Birmingham looks to write new chapter as a tech hub
Chris Teale/Staff
By
Chris Teale
Alabama’s “Magic City” often evokes images of heavy industry, or the nation’s difficult past. A coalition of businesses, political leaders and others are looking to turn it into a technology leader.
BIRMINGHAM, ALABAMA — Though it first rose to prominence as the only place in the world where iron ore, coal and limestone — the three materials to make steel — are in close proximity, Birmingham, Alabama’s population exploded with the growth of heavy industry as it became known as the Magic City, and the “Pittsburgh of the South.”
Then in the 1960s, after it struggled during the Great Depression then recovered during World War II, the city rose to prominence once again as a center for the Civil Rights movement. Protests led by local and national leaders and a notorious church bombing put the city at the forefront of the national effort to pass the Civil Rights Act.
Now, the city is looking to write a new chapter as a hub for technology. It has flown under the radar compared to some of its better-known peers, but has startup incubators, world-class research, an educated workforce and a supportive government, while venture capital is flowing for the next generation of founders. That excitement was palpable last month, as the city hosted its Sloss Tech conference at various venues, highlighting its growth, new companies and investment opportunities.
The University of Alabama at Birmingham, a world-class research institution, plays a leading role, too, especially in biomedicine, alongside a variety of state, local and regional partners.
Those incubators encourage the next generation of startups to find the next cure, and take on industries that had previously been difficult to disrupt. It has meant investing in homegrown talent and founders, revitalizing parts of the city that had sat empty, and looking to accelerate all these new ideas with money from venture capital as well as the federal government.
It won’t be easy. The city found itself in federal crosshairs after a $44 million grant to help implement its federal Tech Hub status was revoked. But those in the Magic City say they are up to the task.
“I believe the city of Birmingham is on its third iteration of its economic identity, its economic direction, its economic trajectory,” Birmingham Mayor Randall Woodfin told Route Fifty in an interview at city hall last month. “And there is no world in this third iteration where tech doesn't lead the conversation.”
“A City of Victors”
Reminders of the city’s past are everywhere, from Kelly Ingram Park’s statues depicting various moments during the Civil Rights movement, to Vulcan Park’s 56-foot cast iron statue of the Roman God of fire, metalworking and the forge reflecting the city’s industrial past.
Founded in 1871, the city grew rapidly as mining and industrial companies moved in to take advantage of the iron ore, coal and limestone present. The first steel was made in the city in 1897, then mass production began just two years later.
But even in those early days, residents worried local work would be taken over by out-of-state companies. In 1907, giant U.S. Steel bought the Tennessee Coal, Iron and Railroad Company, which was its main rival and had much of its business in Alabama. Newspaper reports at the time, on display in Vulcan Park, warned of a "colonial economy," where outsiders controlled local companies and sent profits out of state.
But despite the apparent progress since, the 20th century was not an easy time in Birmingham. Jim Crow laws were rigidly enforced, with segregation impacting every aspect of everyday life. The 1920s were dominated by tensions between labor and management, then the Great Depression hit industry hard. World War II, and increased defense production, eased those economic worries.
Things bubbled over in the 1960s as Birmingham became the new heart of the Civil Rights movement. Under what was known as the Birmingham campaign, peaceful demonstrations organized by the Southern Christian Leadership Conference and other groups, joined by national leaders like Martin Luther King Jr., spread throughout the city and were often put down violently.
The city gained international notoriety in 1963, when a bomb planted underneath the 16th Street Baptist Church by members of the Ku Klux Klan exploded and killed four African American girls. It provided the impetus for the country to finally pass the Civil Rights Act the following year.
Woodfin, under a photo collage depicting protests and police officers’ violent methods of putting them down, said city leaders will rise to the occasion of a new chapter.
“The city of Birmingham is not a city of victims, it's the city of victors,” he said.
Biotech Leads the Way, But Others are Close Behind
UAB and its biotechnology research are a centerpiece of that next chapter for Birmingham, alongside the Southern Research Institute that sits near its campus in the city’s Southside.
The university receives hundreds of millions in research dollars from the federal government, including more than $330 million from the National Institutes of Health in Fiscal Year 2024. It’s estimated that NIH funding alone created $916 million in Alabama, which has local officials on edge given President Donald Trump’s revoking of various grant awards.
