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Pittsburgh has as the 鈥淪teel City鈥� because it鈥檚 home to hundreds of steel-related businesses. It鈥檚 also called the 鈥淐ity of Bridges鈥� because, you guessed it, it鈥檚 home to hundreds of bridges.

But these days, the city is working to become known for something else altogether. Pittsburgh is emerging as a hotbed of innovation for robotics, artificial intelligence, and machine learning, thanks in large part to the influence of (CMU).

The startup scene is growing, as evidenced by the growing number of occupants on 鈥楻obotics Row,鈥� which is home to 鈥渁 string of technology companies setting up shop along the Allegheny River,鈥� according to local publication .

But while some venture funding is flowing into the area, it鈥檚 clear the city still has a ways to go to build significant, and perhaps more importantly, consistent startup momentum.

Don鈥檛 get us wrong, venture funding in Pittsburgh in 2018 so far, at $146.7 million, is already higher than what was raised in the city during all of 2016 ($141.9 million), according to a Crunchbase News analysis of known deals.

But 2018鈥檚 year-to-date tally is way down from an unusually robust year, 2017, that saw some very large deals.

Venture capital funding in Pittsburgh in 2017 totaled an impressive $1.4 billion, thanks in large part to AI startup $93 million Series B round, language platform s $25 million Series E and (of course) $1 billion commitment to .

The automotive giant made that investment in an effort to combine 鈥湽蟠前�诲鈥檚 autonomous vehicle development expertise with Argo AI鈥檚 robotics experience and startup speed on artificial intelligence software 鈥� all to further advance autonomous vehicles,鈥� according to a . The massive investment was notable considering that Argo AI was founded in 2017. It also helped dramatically skew the year鈥檚 numbers, as you can see below.

So what鈥檚 it going to take to boost Pittsburgh鈥檚 profile as an emerging, mid-sized tech hub? We spoke with some tech folks on the ground on the city to get their perspective on what鈥檚 driving innovation and growth in the area, and what may be holding it back.

A Growing Ecosystem

As mentioned above, the presence of Carnegie Mellon 鈥� which is home to in the country 聽鈥� has a lot to do with the startup funding growth the city is seeing. (Did we mention that the institution also in AI?) But it鈥檚 not the only factor at play.

A conducted by Pittsburgh-based regionally-focused early-stage investor , and , pointed out that in the past decade, more than eighty local companies were acquired by the likes of Amazon, Autodesk, Delphi Automotive, IBM, Philips Healthcare, Smith & Nephew, and Yelp 鈥� all of which maintained operations in Pittsburgh.

On top of that, major technology companies, including , , and , have opened technical or research offices in Pittsburgh in the past few years, according to the .

Among the giants investing in the city, Amazon has created more than 10,000 jobs in Pennsylvania and since 2011 has invested over $4 billion in the state, according to this from Business Facilities, a publication focused on area economic development and site selection news.

Access to talent is likely appealing to many of these large companies. But that鈥檚 in addition to the region鈥檚 lower cost of living and doing business, relative to markets such as Silicon Valley and New York, noted , managing director and co-founder of . (The firm is a member of the , according to Katarincic, hence the name).

Draper Triangle Ventures closed its in 1999. It鈥檚 currently investing out of its , in which it raised $80 million. About fifty percent of the firm鈥檚 dollars are invested in the greater Pittsburgh area, said Katarincic.

The firm鈥檚 first investment was in what would today be deemed an AI company that was formed based on research out of Carnegie Mellon.

鈥淎t the time, we probably just called it a sophisticated algorithm company,鈥� he told Crunchbase News. 鈥淏ut certainly, CMU鈥檚 being a world leader in AI and machine learning has been good for Pittsburgh considering that automation is what鈥檚 driving a lot of tech in general right now. And while we鈥檝e always had a number of technology companies here, we鈥檝e never had the velocity of tech companies we have now.鈥�

Pittsburgh is home to 鈥渁 great deal of technical talent and companies鈥� in those areas these days, according to Katarincic. In general, the city鈥檚 educated workforce combined with large companies in the area that can also help provide talent to startups is driving lots of growth as well, he added.

is also 鈥渧ery commercially driven,鈥� he noted.

