Power of Partnerships

Fueling the rise of Birmingham’s innovation ecosystem
Story by Matt Windsor
Photo of Mixtroz founders Ashlee Ammons and Kerry Schrader; headline: Power of Partnerships
Fueling the rise of Birmingham’s innovation ecosystem
Story by Matt Windsor
Mixtroz is making waves. Last year, the Birmingham-based start-up’s founders—mother-daughter team Kerry Schrader and Ashlee Ammons—won the $100,000 Rise of the Rest pitch competition organized by investor and AOL cofounder Steve Case. A few months later, they closed a $1-million funding round to accelerate their business and their product, a clever tech solution for sparking face-to-face connections.
The future looks bright for Mixtroz, and Schrader and Ammons attribute much of their success to Birmingham. The duo was recruited from Nashville, attracted by funding opportunities, expert coaching, and—important for a couple of networking experts—a supportive community. “Birmingham has proved to be a perfect home,” Schrader says. “They have figured out how civic, corporate, and tech ecosystems must come together to breed success.”
“It took us in Nashville a year and a half to make the same progress that took 13 weeks in Birmingham,” Ammons adds.
What is Birmingham’s secret? UAB, as a powerhouse for high-tech research, learning, and entrepreneurship, is one factor. But UAB also is part of a bigger, broader coalition of key players in the region—leaders in government, education, business, and nonprofits—leveraging their strengths to foster inclusive, tech-based economic growth throughout the community. Their shared goal is nothing less than an “innovation ecosystem” that can thrive on a global stage.

HIGH-TECH WELCOME: The success of Mixtroz, founded by Ashlee Ammons and Kerry Schrader (pictured at top, left to right), and other start-ups “sends a message outside the state: Birmingham has a lot to offer,” says Deon Gordon, president of TechBirmingham.
Photo courtesy of Mixtroz via Nashville Entrepreneur Center

Ingredients for innovation

UAB President Ray L. Watts, M.D., remembers the night in 2015 that planted the seed for the partnership. During a visit to Birmingham, Brookings Institution scholar Bruce Katz spoke about the “metropolitan revolution” powering cities such as New York, Denver, and Detroit. And he made it clear that the Magic City had all the ingredients for its own revolution, including UAB, the Innovation Depot business incubator, and space for start-ups to grow. “Bruce said, ‘You have everything in place. Don’t wait on state or federal funding. Just do it,’” Watts recalls.
Since then, “crucial data have been gathered, and reports demonstrate the elements necessary to move the city forward,” Watts says. “Birmingham’s successes have attracted national attention. Now our challenge is to make sure that the people, organizations, and communications all point in the same direction.”
Moving toward a self-sustaining innovation ecosystem also means closing key gaps—such as providing specialized training for budding entrepreneurs and the talent who will work at their companies, improving access to capital for emerging businesses, and building infrastructure to help them grow. Here’s how Birmingham is achieving that:

It's Nice to Have You in Birmingham: Recruiting tech businesses

Already, the partners’ collaboration has helped the city attract and retain high-growth technology companies. (See some recent wins in the caption below.) DC BLOX’s site selection came from the company’s desire “to be close to UAB and the city,” Watts notes. In the case of Shipt, everyone came to the table to meet the company’s needs, adds Josh Carpenter, Ph.D., the City of Birmingham’s director of innovation and economic opportunity.
“The fact that UAB, Alabama Power, and others were there, along with the city, county, and state, demonstrated their willingness to contribute to Birmingham’s economic growth,” Carpenter says.
Now the partnership is building upon those experiences through the formation of a recruitment team dedicated to technology companies, with significant contributions from the Birmingham Business Alliance, Alabama Power, the City of Birmingham, Innovation Depot, UAB, Shipt, and TechBirmingham. “A start-up can meet with the mayor, the president of a leading research university, and the CEOs of major institutions,” says Jon Nugent, Birmingham Business Alliance vice president for innovation and technology. “All the interested parties are able and willing to help them.”