But in the meantime, the work continues. Southern Research, an 83-year-old nonprofit, has developed and commercialized seven oncology drugs and been involved in developing more than 20 drugs that have been approved for use by the Food and Drug Administration.
Kathy Nugent, UAB’s chief biotechnology and innovation officer, said the city has keyed in on making itself a hub for biotechnology, especially homegrown companies.
“What we have really been focused on doing for some time is, how do we establish a biotechnology footprint in Birmingham and in the state of Alabama that can really be reflective of who we are and the kind of research that we do,” she said. “We don't want to have startup companies have to go to another state because we don't have the infrastructure to support it here. Our efforts between UAB and Southern Research have been [exploring] how we support that.”
Making UAB a hub for biotechnology has meant aligning economic development groups with city officials and academia towards that common goal, like finding cures to some of humanity’s most challenging diseases, for example. And that’s been made easier given UAB’s long association with and strong reputation in the healthcare sector. That includes its teaching hospital, which is the largest in the state, and other professional health schools.
Sloss Tech highlighted just some of the work being done in and around the city on some of those diseases in a pitch competition that gave startup founders the chance to win thousands of dollars in investment from a panel of judges. One company, Vanquish Bio, said it is developing cell-derived therapy to tackle what were hard-to-treat cancers in a targeted way. Another, WiNK Therapeutics, won the $50,000 grand prize to help with its development of treatments for Type 1 Diabetes and solid tumors.
“The work that UAB and Southern Research are doing is so stinking important,” said Steve Ammons, CEO of the Birmingham Business Alliance, the city’s chamber of commerce. “[There] is solid research being done.”
While biotechnology is a key part of the city’s tech economy, other sectors are playing a role too. In a simultaneous nod to its industrial past and the future, software company Stella Source is looking to innovate on the steel industry by providing the only commerce platform designed to buy and sell materials and simplify every step of a supply chain that has had little standardization.
Modernizing that buying and selling helps an industry that has traditionally been a dominant economic power in Birmingham and keeps its companies at the forefront of its evolution, Stella Source President Sean Hughes said in an interview.
“We really are playing on that intertwining of technology and metal industry knowledge,” Hughes said. “When you hire somebody [here] that comes out of a tech background, their brother or their uncle or somebody, works in the metal industry too, and they have a familiarity with it that's unusual. We've come to find there's incredible expertise there.”
Incubating the Next Generation of Companies
The links between the city’s past and its future perhaps are most apparent at the Innovation Depot in the city’s downtown, close to a reclaimed rail yard. It used to be a Sears — the largest single story department store in the U.S. — and sits in the city’s Switch District, named for the Frisco railroad switch that was nearby.
But now, the Innovation Depot, which first opened its doors in 2007, stands as a place where new startups can begin their journey, or where more established companies can start to spread their wings in larger office space.
And the Switch District is looking to revitalize itself as a home for retail, restaurants and other amenities, as well as office space for emerging companies and technology. Economic development groups have big plans for the area, and hope the 20 blocks once dominated by heavy industry and railroads can be used by a variety of other businesses.
“The vision is innovation in a broad term,” said David Fleming, president and CEO of REV Birmingham, a nonprofit focused on economic development and revitalization. “It is not just tech, but it is people who have an entrepreneurial spirit, people that may be doing innovative things in tech, but they could be doing innovative things in retail. They could be doing innovative things even in social services… We really want the Switch to be the physical representation of the innovative and entrepreneurial spirit of our city.”
One of its biggest successes was TheraNest and its parent company Therapy Brands, now known as Ensora Health, which provides software and services for mental, behavioral and rehabilitative health therapists.
Founded by Shegun Otulana, who moved to Birmingham from Lagos, Nigeria to attend UAB, he sold the company for $1.25 billion in 2021, less than 10 years after its founding. It was one of the largest software exits in the history of Alabama, and Otulana said the company came at the perfect time, as Software as a Service had started to take hold and healthcare was ripe for innovation. Being in the Innovation Depot helped crystalize much of what he was thinking about in those early days.
“There's lots of lessons in there around alignment in terms of what you want to build as a founder,” Otulana said in an interview at the Depot. “There are lots of lessons in there around finding a problem at the right time with tailwinds instead of headwinds… The trend, the timing, everything just really worked out well. And it also aligned with me personally in terms of the kind of business I wanted to run, the kind of people I wanted to serve.”
