre-Covid exits.

I think that things will only get worse for startups. Nationwide, we’ve seen numbers indicating that fewer startups are graduating to Series A. We’ve also seen seed investment valuations decline and venture capital in general decrease. The adage that when Silicon Valley coughs, Birmingham gets the flu seems apt. At some point during Covid, I had hoped that the new virtual world would allow easier access to capital, but that has not happened.  We should never underestimate the pull of the home market for venture capital firms; since there is no venture capital firm in Birmingham[1], founders should not underestimate this disadvantage. 

This is an investor’s market with dynamics starkly in their favor. Because capital is sparse, valuations and terms will favor investors. Additionally, the market will cull the herd, and I suspect that in 2024 we will see many of Birmingham’s growth startups pursuing non-venture capital routes — or ceasing to exist altogether. My hunch is that this time next year, our list of startups will shrink further. For investors, that is fine: this type of market leaves only the strongest and the cockroaches. The rest will go away. I would indeed suggest that this is a great time to invest in early-stage startups, but I am a contrarian. 

While this is an extremely tough market for founders, I think it’s not necessarily a bad time for founders with the intestinal fortitude to start a business or stick it out. This is a market where only the very best will succeed: startups that are just “good” are destroyed, and no participation trophies are given. 

However, in this market, what does not kill you will make you better. The truth is that to be a great startup, you always have to be the best. You have to have those essential business tenants that make you successful: great market, great product-market fit, great team. I would suggest that the flush capital markets of the 2020-2022 era allowed less-than-stellar companies to survive and hide their flaws. That cover no longer exists.

If you are the best, then, this is a good market for you. The seed and Series A capital markets, even in lowly Birmingham, should still reward high performance. Our infrastructure is strong, and if we focus on helping the companies that are showing progress, we should continue to be a successful ecosystem in the long run. We just need to remember that nothing substitutes for market fundamentals.

My advice for founders is to closely examine what you are and what you can do to be the best yet. That may mean redefining and even limiting your market, but I would suggest that being the best in a smaller market is vastly superior to being a Friendster in a vast market. If you can own a market in a relatively short time horizon, then you need to reevaluate your strategy to do so.

It is going to be tough out there for a little while, and I also think the way startups are financed is changing. When the markets thaw and spring comes, the way things work may shift but the financial impact of innovating startups is too strong for the capital markets to ignore forever. It will come back. I do not know when or how, but it will. However, until then, buckle up, buttercup, because it may get bumpy.

 

 

[1] When I say there is no venture capital firm, I’m defining a venture capital firm as a firm with a minimum of fifty million of assets under management with operations in Birmingham. By that definition, neither the First Avenue Venture Life Science Fund nor any other fund that I know meets that criteria. 

Prior Years Assessments:

2022 Annual Assessment

2021 Annual Assessment

2020 Annual Assessment

2019 Annual Assessment

 

 

