Thank you to Laura Kilcrease, former Entrepreneur in Residence at the Herb Kelleher Center for Entrepreneurship at the University of Texas at Austin, for interviewing me, Laura Lorek, founder of Silicon Hills News at South by Southwest Interactive last March.
Tag: Laura Kilcrease
The steering committee behind Women@Austin, photo by Sara Peralta
By LAURA LOREK
Founder of Silicon Hills News
The Capital Factory in downtown Austin smelled like roses and perfume on Thursday night.
Red heart balloons, roses and heart-shaped doilies decorated the tables, walls and windows of the main presentation room.
The tech accelerator and incubator hosted more than 100 women for the inaugural Women@Austin event, which kicked off with networking over wine and hors d’oeuvres. The event sold out in five days, said Jan Ryan, its founder.
“I think we hit a nerve,” she said.
A steering committee of 16 women began meeting last fall to plan for Women@Austin which aims to triple the number of women-funded companies in the next few years, provide more mentoring and increase the visibility of female entrepreneurs in the community.
“This is the debut of a new mission-driven community to really accelerate women in Austin,” Ryan said.
Josh Kerr, co-founder of Written.com, was one of the few men in attendance. He was one of the first ones to sign up, Ryan said.
Usually, Capital Factory is teeming with a lot of men working on startups. Kerr’s company is based there. But on Thursday night, the women took over except for the first speaker, Bill Wood, general partner at Silverton Partners. Laura Kilcrease, founder of Triton Ventures and founding director of the Austin Technology Incubator, introduced Wood. She said he was the first person she met when she moved to Austin in 1984. And he was the first person she consulted when she decided to become a Venture Capitalist and to establish Triton Ventures.
“He gave me insightful information,” Kilcrease said.
Advice from Bill Wood, general partner with Silverton Partners
Bill Wood, general partner of Silverton Partners, photo by Sara Peralta
“Women are under-represented and they add such a different dimension,” Wood said. Having women involved in startups leads to better outcomes, he said.
Women have “lifestyle obstacles” but those can be addressed and handled, he said.
Wood gave basic information on the different stages of how startups raise money from friends and family to angels to seed funds and then early stage funds and lastly, growth equity.
“We are a classic seed stage, early stage fund,” he said. “We’re the first institutional investor in our deals, but there are almost always angels where we invest.”
Venture capitalists look for a validation of a product’s market opportunity when they decide to invest in a startup, Wood said. Everything is driven by data and metrics today, he said.
“Business has gone from judgment and insight and wisdom to metric-based decision making.” Wood said. “That’s just the way it works…It’s all math. We’re looking for some validation in the numbers.”
The expectations also go up dramatically when a company gets venture capital, Wood said.
He also said there are lots of great businesses out there that don’t make sense for VCs.
“Don’t get your feelings hurt,” he said. “If you don’t raise VC money, that means you own more of the company. If it’s successful, good for you.”
VCs are looking for outcomes in the $100 million range, Wood said. It’s not just that the business is a really good business, but it has to be able to get to a size where it can provide a big return to investors, he said.
Silverton Partners only invests in Austin companies and most of its investments are in the software industry or consumer applications, Wood said.
Three Female Founders Give Startup Advice
From left – Jan Ryan, Patti Rogers, Heather Brunner and Erica Douglass, photo by Sara Peralta
Ryan asked them what challenges they faced launching their businesses and the lessons they learned.
“When you’re starting something new, every day is a new surprise,” Rogers said. “Having tolerance for that is super important.”
Douglass recounted how Josh Baer, co-founder of Capital Factory, told her that no one cared about her $1 million exit and that she shouldn’t mention that when she pitched investors because they think it’s too small. She cried, she said.
She did go on to raise $640,000 as part of the TechStars Austin program and she’s getting ready to raise another round soon, she said.
Women@Austin, photo by Sara Peralta
“You don’t want to waste your time with people who aren’t active investors,” Douglass said.
On the personal side, founders have to get used to rejection, Brunner said.
“Get used to the fact that not everyone is going to love your story,” she said. But make sure to get feedback from them, she said.
