ATC Archives - SiliconHills

By LAURA LOREK
Founder of Silicon Hills News

The Austin Technology Council’s Startup Showdown builds a bridge between the startup community and those who have more seasoned experiences and companies, said Josh Alexander, founder of Toopher.

Toopher, a security platform that helps businesses authentic and verify their customers online, won the ATC Startup Showdown in 2012.

“As a result we were able to connect and get really, really good advice from those who have been there and done that,” Alexander said.

“We’ve been very fortunate in our trajectory so far and we’ve been able to accomplish a lot, clearly, if not most of it, because of the wonderful community we have here in Austin,” he said. Toopher has raised $2 million.

Alexander spoke at the Austin Technology Council’s CEO Summit on Thursday during a noontime presentation of the four most promising local startups in the 2014 ATC Startup Showdown.

Alexander introduced Joseph Kopser, the CEO and Founder of RideScout, “the Kayak of ground transportation” and the winner of the Startup Showdown from last year. RideScout started in the Austin Technology Incubator. The company created a mobile phone app that lets consumers search and compare aggregated ground transportation options to find the best one. The company has raised seed stage funding last year, built out its team and launched in Washington, D.C., Austin, San Francisco, Boston and Chicago.

“We wouldn’t have gotten to where we are today without ATC and its supporters,” Kopser said.

ATC chose one startup from each of four tech incubators based in Austin including the Austin Technology Incubator, Capital Factory, DreamIt Ventures and Techstars Austin.

Among Austin’s incubators and accelerators there’s a lot of collaboration and cooperation, said Isaac Barchas, director of the Austin Technology Incubator.

“The infrastructure is being built out in a way that makes the whole more valuable than its parts,” Barchas said.

Rick Hawkins, president and CEO of Lumos Pharma, an ATI company.

The winning company from ATI was Lumos Pharma. The company is developing a drug treatment for autism, said Rick Hawkins, its president and CEO. Earlier this year, Lumos Pharma raised $14 million in a Series A funding round led by Sante Ventures and New Enterprise Associates. The company is using that money to finance pre-clinical and clinical development of its drug to treat Creatine Transporter Deficiency, a cause of autism and other mental disorders.

The winning company from Capital Factory was Cratejoy.

Josh Baer, co-founder of Capital Factory, said the incubator has made 30 investments since October. He said it’s the most active seed-stage investor in Austin right now. Capital Factory launched a syndicate investment on Angellist with $100,000 investment in Cratejoy and the company attracted another $350,000 in investment from around the country, Baer said.

Amir Elaguizy, founder of Cratejoy, a Capital Factory company.

“Cratejoy is an ecommerce platform for subscription-based businesses,” said Amir Elaguizy, its founder.

The company pivoted from Toutpost, a Y-Combinator startup, into Cratejoy after Elaguizy identified an unmet need for a platfrom catering to subscription based businesses. The company launched a Beta program recently and has signed up several paying businesses including Beard Brand, which sells grooming supplies for breads, Sumo Snacks, a subscription based jerky delivery to companies and a tie of the month club. Cratejoy, which has 10 employees, recently moved out of the Capital Factory and into a house in Austin because it’s expanding so quickly and needed more room, Elaguizy said.

Utz Baldwin, founder of Plum

The winning company from Techstar Austin was Plum, an “Internet of Things” company that makes an app that lets people control lighting in their home from their smartphone. The company, formerly known as Ube, went through the inaugural Techstars class. It has raised $1.5 million, including $307,600 through a successful Kickstarter campaign last year from 1,300 backers. The company has 11 employees and has its prototypes in hand, said Utz Baldwin, the company’s founder.

“I think Austin is the number two city in the country, outside of the Bay Area, for starting up a company,” he said. “We are intent on building a big consumer brand right here in the great state of Texas.”

The winning company representing DreamIt Ventures was Swan, a platform that allows consumers to order beauty services like hairstyles, makeup and manicures to the home or office.