2023 Birmingham
Funded Start-Up List

  1. Accelerate Wind: Erika Boeing, Principal
  2. Acclinate Genetics: Delmonize Smith and Tiffany Jordan, Principals
  3. AI Metrics: Andrew Smith, Principal
  4. Allison Fintech Co.: Brian Alvarez-Bailey, Principal
  5. Alveolus Bio: Vivek Lal, Principal
  6. Analytical AI: David Odaibo, Principal
  7. APEX Pro (DEFT Dynamics): Austin Gurley, Principal
  8. Ashipa Electric: Olu Ajala, Principal
  9. Astound Research: Joel Berry, Principal
  10. Ayas Renewables: Joe McGrail, Principal
  11. Babypalooza: Cecilia Pearson, Principal
  12. Backr (formerly ProU Sports): Thomas Coiner, Principal
  13. Blox: Chris Giattina, Principal
  14. BoomNation: Brent Flavin, Principal
  15. Boulo Solutions: Delphine Carter, Principal
  16. Bridge Therapeutics: Dr. Greg Sullivan, Principal
  17. BrightPay Health Corp.: Archie Otu and Shielvonda Haith, Principals
  18. BuildPlane: Christopher Winslett, Principal
  19. BuyorBorrow Music: Dave Karr, Principal
  20. Case Status: Lauren Sturdivant and Andy Seavers, Principals
  21. CerFlux: Karim I. Budwani, Principal
  22. Chonex: Michael Lynch, Principal
  23. ClearMIND, Inc.: Liz Read, Principal
  24. Cloverly: Dave Folk, Principal
  25. CModel Data, Inc.: Teasha Cable, Principal
  26. Compression Works: Scott Dodson, Principal
  27. Con.doit: Ian Hoppe, Principal
  28. Conserv: Austin Senseman and Nathan McMinn, Principals
  29. Copysmith: Anna Wang, Principal
  30. Croux: Lindsey Noto. Jennifer Ryan, Kenny Kung, Stewart Price, and Brett Ables, Principals
  31. Datacy: Kaleb Jordan Wilson and Paroma Indilo, Principals
  32. Eagle Solar & Light: Sam Yates, Principal
  33. Edify Online: Anil P. Agarwal, Principal
  34. Fighting Cancer Network Inc.: Matt Scalici and Mike Ousley, Principals
  35. Fleetio: Tony Summerville, Principal
  36. Fresh Technology: Mike Bodnar, Principal
  37. Fulmer Instruments, LLC: Benjamin Fulmer, Principal
  38. Glow: Yazmin Cavale, Principal
  39. GoodJob Software: Chase Morrow and Stephen Johnston, Principals
  40. Greens AI/Xplosion Technology, Inc.: Isis Ashford and Kehlin Swain, Principals
  41. Guideway Care: Craig Parker, Principal
  42. HData: Hudson Hollister, Principal 
  43. HealNow, Inc.: Halston Prox and Joshua Smith, Principals
  44. Health OpX: Jose Hernandez, Principal
  45. Help Lightning (formerly Vapaar): Gary York, Principal
  46. High Five Dental/High Five Healthcare: Chad Trull, Principal
  47. Immediate: Matt Pierce, Principal
  48. Immunowake: Xiaoyun Wu, Principal
  49. ImmPrev Bio: Charles O. Elson, Principal
  50. inNOvodel: Gary Lessing, Principal
  51. KaiXR: Kai Frazier, Principal
  52. Kaya: Corey Anand, Principal
  53. Kirklin Solutions: James Kirklin, Principal
  54. Linq: Jared Mattsson and Elliott Potter, Principals
  55. Magic Medical Solutions: Paul Cox, Principal
  56. Mixtroz: Ashlee Ammons, Principal
  57. MomentMD: Abanob Farag, Principal
  58. MoovMo: Daryl Harris, Principal
  59. Novocuff: Amelia Degenkolb, Principale
  60. NRTC Automation: Greg Owens, Principal
  61. The Office Exchange: Anthony Grivet, Devin Davie, and Robyn Ong, Principals
  62. OpenVia (formerly known as The Porch Pod/End Point Logistics): Patrick Campbell, Principal
  63. Prepaid2Cash: Peter Vogt, Principal
  64. Prepaid Technologies: Stephen Faust, Principal
  65. Preventric AI: Philip White, Principal
  66. ProxsysRx: George Salem, Principal
  67. QuantHUB: Matt Cowell, Principal
  68. Quantalytix: Will Bryant, Principal
  69. Rampart IC: Tom Livingston, Principal
  70. REPOWR: Patrick Visintainer and Spencer Ware, Principals
  71. ResBiotic Nutrition, Inc.: Vivek Lal, Principal
  72. Sequense Corp.: Kimber Falkinburg, Principal
  73. Shipshape: Ryan Dalton and Alexander Linn, Principals
  74. Shipshape Urban Farms: Angela Speetjens and Kenneth “Dale” Speetjens, Principals
  75. Smart Alto: Hassan Riggs, Principal
  76. StreetMetrics: Drew Jackson, Principal
  77. Stroma Vision: Anıl Üzengi and Oğuzhan Mete Öztürk, Principals
  78. SynsorMed: Theodore Harvey and Amin Holmes, Principals
  79. Talent Engines: Michael Connolly, Principal
  80. TIXiMED, Inc.:  Anath Shalev and Mike Goodrich, Principals
  81. TriAltus Bioscience: Bob Shufflebarger, Principal
  82. TruSpin Nanomaterial Innovation: Robert Agnew and Anthony Brayer, Principals
  83. Tuesday Advisors (Formerly LeadHR): Ross Blankenship and Howard Glenn, Principals
  84. University FanCards: Lynn Boggs, Principal
  85. Urgent Care for Children: Allury Arora, Principal
  86. Vendrix: David Stewart and Joe Turner, Principals
  87. Vulcan Biosciences: Michael Heaven, Principal
  88. WineView: Gary Campbell and Angela Grace, Principals
  89. Wyndy: Tommy Mayfield, Principal
  90. Xcellent Life: Dr. Lakiesha Crawford, Samuel Berestizhevsky, and Victor Brown, Principals
  91. XpertDox: Sameer Ather, Principal
  92. Yuva Biosciences: Greg Schmergel, Keshav K. Singh, and Saksham Narang, Principals
  93. Ziscuit: Mark Peterson, Principal
  94. Zorro-Flow: David Askenazi, Principal

Exits in the Past Three Years

  1. Atlas RFID (Year of Exit: 2021)
  2. Baremetrics (Year of Exit: 2020)
  3. Diamond Fortress (Year of Exit: 2021)
  4. DiscoveryBioMed (Year of Exit: 2022)
  5. Fetch Talent (Year of Exit: 2020)
  6. Incysus Therapeutics (Year of Exit: 2020)
  7. In8bio (Year of Exit: 2021)
  8. Main Street Family Care (Year of Exit: 2020)
  9. MOXIE IoT (Year of Exit: 2023)
  10. NXTsoft/ThreatAdvice (Year of Exit: 2023)
  11. Pack Health (Year of Exit: 2022)
  12. ProctorU (Year of Exit: 2020)
  13. Simpeo (Year of Exit: 2023)
  14. SPNet Clinical Solutions (Year of Exit: 2020)
  15. StrategyWise (Year of Exit: 2020)
  16. True Load Time (Year of Exit: 2022)
*A Note on the Funded Start-Up List: No representation is made as to the accuracy and completeness of the information provided. We make every effort to be accurate, but this information is notoriously difficult to find and verify. If you find any errors, please let us know.

In order to be included on the Funded Birmingham Start-ups List, a start-up must*:

  1. Have raised over $100,000 over the past three years from an outside private source or sources
  2. Be part of a growth industry, defined here as:
    1. A business that involves a degree of innovation and/or a novel approach to a market challenge and
    2. demonstrates the potential to grow beyond a real estate based company.