After my lengthy trip to the Valley and San Francisco, I have a few thoughts to share on how the South needs to shake up our approach to entrepreneurs and startups. I gave this report verbally to Angel Lounge last week and enjoyed a lively discussion with that group about how Atlanta’s technology community should start “skating to where the puck will be, not where it is.” (Hat tip to Wayne Gretsky) My focus was strictly on the Consumer Internet space, so please take all my comments in that light. Here’s my list:

1) Not all the entrepreneurs out there are youngsters, but Clarium Capital has set up a fund offering $100K stakes to founders 19 and under. These are not gifts; these youthful founders do have to combine raw intelligence and work ethic with a bankable idea. Can the next Gates or Zuckerberg be found in that manner? Clarium must think so.

2) There have been enough successes in that area in recent years that entrepreneurs who have participated in a high-profile exit or have founding history in the Consumer Internet space can raise money at high value with hand gestures -- napkin optional. Investing anywhere is always a bet on the jockey, and the proven winners are at the head of the line. No surprise there.

3) Startup values in the $3-5M range are common; sometimes are double that. A bit of traction with a working product in the hands of even a few customers is a big plus when valuation comes up on the agenda, but things are now competitive enough that this is no longer a strict requirement.

4) Although there are copious examples to the contrary, generally speaking the founding team is advantaged by being resident there and fully plugged into the local Valley network. Some of the sharpest young companies and people (I think of Austin's Storenvy or Paul Stamatiou) have made their way West, and it's hard to argue with the osmosis that happens.

5) The co-working and incubator spaces I visited exhibited high energy levels and skewed almost exclusively to the web startup crowd. Some spaces are as open as a high school cafeteria with techs sitting across from each other at banquet tables and commingled with other companies. Others have private offices more like the ATDC. All have the necessary accouterments that are designed to promote the interchange of ideas. Some are very focused on particular genres of companies so there is more collective leverage in building and launching new products with closely aligned partners. And, those closely aligned partners may even have key executives resident, or at least very nearby. The action seems to be tightly packed in about a square mile near AT&T Park in San Francisco. Newer media-focused startups are choosing to be in town – not scattered up and down the length of the Valley.

6) Raising money is always a people game, but it involves a lot more bodies on both sides of the table than we see in Atlanta. The population of the whole Bay Area is about 25% greater than metro Atlanta, but a much bigger slice is engaged in well-known tech companies. Literally more than 1,000 entrepreneurs will show up at a hot networking event. There is a large cast of angels, and super angels, along with the major VC funds that have long flourished there. There's no single investor (like Sig) who can say no and spook other investors. If anything, there is active competition to get into deals, not to avoid them.

7) One reason for this competition is that angels there made huge returns on the rise of the Consumer Internet in recent years. Early employees at even the lowest levels of the big winners can now afford to be angels. There seems to a bias to keep that money at work growing newer and bigger ideas on the strength of the engineering and entrepreneurial talent at hand. There's a killer sense of competitiveness there that drives success, and inherently makes entrepreneurs think bigger. It's very different from the almost constant refrain in Atlanta that tech angels made no money in the last decade and aren't sure whether or where to play in the coming years.

8) Atlanta has some great companies that will pay out nicely for their investors. But our city sat out the Consumer Internet epoch that has created and continues to create so much wealth in San Francisco. We're now seeing the seismic shift of information consumption, creation, and participation away from traditional media to the Internet on a scale far beyond what even the ‘90s "futurists" predicted. And all that is associated with real money and genuine scale. Transactional media is now coming to the fore in a way that changes all the old revenue paradigms. This is not another Bubble; it's real business.

9) If I had $10M to invest in angel deals, I would consider investing it in the Valley or San Francisco. I'd try to align with one of the super angels and finesse my way into the hot deals. Is this heresy for an Atlantan? Not if I make a great return and start redeploying some of that in the ATL. It beats the alternative of keeping the money at home where returns may well be far lower and where I wouldn't be growing my capacity to invest in future deals.

10) And, this too may be heresy, but I would challenge Stephen Fleming and the ATDC to set up a "consulate" in the Valley to facilitate the matching of deals and talent with funds -- even if that means losing ventures to that area. Some will win big, and the founders will return to Atlanta with money and skills that will result in significant startups. We'll gain a toehold in the latest run-up of consumer-oriented opportunity and build some diversity beyond our current enterprise thinking. We certainly have the educational and research institutions generating top talent for this arena and exporting many of them westward. If we stay physically close to them, maybe we'll eventually lure some good ones back.

I look forward to continuing the conversation in the comments below…