The next generation of companies are looking to follow in his footsteps. That includes the likes of tax preparation software company SmartWiz, which also started in the Innovation Depot’s shared space and has since moved into its own offices upstairs. Co-founder Olumuyiwa Aladebumoye said the entire area has a feel of founders “trying to turn your side hustle into a business.”
Decision intelligence company CModel is also flourishing in the Innovation Depot, having relocated to Birmingham last year from its original headquarters in San Francisco, California. The company, which helps business leaders analyze their data and show which decisions or strategies can help drive future growth, was part of a cohort of startups chosen in 2023 for the Techstars program in Tulsa, Oklahoma, before moving permanently to Birmingham.
Moving away from the traditional Silicon Valley tech powerhouse into a different community was crucial, said Teasha Cable, CModel’s CEO, and the company received financial incentives to do so.
“The economic development opportunity was the thing that drew me in the most, because I know that surviving, growing, developing really relies on having opportunity, and so I saw a chance to come and create jobs that wouldn't exist without us,” she said. “I also believed that in a city whose population looks a lot like me, I'd have an opportunity. We need to demonstrate that the impossible is possible if we put a lens to it. I'd love to see Birmingham really blossom.”
But it’s not just the Innovation Depot where talent is being incubated. Right on the doorstep of UAB’s campus on the city’s Southside is the Southern Research Center, and its Station 41 incubator.
Opened last year, the biotech incubator is notable as it provides early-stage companies with wet lab space and offices. UAB’s Nugent said the 11,000-square-foot space was fully leased inside six months and plans to expand to 60,000 square feet to be competitive with larger biotech hubs.
“As we've been spinning companies out over the past decade and then we hear back from them, one of the biggest things is they need space,” Nugent said. “Because we're a state institution, we can't lease space out to a private company, because of conflicts of interest. Wet lab space is something that, unless it's there, it's hard to create. It takes some time, it takes some money, it takes some real thought developing that.”
“Potential is Gradually Getting Realized”
Though cities may be tempted to spend millions trying to attract tech companies, the strategy in Birmingham focuses heavily on keeping local talent, encouraging local founders and then making sure that companies founded locally can stay local as they expand.
The city’s tech scene put itself on the map in 2017, when locally founded delivery service company Shipt sold to Target for $550 million. Then, rather than relocate to Target’s corporate headquarters in Minneapolis, the company stayed in Birmingham. It showed that the city does not need to give up its biggest business assets to others.
“A lot of organizations, a lot of regions, are probably looking for a magic bullet,” said Deon Gordon, CEO of TechBirmingham, which advocates for the city’s tech scene. “There's really no such thing… [Shipt’s sale to Target] really changed the perception of the city and the state.”
The following year, Mayor Woodfin led a delegation to Chicago to explore that city’s partnership with Apple to provide coding education opportunities for students. Just six months into his tenure, Woodfin said he saw a chance to teach young people in Birmingham to be the next generation of tech entrepreneurs.
“The biggest thing I saw was, what do we do for the next generation? We have to teach them how to code,” he said. “You want the next engineers, you want the next tech startups, you want the next founders, you want the next creators.”
After two years of planning, what resulted was Ed Farm, a nonprofit that looks to educate “digitally fluent learners,” on coding, digital skills and other educational activities. Not only does it help position the city to be a tech leader, but also to capitalize on coming disruptions across the workforce.
“We know that AI and automation is going to disrupt a lot, so we thought, ‘Alright, what are the skills that people need now so they can best position themselves for whatever this future of work is going to look like?’” Gordon said. It’s all part of an effort he described as “investing in yourself” that has percolated throughout the city.
That investment has extended beyond training and to actual dollars flowing from venture capital firms in the city looking for the next big company. After selling TheraNest, Otulana started Harmony Venture Labs, which invests in startups financially and provides them with other support and resources to help get their company off the ground.
“When I started, there was almost no capital, there was almost no early-stage talent,” Otulana said. “Nobody knew the playbooks around here and now we are in a place where there's a lot of potential. The opportunity is actually increasing. The potential is gradually getting realized, and what it does not have yet is attention.”
A ‘Steadfast’ Commitment to Federal Tech Hub Status
It hasn’t all been plain sailing, however, especially as the city tries to leverage federal grant funding to help establish itself as a tech leader. And while local leaders say they are confident of success in the end, the uncertainty continues to swirl amid President Donald Trump’s revocation of federal dollars.