Kerry Rupp, CEO of DreamIt Ventures in Austin, introduced Julia Andalman Swan’s founder. Andalman first pitched her company to Steve Welch of DreamIt Ventures in Dallas but she didn’t think he liked it. Then he called her a week later. He went home and talked to his wife about it and she thought it was a great idea, Andalman said.

By LAURA LOREK
Founder of Silicon Hills News

In a panel titled “Austin’s Brand: Go Big or Go Home” at the Austin Technology Council’s CEO Summit three seasoned tech leaders gave their perspective on building a billion dollar company.

“Something that Austin is not known for is thinking big,” said Mark McClain, CEO and founder of SailPoint Technologies.

Austin companies often don’t go long and take their ventures to the “Thunder Lizard” stage, a term made famous by Mike Maples Jr. with Floodgate Ventures in Silicon Valley. Maples has challenged Austin entrepreneurs to come up with the next big thing and create a $100 billion tech company in the next 10 years, a venture he calls a Thunder Lizard.

RetailMeNot always had a bigger vision, said Cotter Cunningham, its CEO.

“For us, we felt like there was an opening and we could take advantage of it,” Cunningham said.

RetailMeNot is now the world’s largest online coupon and deals marketplace. Cunningham raised about $300 million from investors, including Austin Ventures, Google ventures and others. His intent was always to build the biggest company in the coupon market largely through acquisitions.

RetailMeNot went public last June. Its stock trades under the symbol “SALE” on the Nasdaq stock market and closed at $25 a share on Thursday. It has a market capitalization of $1.2 billion.

Rod Favaron, CEO of Spredfast, a developer of enterprise software for social media platforms previously ran a company called Lombardi Software, which he said was in a niche market. IBM acquired Lombardi Software in 2010. He then joined Spredfast.

At the time, Favaron had no idea that Spredfast was chasing a multi-billion market.

“In 2011 we started to sell to people for $100 a month,” he said. “It was completely unclear how big the market would be. It hit us last summer that this was a very big market. We went from very short term planning horizons to long term planning horizons.”

Spredfast raised $60 million and recently acquired another Austin startup in the social media market, Mass Relevance.

“It’s either going to be a giant fireball or really successful,” Favaron said. “We’re shooting the moon on this one.”

At SailPoint there may be a chance to go bigger and go longer, McClain said.

But it’s often difficult to see that massive potential at the startup stage, he said. Some people may think their market is small but it may develop in ways they didn’t think about, he said.

The key to building a massive company that can scale is product and market fit and market size, the panelists said. The market has to be really big and the startup has to be the leader.

Investors can also keep a company from going big if they don’t think big, Favaron said. It’s really important that investors be in synch with the long-term vision of the company, he said.

The founders also have to have the right mentality to go long and take risks. Some first time founders want to maintain control and that means they don’t raise a lot of money and take risks. For example, the founders of Spredfast were willing to sell the company for $6 million, Favaron said. But he saw a much bigger market and potential.

“Our biggest competitor has raised $70 million,” Favaron said. “I’m underfunded, which is weird. It’s a super big market. I think going big is something we don’t do enough in Austin.”

First time entrepreneurs are more risk averse and tend to sell their company so they can put some money in the bank, according to the panelists. Second time founders are more willing to raise more money and risk more.

“If you’re the founder you can do what you want unless you raise money,” Favaron said.

Austin needs to spin out more first time entrepreneurs quickly and cultivate a set of executives “ready to swing big for the next one,” according to the panel.

Austin has a strong brand as a technology center, which South by Southwest Interactive has helped to cultivate globally, said Favaron. He said he doesn’t have any trouble recruiting tech talent to Austin. In fact, Spredfast just recently hired a Chief Financial Officer and had plenty of qualified candidates, he said. Earlier in the day during a different panel discussion, Chuck Gordon, co-founder of SpareFoot, mentioned his company was having trouble recruiting a CFO to relocate to Austin.

Tag: ATC

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