Go global

Last year, several partners funded a study by job-market analytics firm Burning Glass Technologies. They wanted to identify ways to improve Birmingham’s industrial mix of companies and align educational offerings to meet future labor market demands.
The Burning Glass report, Building (It) Together, described Birmingham as facing a “crucial moment.” The city relies heavily on “non-traded” industries—those that mostly sell locally—rather than “traded” industries that sell in national or international markets and draw in wealth from outside the area, the report explained. Meanwhile, Birmingham’s workforce is heavily concentrated in low-skilled occupations that are more susceptible to automation and less attractive to relocating industries. And certain jobs, especially in technical areas such as software development, are hard to fill, creating a “supply and demand misalignment in the job market.”
In response, the partners are working hard to put Birmingham on the radar of companies across the nation and around the world. “We’ve already had advanced conversations with companies in Europe, Asia, and Israel,” Nugent says. Many are attracted by potential collaborations with UAB and Southern Research, with their extensive life-science research and development. “To incorporate UAB, the largest employer in the state, as a driver of economic development is huge,” Nugent adds.

Photo of Birmingham skyline with Shipt sign on towerTECH SUCCESSES: • Shipt: Acquired by Target for $550 million in 2017, the Birmingham-founded company will remain in the city and add 881 new jobs at an average salary topping $48,000. • DC BLOX: The Atlanta company plans to invest up to $785 million in a data center in the Titusville neighborhood. • Joonko: The San Francisco tech company relocated its headquarters to Birmingham after winning investment capital from the Alabama Futures Fund in 2018. • HospiceLink: The Birmingham start-up was acquired for hundreds of millions of dollars in 2018. • TheraNest: The software company—an Innovation Depot graduate founded by a UAB alumnus—now has 300 employees nationwide. Photo courtesy of Shipt.

Innovative incentives

Traditional economic development incentives such as tax abatements and revenue sharing work well for attracting industrial manufacturers and retailers, but tech companies are different. They want to relocate to cities with a diverse, skilled workforce, and they want help growing and cultivating that workforce.
So the City of Birmingham developed the Putting People First Fund as a step toward a human capital improvement program. “That creates a sustainable way to incentivize growth because it invests in Birmingham’s greatest asset—our people,” Carpenter says.
The fund fuels three incentive programs for tech companies: The Talent Improvement Program uses real-time data from Burning Glass to encourage companies with high occupational growth in one area—such as software development, which has four job openings for every local candidate—to relocate employees to Birmingham. The Talent Acceleration Program offers employers incentives to train entry-level employees—“the folks who will run the business one day,” Carpenter says—through boot camps, certificate programs, postsecondary education, and more. Finally, the Talent Optimization Program rewards companies that hire local talent, such as graduates from the Innovate Birmingham information technology (IT) workforce development program.

Accelerating the best

Innovation Depot’s Velocity Accelerator program, launched in 2017, has already proven it can draw tech talent from around the world. Each year, the 13-week boot camp offers up to 10 companies $50,000 in seed funding, space to work, and the attention they need to learn “the fundamentals of how to build and scale a business,” says Devon Laney, Innovation Depot president and CEO.
Velocity Accelerator intentionally casts a wide net. “We want the 10 best companies we can find anywhere,” Laney says. “If we can bring them to Birmingham if they’re not already here, and give them seed capital to quit their jobs and work on this full time, then we can bring consistency to our pipeline of high-growth tech companies.”
The 2018 cohort included Mixtroz plus teams from San Jose and Atlanta. The 2019 cohort drew more than 100 applicants from around the world. Among the semifinalists, 40 percent were international, 28 percent came from Alabama, and 32 percent were from other states.
Particularly promising companies can receive follow-on investments from the Velocity Fund supported by Regions Bank, Alabama Power, BBVA Compass, Blue Cross Blue Shield, Protective Life, UAB, the Community Foundation of Greater Birmingham, Encompass Health, EBSCO, Brasfield & Gorrie, McWane, Altec, and Hoar Construction. In its first two years, Velocity Accelerator companies have received more than $1.5 million from the Velocity Fund—and raised an additional $7 million and created more than 60 full-time jobs, Laney says.

Capital ideas: Expanding investment in innovation

Once a tech company finds its footing in Birmingham, how do we keep it here—and help it thrive? The partners are working to build venture capital capacity to support the growth of these new businesses. Take the Alabama Capital Network, for instance. It was formed in 2017 by a group of local business leaders “who had seen an increase in activity in the innovation sector in Birmingham and around the state and wanted to make sure these companies remained here instead of moving to places like Atlanta, Nashville, or Austin,” says CEO Miller Girvin. “The goal of this organization is to make the more traditional business and investor community aware of what’s going on in innovation and facilitate opportunities for them to get involved.”
A perfect example is the UAB spin-off Incysus, which has licensed immunotherapy technology for treating different types of cancer. While the therapy has shown promising results in UAB research, large pharmaceutical companies are reluctant to invest without a pivotal human trial, Girvin explains. So the Alabama Capital Network facilitated a meeting between its members and Incysus CEO William Ho. Nine of its 45 individual and company members have invested in the company, “and William was able to make one pitch, instead of meeting with all these individuals,” Girvin adds.

