As layoffs roil Silicon Valley, tech industry experts met in Pittsburgh recently to discuss the needs of startups and other innovative firms in the middle of the country to ensure their continued growth.
The Oct. 20 event, hosted by One America Works, focused on how to bolster tech ecosystems in non-coastal cities, building on the existing strengths that make them successful in good economic times and resilient in challenging economic times.
A number of those existing strengths were examined, but much of the discussion revolved around improving access to capital.
“Here in Pittsburgh there’s an enormous amount of talent,” said Sreekar Gadde, Managing Director of Blue Tree Venture Capital. Thanks to the region’s universities and colleges, there are investable ideas “just coming out of the woodwork” and there are many local venture funds eager to partner with startups and their founders.
“We have a bunch of [VC funds] here. Not enough, but a bunch,” Gadde said.
Gadde explained that Pittsburgh-area VC firms can typically invest enough to get startups to the point of bringing in revenue, but not as far as being cash-flow positive. For the most promising firms, that can slow them down right when they need to be hiring and growing even faster.
“We don’t have the type of money in Pittsburgh to help a company that is doing very well really turn on the afterburners and scale up significantly,” Gadde said.
The discussion quickly turned towards solutions. This challenge can be overcome by strengthening Pittsburgh’s connections with larger institutional investors, One America Works Founder Patrick McKenna told the audience. Or institutional capital can be convinced to set up shop locally, McKenna said.
In nearby Columbus, Ohio, for example, a $2.2 billion VC firm called Drive Capital was established by two alums of Sequoia Capital in Silicon Valley. “We need institutional capital with a long-term view of the talent and opportunity in cities like Pittsburgh,” McKenna said.
The creation of a homegrown VC fund in Pittsburgh, involving the city’s storied family funds, private equity funds and others, was also discussed. It could serve the role in Pittsburgh that venture fund Kleiner Perkins – which was an early investor in companies like Amazon and Google – played in Silicon Valley, McKenna said.
“There are a lot of big pools of capital in Pittsburgh that are available for other things,” McKenna said. “The question being: Why aren’t they funding a version of Kleiner today, based here in Pittsburgh?”
Part of the solution involves raising the visibility of Pittsburgh’s tech and innovation sector, to increase awareness of the city’s “brand” across the investment community.
“You tell the real stories, the true stories,” said Jennifer Apicella, Director of Strategic Partnerships and Programs at the Pittsburgh Robotics Network (PRN). “You give it the right context and the rest of the world tunes in. And as long as you are backing it up with authenticity, which our city has in spades, then it will stick.”
For example, PRN recently engaged with the media after the closures of Pittsburgh-area firms Argo AI, an autonomous vehicle startup, and Fifth Season, a vertical farming startup.
While these layoffs will impact an estimated 800 workers and their families, PRN provided an important piece of missing context – there are at least 1,000 open job opportunities in other robotics firms across the Pittsburgh region.
Or as WPXI News reported after speaking with PRN: “[T]he desire for talent in the local tech scene remains strong.”
In other words, PRN was able to showcase the resiliency of the Pittsburgh tech sector, even when some firms within the sector fall on hard times – a critical trend to communicate to key audiences, including tech professionals and investors, at a critical time.