Brunner also recommended vetting venture capital firms and investors to find the right fit for a startup’s industry and for those investors who already had investments in that space. That will save time, she said.
She heard from a lot of investors who loved WPEngine’s metrics and were in love with the story, but it didn’t fit their investment metrics, she said.
Ryan also asked the panel how they coped with stress running a startup. Brunner and Rogers do Yoga a couple of times a week and Douglass plays games on her mobile phone with friends.
Lastly, Ryan asked them to give advice to other startup founders.
Rogers said it’s important to really know your story.
“And to continue to refine it and craft it and repeat it and make it better all the time,” she said. “And deliver it with clarity and confidence.”
She also recommended reading Steve Blank’s Startup Manual.
Brunner said it’s important to “know who your hero customer is and find as many of them as possible and talk to them. Make sure you really understand their psyche.”
Douglass told the founders not to opt out. She recommended reading Sheryl Sandberg’s book “Lean In.”
The crowd at the Women@Austin event, photo by Sara Peralta
Isaac Barchas, director of the Austin Technology Incubator, at its 25th-anniversary celebration and graduation.
The Austin Technology Incubator started off as a lab at the University of Texas at Austin 25 years ago.
No one knew what an incubator was in 1989 but they understood labs so George Kozmetsky, dean of the business school and ATI’s founder, called it a lab for students to learn about entrepreneurship and technology transfer.
Today, that lab is one of the oldest and most successful incubators in the country. ATI has graduated 142 companies and six of them went public, 40 more merged or were acquired with larger firms and another 50 are still operating, according to a new report “The Economic Impact of Austin Technology Incubator Alumni Companies on Travis County.”
The report found that just in the last 10 years, ATI companies have had an $880 million economic impact on Central Texas and they have created 6,524 direct and indirect jobs.
“ATI has had a tremendous economic impact on Austin,” said Juan Sanchez, vice president for research at the University of Texas at Austin. “It’s not too bad for a 25-year-old.”
On Wednesday night, ATI graduated 25 companies, which have raised $60 million so far in venture funding. Two of those companies, Black Locus and Hoot.me have already been acquired. Home Depot bought Black Locus in 2012 and Civitas Learning acquired Hoot.me last summer.
“In a very real sense, ATI was the only game in town 25 years ago,” said Isaac Barchas, ATI’s director. “Today, ATI is not the only incubator.”
Austin has Capital Factory, DreamIt Ventures, Techstars, Incubation Station, Tech Ranch Austin and more.
“Now Austin is the incubator,” Barchas said.
At the event, Josh Alexander, co-founder of Toopher, gave a humorous graduation speech. Toopher, founded in 2011, now has 23 employees and plans to expand in 2014, he said. Toopher has created software to detect identity theft and fraud online. The company, which created two-factor authentication security software, received $2 million in Series A funding last year.
ATI also handed out awards.
Manoj Saxena, founder of Webify and now general manager of Watson Solutions for IBM Software Group in Austin, won the Laura J. Kilcrease Civic Entrepreneurship Award.
“I want Austin to become the hub for cognitive computing in the country,” Saxena said, upon accepting his award.
The inaugural John Butler Distinguished Alumni Award went to Michael E. Webber, former ATI intern and now Deputy Director of the Energy Institute at the University of Texas at Austin.
More than 400 RSVPed to attend the graduation event. Greg Kozmetsky, son of the late George Kozmetsky, attended along with Pike Powers, a longtime economic development proponent for the technology industry who worked closely with Kozmetsky. Others attending included Laura Kilcrease, the founding executive director of ATI, Robert Peterson, director of the IC2 Institute, Gregory Fenves, UT executive vice president and provost, Bob Metcalfe, UT Professor of Innovation and many more.
By SUSAN LAHEY
Reporter with Silicon Hills News
Rosa McCormick and Laura Kilcrease at the Herb Kelleher Center Speaker Series of the McCombs Business School at UT
Wild Basin’s managing director Rosa McCormick was the first speaker in the Herb Kelleher Center Speaker Series of the McCombs Business School at UT Tuesday night at the AT&T Executive Education and Conference Center. McCormick is also president of Key Light Capital LLC, the company’s venture firm. Laura Kilcrease, who is sharing the Entrepreneur in Residence spot with Brett Hurt, interviewed her.