Funding fresh ideas

“The future hinges on partnerships with universities,” which will drive “the next wave of entrepreneurs,” Girvin predicts. The Alabama Capital Network has connections with the University of Alabama, Auburn University, and the University of Alabama in Huntsville in addition to UAB. “Our members recently attended an event at the UAB Commercialization Accelerator, and they were blown away with the ideas they heard,” she says.
“The goal of the Commercialization Accelerator is to make it easier for students, staff, faculty, and clinicians to move their innovations closer to commercialization, whether that’s through licensing new technologies to companies or through start-ups,” says Kathy Nugent, Ph.D., associate vice president and executive director of the Bill L. Harbert Institute for Innovation and Entrepreneurship at UAB (HIIE). While Innovation Depot is a business incubator, the Commercialization Accelerator “‘pre-incubates’ companies”—identifying campus visionaries with great ideas and providing resources to advance them and determine if they could sprout into viable companies, she says.
Last year, the HIIE established a $500,000 Innovation Fund to “help address lapses in funding between grants and venture investment,” Nugent explains. “At a research institution, many potential products can’t continue to develop toward commercialization without a funding source.” The Innovation Fund supports proof-of-concept testing of these new technologies that is necessary to secure further investment from venture capitalists or pharmaceutical companies. “If one of our surgeons has an idea for a new medical device that has great potential,” Nugent says, “we can fund development of a prototype so it will be more valuable when we license it. We want to make sure we’re not letting commercialization opportunities sit on the shelf.”

MEET SOME OF THE PARTNERS SUPPORTING BIRMINGHAM'S TECH EVOLUTION: Birmingham Business Alliance • UAB • Innovation Depot • Alabama Capital Network • Alabama Power • City of Birmingham • Innovate Birmingham IT Workforce Program • REV Birmingham • TechBirmingham • Community Foundation of Greater Birmingham • Venture for America • Birmingham Venture Club • Central Siz • CSBhm • Redhawk • TEALS

Training for tech: Building a workforce

Jacob Downard, a Marine Corps veteran, had been working as a server in a local restaurant. But then he was accepted into Innovate Birmingham’s 14-week I Am Bham software-development boot camp. Today he works at BBVA Compass as a systems programmer.
The partners envision many other success stories like Downard’s throughout the region. The Building (It) Together report made clear that significant investment in training is needed to build “a talent base that can sustain employers while providing workers with wages that can sustain a family.” Consequently, the partners are supporting education efforts along parallel tracks—including K-12 enrichment opportunities from groups such as TEALS and TechBirmingham, worker retraining programs led by Central Six, and the Innovate Birmingham IT workforce development program.

Boot camps for new careers

Downard is one of nearly 200 Jefferson County residents who have trained for careers in web software development and hardware support through the Innovate Birmingham workforce program. Funded by a nearly $6-million Department of Labor grant in 2017, the program offers IT boot camps at Innovation Depot for participants ranging in age from 17 to 29. And their prospects are bright. Program graduates have a 66.7-percent employment rate with 36 area companies three months after graduation. Innovate Birmingham also has awarded $87,000 in scholarships to 46 Jefferson County residents who are pursuing degrees in technology-focused majors (computer information systems, electrical engineering, computer science, or information systems) at UAB, Jefferson State Community College, and Lawson State Community College.
Based on requests from employers, Innovate Birmingham is piloting a new boot camp on data analytics and an apprenticeship program to help participants gain hands-on experience. “These are incredibly smart, talented people who are ready to jump into IT,” says Haley Medved Kendrick, Ph.D., Innovate Birmingham director of workforce development. “We’re connecting employers to top-of-the-line talent they otherwise would not look at.”