鈥淚t鈥檚 not only about providing the best patient care, but also around innovating around delivery methods and healthcare IT,鈥� Katarincic said. 鈥淭o the point, it鈥檚 even set up a separate division to spin out those technologies into funding or startups that are based in Pittsburgh or want some relationship with the university.鈥�

But while he is bullish on the region, he acknowledges the city鈥檚 鈥渄enominator is not big enough.鈥� So, a large round or two can really skew results.

鈥淲e don鈥檛 yet have a large number of fast-growing companies that are continually doing large rounds,鈥� Katarincic told Crunchbase News.

鈥淧ittsburgh is one of those cities that is still evolving and growing, 聽and so we just don鈥檛 have a mature base as you鈥檒l find in Silicon Valley or Boston. Until we do, we鈥檙e going to see these kinds of swings.鈥�

He also believes the city鈥檚 lack of sales and marketing talent is an obstacle to growth.

鈥淣o one has greater technical talent than Pittsburgh,鈥� he said. 鈥淏ut as a company transitions from technology only to a customer-facing company, we sometimes struggle with that. It鈥檚 a challenge to scale a company because we don鈥檛 have the senior sales and marketing talent in Pittsburgh and it鈥檚 not always easy to recruit it to the area.鈥�

The city鈥檚 broad-based lack of capital is also an issue.

鈥淚t holds us back because we don鈥檛 get tempo into our companies fast enough,鈥� he told Crunchbase News. 鈥淭hey鈥檙e not out and running as fast as they can be because they are worried they don鈥檛 have enough capital, or how they鈥檙e going to get more. So they grow potentially slower than they might otherwise. Still, overall, there鈥檚 such a wealth of opportunity here and we鈥檙e looking forward to continuing to grow it.鈥�

Money In

Pittsburgh-based claims to be the largest seed stage investor in the Southwestern Pennsylvania region, and one of the most active in the country. It鈥檚 invested $78 million into nearly 400 companies over time, seeing 57 exits so far, per its . Those exits include (acquired by IBM), (acquired by WalMart) and (acquired by Yelp). Delphi (GM) in 2015 also bought one of Innovation Works鈥� portfolio companies, , a Carnegie Mellon spinoff.

, managing director of hardware and (Innovation Works鈥� hardware accelerator), agrees that the fact that machine learning and robotics have gotten to the point 鈥渢hat they鈥檙e no longer in the lab and [there are] commercial applications and people interested in investing in those fields鈥� has been huge for Pittsburgh.

鈥淪elf-driving cars were here when I got here in the 1980s,鈥� she recalled. 鈥淪o we鈥檝e always been a leader in that. As we鈥檝e gone from research to real products and real markets, and things people want to invest in, we鈥檝e seen our ecosystem grow.鈥�

One Startup’s Story

is a Pittsburgh-based company that earlier this year聽. Voci鈥檚 mission, per its , is to 鈥渆nable enterprises to extract actionable intelligence from their voice data鈥� to do things like improve customer experiences. Its technology came out of CMU and it鈥檚 based in Robotics Row, so it is a classic example of the kind of innovation being produced out of the local institution.

Voci CFO notes that it has been challenging over the years to retain the talent coming out of CMU and the University of Pittsburgh in the region.

鈥淚n the past, companies would have to recruit from outside the city because a lot of developers, programmers,聽and high-end researchers would typically leave to California, Boston or even Austin,鈥� he told Crunchbase News. 鈥淏ut now they鈥檙e willing to look at Pittsburgh as a city with multiple opportunities. Pittsburgh has emerged as a credible location with respect to robotics and other AI technologies, and is in a better position to keep some of that talent.鈥�

As robotics technology has advanced, it鈥檚 become a more significant contributor to the Pittsburgh economy, Ryan added.

鈥淲hile we don鈥檛 have access to the VC funds in other markets, we are starting to be surrounded by a really great technology environment,鈥� he said.

Certainly, Pittsburgh鈥檚 tech ecosystem has lots of potential. But it鈥檚 sort of like a puzzle that needs piecing together, little by little.

Top Image Via聽Igor Oliyarnik/Unsplash