Best places to start a business
› Out of 150 cities
1. Oklahoma City, Okla.
2. Salt Lake City, Utah
3. Charlotte, N.C.
4. Tulsa, Okla
5. Grand Rapids, Mich.
Area city rankings
26. Birmingham, Ala.
61. Columbus, Ga.
119. Huntsville, Ala.
Source: WalletHub ranking based upon number and success of new businesses, access to capital and resources and the cost of doing business.
Five years ago, when Lamp Post Group partner Jack Studer sent emails to venture capitalists on the West Coast in the Silicon Valley asking them to consider Chattanooga projects, many asked what state Chattanooga was in.
"People just didn't know about Chattanooga then, but that has quickly changed," said Studer, who now heads The Company Lab, a business accelerator that helps dozens of tech and other business startups in Chattanooga. "Now, we have those running major venture funds of $100 million or more telling us that they need to come to Chattanooga to check us out."
Last week, for example, Jamie Lin, an Eisenhower Fellow and the founder and managing partner for Asia's largest startup accelerator, AppWorks, visited Chattanooga as one of only eight U.S. cities to see how American accelerators were doing to develop new technologies and businesses.
Fortune magazine last week also touted Chattanooga as "one of America's most startup-friendly cities."
Fortune writer Polina Marinova said Tennessee's fourth biggest city in the southern Appalachian mountains is a long way from California's Silicon Valley and seemingly an unlikely leader for tech startups.
"Eight years ago, you couldn't find a person who was working on a startup in Chattanooga," she writes in Fortune. "Today, this Southeastern city has quietly developed a bustling tech scene."
Marinova and others cite Chattanooga's low cost of living and ultra-fast internet service in helping tech startups. Chattanooga also is benefiting from some of its long term advantages, including its scenic and outdoor attractions, central location and diverse economy, and more recently developed venture capital and accelerator programs.
Chattanooga Mayor Andy said the addition of EPB's fiber optic network and the nation's first gigabit-per-second internet service in 2010 "allowed us to change our perception of ourselves.
"We started a community conversation about how to bring the tech industry to Chattanooga," Berke told Fortune magazine.
But the mayor said when he became mayor in 2013, "it felt like we were grinding our gears a lot — working a ton but not making as much progress as we wanted to."
Berke assembled civic leaders to prepare a blueprint to capitalize on the Gig, and two years ago created a 140-acre Innovation District in downtown Chattanooga that clusters startups, nonprofits, and government entities.
The district is anchored by the Edney Building at Market and 11th Streets, which houses the Company Lab, the Enterprise Center, Tech Town and Society of Work, along with many startup ventures. The Lamp Post Group and the city's biggest venture fund, Dynamo, are three blocks away in the Loveman's Building, which is located across the street from the Tomorrow Building which opened its doors in December as the first co-living space in the Southeast.
The high-speed Internet service, combined with the Innovation District, is credited with at least 2,800 new jobs in the area.
One of the new companies lured to Chattanooga by the Gig, a software development company known as Skuid, Skuid's CEO Ken McElrath says Chattanooga's cooperative approach also is unique in helping businesses to grow.
"In the Bay Area, it's very cutthroat and dog-eat-dog, but when I moved here, people helped me figure out things like how to get grant money and where to locate my business," McElrath told Fortune.
U.S. Rep. Chuck Fleischmann, R-Chattanooga, who is championing a Microsoft initiative to improve computer skills and literacy, said Chattanoogans work across partisan and business differences to help the community grow.
"When we get a good idea in Chattanooga, we put aside our partisan politics and get things done," Fleischmann said.
But for all its success, another new study indicates Chattanooga still has a long ways to go.
The financial web site Walllethub analyzed 17 factors that affect small business startups and ranked the top 150 cities to determine what cities were best to start a business. Chattanooga overall ranked No. 92 among the 150 biggest metro areas.
Chattanooga ranked among the top 20 percent for businesses in the cost of doing business, including cheaper office and labor costs and taxes than in most cities. Chattanooga also was better than average in its access to resources, including colleges, venture capital and other financing. But Chattanooga fared among the bottom 10 percent for the number, growth and sustainability of startup ventures.
Ironically, Seattle, which is home to some of the world's biggest companies created in the past generation — Amazon, Microsoft, Starbucks and Costco — ranked dead last because of its high cost of living and the its relatively lower startup success ratio.
"Startup businesses in the tech and other growth sectors often have higher failure rates, but those that are successful can truly transform a community," Studer said. "We certainly have a ways to go, but the startup scene is definitely improving, and Chattanooga is certainly attracted national, and even global attention, that should pay dividends for years."
Contact Dave Flessner at email@example.com or 423-757-6340.