Attracting the tech generation

Jared Weinstein is a New York venture capitalist, yet he remains emotionally invested in his hometown of Birmingham. So when he met with leaders of Venture for America—an organization that embeds recent college graduates at start-ups across the country for two years—he urged them to send fellows to Alabama.
Venture for America named Birmingham as its 14th city in 2015. Now the “best and brightest” from the nation’s elite colleges are working at booming local enterprises like Fleetio and Shipt, as well as on entrepreneurial initiatives at companies such as Alabama Power, says Abby Guerin, director of Birmingham for Venture for America. You’ll also find them at UAB’s HIIE, where fellow Lydia Dick runs the Commercialization Accelerator, and the City of Birmingham’s Department of Innovation and Economic Opportunity, where fellows Sarena Martinez and Yuval Yossefy helped with the Shipt retention efforts. “They’re the only two public-sector Venture for America fellows in the country,” Carpenter says. “They’re incredible thinkers who have added a ton of value in our processes.”
The fellows are spreading the word about Birmingham, too. While the city is Venture for America’s smallest metropolitan area, it had the fourth-largest class of fellows in 2018, Guerin says. “As they see how much opportunity there is, how connected they can become, and the impact they can have, Birmingham’s popularity has grown,” she explains. “Our goal is to put Birmingham on the map for young people interested in tech start-ups.”

Entrepreneurship education

Patrick Murphy, Ph.D., also wants entrepreneurially minded students to consider Birmingham for their education. The city presents “an amazing opportunity to make an impact,” says Murphy, the inaugural Goodrich Endowed Chair in Innovation and Entrepreneurship in UAB’s Collat School of Business. Birmingham’s upward trajectory and the opportunity to build a signature entrepreneurship program brought him to UAB in 2018 from the start-up hotbed of Chicago.
Murphy can sense the local excitement every Wednesday at noon, when he hosts an informal gathering in the Collat School of Business lobby to discuss ideas and build community. The meetings were an instant hit: Up to 40 students, faculty, and local entrepreneurs were in attendance just a few weeks after Murphy started them. Now he is collaborating with Innovation Depot to launch a 12-month Entrepreneurship Primer seminar series. “All of our programs are developed with that spirit of cooperation,” Murphy says. “The trick to building an ecosystem is to coordinate with all interested groups. That will act as a force multiplier for the impact we can have on Birmingham.”
Meanwhile, Murphy is working with school faculty to develop an undergraduate entrepreneurship major and an entrepreneur-ship focus for the M.B.A. program. The curriculum’s conceptual foundation will be his seven-step model to transform ideas into viable businesses, which he has implemented around the world. “It’s a core set of skills that involve envisioning things that aren’t there and assembling resources to build a team or develop a product,” he explains. Murphy surmises that 10 percent of the students will launch their own start-ups after graduation while the majority will join local ventures. “We’re going to help them hire stars,” he says.

Photo of people meeting in glass-walled room at Bill L. Harbert Institute for Innovation and EntrepreneurshipUAB's Bill L. Harbert Institute for Innovation and Entrepreneurship and the Collat School of Business help idea-driven students and faculty become part of a community that can bring their products and start-ups to life. Photo by Andrea Mabry.

Neighborhood of ideas: Birmingham's innovation district

In the future, the partners envision an entire innovation district in Birmingham—something like New York’s Soho or The Gulch in Nashville—to provide space for growing start-ups. “It’s the physical manifestation of this innovation idea,” says David Fleming, chief executive officer of REV Birmingham, which specializes in revitalizing commercial areas.
Tech companies would find a district appealing because they would be in good company—and could benefit from the connections. Innovation Depot offers an illustration: It has become one of the country’s largest entrepreneurial support organizations—and an example to others nationwide—in part because of its close ties with UAB. Last summer, UAB linked its 100-gigabit Internet connection, the region’s fastest, to Innovation Depot, giving the companies within it world-class network speed, security, and reliability. Soon they can connect to UAB’s supercomputer, one of the Southeast’s fastest. “A start-up could never have access to this on its own,” Laney says. “That’s a game changer.”

City of opportunity

Fleming, who also is a historian, says Birmingham is no stranger to big ideas. “In January 1871, people decided they were going to build an iron and steel industry here,” he says. “By December there was a city, and roughly 40 years later, 135,000 people were living here. We’ve got in our DNA the idea of starting from nothing and building a whole new industry.”
Opportunity is at the heart of Birmingham’s emergence on the innovation scene, Watts adds. UAB and the other partners in the region are determined to “deliver every advantage we can,” he insists. “There’s a tremendous amount of positive energy. We’re growing this innovation ecosystem together.”

Published May 2019