Wild Basin started in 2007 with the idea of seeding three to eight Austin startups a year with amounts ranging from $50,000 to $150,000. In recent years, the company has switched to giving larger amounts to fewer companies, about three a year, partly because, as an evergreen fund, its portfolio has grown with companies it continues to support as well as new startups. An arm of Wild Basin, Key Light Capital, does larger deals and more direct investment. Key Light manages the legacy venture capital portfolio for the family’s future generations.
“We are industry agnostic and opportunistic…diversification is something we embrace as a strategy,” McCormick said. It also has a lot of flexibility in how investments are structured. But that means the company has to do due diligence on a number of different industries before making investments.
“One of the nice challenges about the job is you can dig in and learn something new, but that also makes it that much harder,” said McCormick. “And to a large extent you have to make sure you have validation from people with deep domain expertise. You need a third party to look at it and provide third party validation.”
As part of its strategy to invest in diverse companies, Wild Basin collaborates with other angels and funds that have deep knowledge of the industries where they invest. McCormick serves on the board of the Central Texas Angel Network
“Wild Basin will lead deals, but it takes a lot of effort to lead a deal. You need to make sure can devote the correct resources to it. We don’t take sole investor in a round position. That is in contrast to the strategies employed before by the principals where we were the first monies in or the only monies in. That was, on balance, a very successful financial strategy but it had hard losses. You are the only person at the table when something goes wrong.”
Their partners, she said are “people who have similar interests or similar business models.” Once they’ve partnered with an investment fund or angel, they may reconnect with that fund. A big question, she said, is how the other investor acts “when things go wrong…if they handle that well, you know those people are people you can do deals with in the future.”
Wild Basin structures deals in a number of different ways, McCormick said. In answer to a question she said the company has never done revenue based funding, but she thinks it’s an interesting idea. She also said they might consider working with a company that’s already partially funded, as long as there were not too many complexities in working out the deal with other funders—such as nonstandard terms.
Unlike some investors who are looking for a quick return, Wild Basin is investing in order to create wealth for generations of a family. Which makes the fund more risk averse than some might be but also gives it a long view.
“We constantly reevaluate a strategy and experiment. But you run an experiment and you don’t get any data back for a long time. We don’t know what good decisions we’ve made and what bad, and we won’t know for a while….things seem to be going well.”
Wild Basin is Austin-centric. And in the years she’s been dealing with startups, McCormick said, the quality of the deal flow has increased greatly.
“There are more and more folks who come into the entrepreneurial process with some grounding in being an entrepreneur….. There is a higher percentage of folks coming up to speed on terms and term sheets. Before we had be very careful to walk them through it. We needed them to understand what deal was going on. Now I think people are very savvy.”
The next Herb Keller speaker event will be October 15. The speaker will be announced about 10 days before the event.
Laura Kilcrease, Brett Hurt, Michele Skelding and Rick Timmins Photo by ©2013, Scott Van Osdol, www.vanosdol.com
By LAURA LOREK
Founder of Silicon Hills News
Austin has one of the nation’s most active angel networks through the Central Texas Angel Network, known as CTAN.
Last year, CTAN, with 100 members, invested about $8 million in 28 companies, including 13 new companies and 15 portfolio companies.
Every angel investor is doing it because they are passionate, said Michele Skelding, a CTAN member and angel investor.
She spoke at the RISE Lunch & Learn panel Tuesday on Angel & VC Funding at the AT&T Executive Education and Conference Center in Austin.
Michele Skelding photo by ©2013, Scott Van Osdol, www.vanosdol.com
Throughout an hour long discussion, the panelists talked about a wide range of topics including what they look for when deciding to make an investment to tips on how to talk to a potential investor.
A startup must have five critical ingredients to build a successful company, said Hurt. He details them on his blog Lucky7.io. They are a solid business plan, a good team, the proper mindset, funding and culture.
