Laura Kilcrease says Austin has Entered Entrepreneurial Stage Three

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BY SUSAN LAHEY
Reporter with Silicon Hills News
Austin is entering entrepreneurial stage 3.0, where local startups will not only emerge, succeed and be acquired by bigger companies, but where they’ll be able to grow to serious scale, said Laura Kilcrease, entrepreneur-in-residence at the Herb Kelleher Center for Entrepreneurship at The University of Texas McCombs School of Business
Earlier, Kilcrease said, Austin had limited entrepreneurial experience. There were people who had built lifestyle businesses but few whose businesses scaled to the enterprise level. Nor were there enough serial entrepreneurs.
“Now,” she said, “We have entrepreneurs who have built businesses once, twice, five times. There’s such knowledge and learning now about what to do and what not to do they can take the talent to the next level.”
That includes entrepreneurs like Kilcrease herself, people in their 50s and older who have “failed at retirement who are moving here and they’re vibrant and active and want to help those entrepreneurs who are starting out. Growing a business from one to three people is one thing…but when you get to growing a business from 50 to 300 that’s a whole different way of managing. We have the managers here now and the talent to make that possible.”
In fact, Kilcrease later called out an audience member from Dell who asked what contribution that company could make toward Austin 3.0. A company like Dell, she said, that has successfully scaled and is now reinventing itself could be a great resource of guidance and mentorship to help other local companies do the same.
Kilcrease was interviewed Tuesday night by John Sibley Butler, director of the Kelleher Center at the final event of Entrepreneurship Live, a series she created for interviewing serial entrepreneurs about their experiences.
Kilcrease is a 25-year veteran of the Austin entrepreneurial scene and watched the city evolve from one that relied on state government, the University and peripherally the oil and gas industry, into a hub for startups. In 1992 she became executive director of the University of Texas IC2 Institute’s Center for Commercialization and Enterprise. She co-developed and launched the Austin Technology Incubator (ATI), one of the country’s first technology incubators, and served as ATI’s founding executive director. Kilcrease also launched The Capital Network, one of the largest “business angel” investor networks in the United States with more than $150 million in completed transactions
Kilcrease talked about the evolution of the startup ecosystem and where it is headed, largely from a funding standpoint.
“Early stage companies were funded in an ecosystem…where you could give a venture capitalist a 12-page powerpoint presentation on your idea and get $5-or-$10-million,” she said. “Now you couldn’t present a running company and get $5-or-$10 million.”
Venture capitalists have become more risk averse because it’s harder to take companies public and IPOs give investors a far greater return on investment. Enter the angels investors of whom the Central Texas Angel Network is the fourth most active in the country. In recent years, she said, roughly $29 billion has been invested by VCs in startups annually, with about 3,000 companies receiving that funding. Angels, meanwhile, have invested $20 billion in 50,000 to 60,000 companies. More angels have become investors in networks and clubs as well. But now, crowd funding seems to be encroaching on the kinds of deals the angels traditionally made, since new Securities and Exchange rules will require crowd funding investors to be SEC approved.
At the same time, more companies are beginning as lean startups requiring relatively little investment.
“There are a lot more tools today than there used to be,” she said. “Lean startup, three day startup, accelerators. There are a myriad of different ways to enter the discourse about entrepreneurship and how to get going…. What I’ve seen is that people start not with assumption that they’re going to try to make a traditional business as in, do you have an IP, what is the market…there’s not a 30-page business plan. They’re driven by new business models.”
As a judge at SXSW Interactive, for example, she always asks “How are you going to make money?” and the response is frequently “I don’t know. We’ll just get the technology out there and see what happens.”
One of Kilcrease’s passions is to make entrepreneurship accessible for more people. Twenty years ago, she said, most entrepreneurs were 35-to-45 years old with some experience under their belts. Now most people think of entrepreneurs as the Mark Zuckerbergs, fresh out college without the responsibilities many middle-aged people carry. But now people over 50 are becoming entrepreneurs at a rapid rate.
Moreover, as an immigrant herself from England, Kilcrease would like to see barriers removed for immigrants who, she pointed out, already had to overcome barriers to leave their home countries and adapt to U.S. culture.
One audience member asked whether this evolving ecosystem Kilcrease described in Austin would be choked by the rapidly growing population and all the problems that brings. Kilcrease, however, said that the focus could not just be on Austin but on all of Central Texas. That’s the real ecosystem. And while Austin was no longer a small city where most of the key players could sit down in one room and work things out, it could still evolve positively.
For example, rather than business incubators and accelerators fighting over a particular business, they could all just support one another’s successes.
“We complain about traffic and complain about other things but we’re still ranked as one of three top growth areas…. With anything good, there are things you need to tweak.
We need to solve the problems and make sure that everyone’s involved. And be thankful we’re doing well in a great place.”

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