Birmingham was first named a federal Tech Hub in Oct. 2023, one of 31 metropolitan regions to earn that designation. The Tech Hub initiative, which began under former President Joe Biden and was funded by the 2022 CHIPS and Science Act, looked to directly invest in regions and promote industries that could be globally competitive in the future.
Led by the Economic Development Administration out of the Department of Commerce, cities and regions were chosen to be innovation hubs in various sectors of the economy. Birmingham was chosen as a biotechnology hub, and had the opportunity to apply for federal funding to support that mission.
At the time, Woodfin said in a statement that it was “a recognition of what Birmingham has become and what it has the chance to become in the years and decades ahead.”
In Jan. 2025, during the waning days of former President Joe Biden’s administration, the city won a $44 million grant to support its Tech Hub efforts, one of only a few to receive that grant funding before Biden’s term expired. At the time, Birmingham leaders said the federal infusion from the Commerce Department would help its Tech Hub’s efforts to encourage more diverse representation in clinical trials, use AI to shorten drug development timelines and otherwise deliver more life-saving cures.
But that award was reversed after Trump and Commerce Secretary Howard Lutnick took office later that month. In May, Lutnick announced that the department was “revamping” the Tech Hubs initiative “to prioritize national security, project quality, benefit to the taxpayer, and a fair process.” He also dinged the previous administration for a “rushed, opaque, and unfair” award process.
At the time, Lutnick said a new funding application window would open this summer, and new grant awards would be made early next year. Woodfin said the city remains “steadfast” in its commitment to reapply for funding, and in its commitment to being a Tech Hub for biomedicine. Ammons said he is “cautiously optimistic” the city will prevail again.
“I'm fiscally conservative, but my job is also to promote and build out our region appropriately, and you can't do that without investment from the federal government in local governments, to help weigh in where it's competitive,” Ammons said. “It will show a return on investment.”
Nugent, the local lead on the federal Tech Hub designation, said the work will continue regardless of federal designation. Funding will make it easier, however.
“We continue to move every part of the application,” she said. “The projects that were funded in that application have continued to move forward. We've made progress in each one of those areas. In our minds, we're going to do this whether we're funded or not. It's always easier if you've got $44 million coming in to help you with that. But regardless, this is our strategy, and we're going to do this one way or the other.”
“A Center of Innovation More Than Once”
It all adds up to an interesting future for Birmingham and its tech ecosystem. But there are more obstacles than just the uncertainty around federal funding.
One issue stemming from the city’s past is a lack of regional cooperation between Jefferson County’s 35 municipalities, a legacy of white flight and generations of mistrust between different local governments stemming from it.
“Historically, we have not done it well,” Ammons said, noting other metro areas have been able to surpass them in regional cooperation. “We're still very siloed, and we're still trying to break down the barriers, but I think it becomes the culture of the community.”
There is evidence of a shift towards better regional cooperation, however, like many other metropolitan areas across the country. It starts with efforts like Tech280, a new initiative to make U.S. Highway 280 between Birmingham and Phenix City into an innovation highway. The road includes cities like Hoover, Opelika and Auburn, as well as major research institutions that could all be brought together in a more collaborative way.
“If you go from UAB down to the University of Auburn, there's so many innovation assets,” said Reid Knight, director of development at the Shelby County Economic Development Corporation, one of the drivers behind the highway. “There's software and technology companies, biotechnology companies, universities that are really plugged into those sectors. Ultimately, we're trying to give that corridor an identity that reflects all the innovation assets that it has.”
The state, too, will play a role in the future of the city. Gov. Kay Ivey last year unveiled a comprehensive economic strategic plan known as Catalyst, which identified bioscience as an industry sector that should be prioritized for investment.
But the city still needs help. Fleming noted there are still plenty of vacant buildings and storefronts, even as the city has made progress on filling them. He called them “vibrancy gaps,” and said a variety of tax credits and other incentives will be needed to fill them, as well as working to retain top companies and talent in the city.
Whatever happens next, business and political leaders in the city are confident they can succeed.
“We talk about all these things, but at the end of the day, Birmingham has been a center of innovation more than once,” said Donnie Garvich, vice president of technology at Stella Source. “Whether it's civil rights, whether it's metals, there's nothing that precludes us from doing it here.”