Cyber strong: Alabama’s innovation ecosystem fuels economic growth

Alabama has developed an extensive business and tech incubator system that is playing a crucial role in supporting the development of homegrown startups, including Birmingham’s Innovation Depot, which has been instrumental in the growth of companies like Fleetio and Shipt. (contributed)
Alabama’s technology sector is rapidly advancing, with significant growth in software services, cybersecurity activity and other fields that show considerable potential for expansion and job creation.
In fact, the economic output of Alabama’s tech sector has surged by 50% since 2018 and is projected to reach 5.3% of the state’s total GDP by 2030, basically doubling the recent figure.
Buoyed by increasing venture capital investments – $321 million in IT deals in 2023 alone – the sector is flexing its muscle. Key hubs like Huntsville, Birmingham and Mobile are fostering ventures focused on fields including IT cybersecurity, the Internet of Things (IoT) and AI.
Meanwhile, homegrown successes like Shipt and Fleetio highlight the potential of Alabama’s tech-focused startups, supported by a statewide incubator network driving innovation and market alignment.
With the wide-ranging support of Innovate Alabama, a statewide public-private partnership focused on entrepreneurship, technology and innovation, these developments are setting the stage for a new wave of growth in Alabama’s emerging tech sector.
“Alabama’s technology sector is on a remarkable trajectory, with dynamic growth in areas like cybersecurity, software development and artificial intelligence,” said Ellen McNair, secretary of the Alabama Department of Commerce. “With strong industry partnerships, rising venture capital investments, a robust incubator network and exciting new initiatives, we’re creating a thriving tech ecosystem that drives job creation.
“The rapid expansion we’re seeing today sets the stage for a transformative future for Alabama’s tech industry,” McNair said.
Here are tech trends to watch in Alabama as 2025 unfolds:
No. 1: Emerging hubs
IT subclusters aligned with local industries have formed around Alabama, with a host of cybersecurity, IoT and advanced manufacturing-focused IT companies landing in Huntsville, where their services are prized by aerospace and defense industry players.
Meanwhile, healthcare and business management-focused IT companies are growing in Birmingham, home to the brainpower in Southern Research and UAB’s growing medical enterprise.
Acclinate, a startup that aims to broaden minority representation in clinical trials, is an example. In 2024, the company launched a growth project in Birmingham that will add 25 new full-time workers.
In addition, the Mobile area boasts emerging companies using AI and machine learning for data analytics.

Birmingham-based digital healthcare startup Acclinate, founded by Del Smith, Ph.D., and Tiffany Whitlow, launched a growth project in 2024. (Acclinate)
No. 2: Rising VC investments
There has been increasing venture capital (VC) investment activity in Alabama’s tech sector, with $321 million in IT-related VC deals in 2023, up from $74 million in 2022 and just $3 million in 2013, according to data from Pitchbook.
The increase signifies a growing IT startup ecosystem across Alabama and growth potential for homegrown companies to sell their products and services.
More good news: As much as half of the VC investments in Alabama during the past decade flowed into startups, providing lifeblood to promising new companies.

Birmingham’s Innovation Depot has helped more than 100 startups get off the ground, resulting in an economic impact measured in the billions of dollars. (contributed)
No. 3: Incubator support network
Alabama has developed an extensive business and tech incubator system that is playing a crucial role in supporting the development of homegrown startups.
Birmingham’s Innovation Depot, for example, has supported more than 100 companies and has been instrumental in the growth of companies like Fleetio and Shipt. In Tuscaloosa, The Edge has played a similar role.
Other examples include the University of Alabama in Huntsville’s Invention to Innovation Center (I2C), which supports high-tech startups, including notable software-as-a-service (SaaS) companies such as LunarG and Q-Track.
And Auburn University’s Tiger Cage Accelerator has supported numerous student-led startups in biotech and information technology sectors.

Inside the Alabama School of Cyber Technology and Engineering in Huntsville. (contributed)
No. 4: Cyber school
The Alabama School of Cyber Technology and Engineering (ASCTE) in Huntsville is the state’s only public, tuition-free high school dedicated to cybersecurity and engineering.
Opened in 2022, ASCTE serves students statewide, integrating rigorous academics with hands-on learning, supported by industry partnerships with companies like Raytheon, Northrop Grumman, SAIC and Lockheed Martin.
The school’s 330-plus students benefit from internships, mentorships and capstone projects tackling real-world challenges, preparing them for careers in STEM and cybersecurity.

In May 2024, technology company Meta Platforms announced plans to open an $800 million data center in Montgomery that will support 100 operational jobs and build on the company’s previous investment in the state. (Hal Yeager / Governor’s Office)
No. 5: Data central
Alabama is emerging as a key location for data center investments, driven by its favorable business climate, strategic location and infrastructure.
In 2024, Meta Platforms selected Montgomery as the site for an $800 million data center, building on previous investments topping $1 billion in Huntsville.
“The city – and our specific location – offers great access to infrastructure and renewable energy, a strong pull of talent and, most importantly, an amazing set of community partners,” said Brad Davis, director of community and economic development at Meta Platforms. “We look forward to having a strong partnership for years to come.”
Google already operates a $600 million data center in north Alabama. Other companies, including DC Blox and AUBix, have made data center investments in Alabama.
To prepare for future demands, the Alabama Department of Commerce, in partnership with the state’s transmission providers, is conducting an energy infrastructure study to look at how the state can proactively address the needs during the next five to 20 years.
This story originally appeared on the Alabama Department of Commerce’s Made in Alabama website.