While Hurt, 41, spent the first half of his life building companies, he plans to spend the second half helping entrepreneurs make an impact on Austin. His focus is on ideas that can become big businesses. Hurt co-founded Bazaarvoice which is now a $540 million company.
Laura Kilcrease and Brett Hurt photo by ©2013, Scott Van Osdol, www.vanosdol.com
“There are some people who are thinking too big,” he said.
He’s only interested in working with companies that have products like Bazaarvoice and HomeAway. The one difference is if he has his Angel hat on he will make an investment in something different like Deep Eddy Vodka. He actually met Clayton Christopher, the founder of Deep Eddy Vodka, through RISE.
“I’m a huge, huge fan of RISE,” Hurt said. “This is one of the best things the city has going.”
If he makes an investment in a company like Deep Eddy and he gets back three times his investment then that’s just fine, he said.
But normally, he wants to see companies that have a clear path to get to $100 million in revenue or $1 billion in revenue.
“Most of the things I see are not close to that,” he said. “Lifestyle businesses are just fine. I’m a think big guy.”
When it comes to writing a check, Timmins looks at four things. The most important thing is the entrepreneur, he said. He looks for leadership qualities, managing skills, the ability to take advice and listening skills.
“It’s about the person or the people running the company,” he said. “Fifty percent of what I look at when I decide to invest is about the entrepreneur…If there are any doubts in my mind, I don’t do it.”
His second criterion for investment is the company’s technology and whether it’s disruptive enough. He’ll often consult experts to help him assess that.
The third thing he looks at is a customer.
“All you need for me to believe this is one paying customer who believes in what you’re doing and what you’re trying to establish,” he said. “The last thing I look at is the business plan.”
The business plan makes up just 10 percent of his decision making process.
“I don’t believe business plans anymore,” he said. “But I want you to go through the exercise…I want you to go through the process of thinking through it.”
As a venture capitalist, Kilcrease looks at two key aspects: the jockey and the team, she said.
“We know the business plan is wrong but it’s giving us an idea of what you’re thinking,” she said. “The next thing I look at is the market.”
The average angel investment is around $275,000 and the average venture capital round is $2 million to $3 million.
“I think the jockey and the market is key,” Kilcrease said. “The very last thing I look at is the technology. An “A team” will be able to rework the technology to the market or pivot as they go along.”
In addition to VCs and Angels, now investors are starting to see a third category called the Super Angel who is funding the gap between seed stage and Series A funding for startups, Kilcrease said. And another funding source is syndication between angel networks across the country, which can provide funding in the $1 million to $3 million range, she said.
“Don’t just think about angels as a $50,000 check,” she said.
Mentorship that a company gets is more important than the amount of money they receive, Hurt said.
“A business needs capital and mentorship,” he said. “It’s like a marriage. You can take money from angels and it can be your worst nightmare. It’s got to be the right fit.”
CTAN has five funding cycles through the year, said Skelding. And CTAN added office hours as a more informal way to get to know the angel investors and for entrepreneurs to discuss their ideas, she said. One big mistake entrepreneurs make is that they are just not prepared to pitch to investors.
“You’ve got to learn how to speak to an investor,” Skelding said. “They’ve seen thousands of deals.”
Entrepreneurs need to serve up their ideas in a way that is quick and interesting, she said.
Angels will invest in any type of businesses, Kilcrease said.
“If you get the right angel there’s almost no area they won’t consider,” she said. Whereas, VCs have specialized areas they invest in, she said.
Since 2009, Timmins has invested in 24 companies and only one has a chance to be public, he said.
In response to a question about the single biggest mistake people make in their pitch, Hurt said that entrepreneurs go into the VC or Angel pitch and they show a hockey stick growth slide that they don’t believe in.
“Set expectations you think you can meet,” he said.
Rick Timmins photo by ©2013, Scott Van Osdol, www.vanosdol.com
“If you don’t want the pressure of being accountable then be like my parents and don’t ever raise money,” Hurt said. His dad created a halogen fishing light but turned down an offer from Wal-Mart because he wanted to keep his business simple.
Another audience member asked about when to take additional funding for her business.
“Only take the amount of money that will add value to get you to the next level,” Kilcrease said.