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When Adam Klein thinks about the last year of his work in Durham, one comment sticks out.

It came from celebrity investor Steve Case during his stop in Durham on the much-publicized Rise Of The Rest Tour. Rather than charge startup community leaders with things to change and work on, Case said "I don't know why I'm in Durham. This city has clearly risen."

That comment has shaped Klein's thinking about his mission as chief strategist at American Underground (ExitEvent's parent company). Rather than following the lead of other more-established startup hubs, it's time for Durham to start taking the lead on new initiatives and dreams. 

Adam Klein at Google

"We need a mindset shift as an ecosystem around how we lead," he says. "We need to tell the story of the impressive entrepreneurs who are here and create new programs to support new growth that other communities can replicate instead of us."

With today's annual report reveal, it's clear some of that work is already taking place. A key figure in the report, missing from last year's, was 29. That's the number of times American Underground and its companies appeared in national news between October 2014 and October 2015. 

Another is 42 percent. That's the number of startups in the AU's three locations that are led by minorities or women. That's up from 32 percent last year and a far cry from the nation's dismal single-digit figure for both categories.

$29.85 million is also significant. That's the amount of funding raised by 49 American Underground headquartered companies. That's up from $20.75 million by 30 companies last year and a signal, according to Klein, that investors are seeing the quality of companies and putting their money behind them. 

American Underground 2015 Annual Report 2

Economic impact of the Underground

Some of the stats are simply a sign of growth. 

American Underground expanded its footprint from 65,000 square feet to 95,000 square feet, with another 20,000 square feet coming when its fourth location, American Underground @Market opens next year. With 227 companies, a 21 percent annual increase, and 742 daily workers, there were more than twice the number of pizza slices and cups of coffee consumed, nearly three times the amount of waste composted and double the amount of money spent in downtown Raleigh and Durham establishments by AU staff and members.

The numbers show the impact that a thriving tech community has on the broader economy in Durham, and help to explain why American Underground is also helping to opening a retail store and kid-focused Beat Making Lab in the new building, why it's supporting code school The Iron Yard's expansion to Raleigh and the creation of the Digital Marketing Foundry and The Forge Initiative makerspace for Durham families. ExitEvent is a part of that, Klein says. 

"We've got to be able to tell the story of what is happening in this region and that is a full picture of an ecosystem," he says. "It's not as though we want to only tackle space."

The economic impact is part of why corporations are coming on as sponsors. Coastal Federal Credit Union and Fidelity Labs became the first companies to join institutions like the RTP Foundation, Duke University, Self Help and Google for Entrepreneurs as AU founding partners. 

Klein explains the phenomenon as a recognition that the teams in the space have a lot of insight to offer corporations and vice versa. He calls the three companies "like-minded partners" who understand the vision for the ecosystem and can add value to the teams within it.

American Underground 2015 Annual Report

Marching orders around diversity

The statistics give the community something to measure itself by but they also help to identify opportunities for growth. For example, at the beginning of 2014, 7 percent of teams were led by women and that number has increased to 29.4 percent this year. At the beginning of 2015, Klein and team stated a goal to make American Underground the most diverse tech hub in the world. With 11 percent growth in the percentage of teams led by women or minorities, it seems they're making progress. 

But Klein expects the number to accelerate even more over time as research from Kenan-Flagler Business School shows that women and minority-led companies hire other women and minorities at a faster rate than white male-led companies.

"The leadership piece was key in the early going and this year, what we saw was the employee base reflecting the leadership of the community," he says.

Klein's marching orders for 2016? 

"I think there are opportunities to recruit and bring great female and minority CEOs to Durham to see the Underground and ecosystem and resources here for that to be a hallmark and distinctive of this region for the long term," he says.

The application period for CODE2040's 2016 Entrepreneur-in-Residence has also begun. Durham's EIR Talib Graves-Mann has helped to host the first diversity focused Triangle Startup Weekend as well as an Innovate Your Cool startup event and the first Black Wall Street Homecoming. That's all while building his own company RainbowMe, which had a successful crowdfunding campaign this fall.

More space needed

There's one goal that remains a big challenge for 2016 and beyond. In order to reach 500 startups in 2017, more space will be needed. Nearly two years operating in space in Raleigh proved to Klein that density is critical. It was hard to get the American Underground teams in Raleigh engaged in the broader community. The space closed in October and is under construction to make room for The Iron Yard in January. 

Durham will be the focus for the near-term, but Klein admits it's getting harder to find affordable space within a half mile of the existing campuses. The 20,000 square feet in the Market building is already committed.

Durham Historic Trust Building
The historic Trust building in downtown Durham is being renovated into a third American Underground campus and home to Windsor Circle and the Durham CVB.

"As the region becomes more popular, the ability to get relatively low cost real estate is diminished," he says. "We're weighing how close and proximate do locations need to be? You have to create a campus model that allows people to move around pretty effortlessly in order to take advantage of the resources there."

Space might seem a challenge, but expansion has happened each of the last three years. With that track record, and Klein's drive to exceed every goal set for the startup hub, expect 2016 to be a year of figuring it out.