BuildGroup Wants to Invest in High Growth Austin Startups

By LAURA LOREK
Reporter with Silicon Hills News

Jim Curry and Alan Schoenbaum, two of the co-founders of BuildGroup with Laura Kilcrease, Entrepreneur in Residence at UT at the Money Talks! event. Photo by Hojun Choi.

Jim Curry and Alan Schoenbaum, two of the co-founders of BuildGroup with Laura Kilcrease, Entrepreneur in Residence at UT at the Money Talks! event. Photo by Hojun Choi.

BuildGroup, one of Austin’s latest venture capital firms, plans to invest in two to three high growth companies a year, according to one of its founders.

“We want to find companies that have founders that welcome our activity,” said Alan Schoenbaum, co-founder of BuildGroup. “We don’t want to invest in a company that just wants money.”

Schoenbaum and Jim Curry participated in a Money Talks! Series hour-long interview with Laura Kilcrease, entrepreneur in residence at UT. The events are hosted by the Herb Kelleher Center for Entrepreneurship, Growth, and Renewal.

BuildGroup is a new source of capital for the region. It has already made two investments into Austin-based Continuum Analytics and Maintenance Assistant, a Toronto-based company. Continuum Analytics, which develops Anaconda, the leading modern open source analytics platform powered by Python, received $24 million in Series A funding led by BuildGroup and General Catalyst Partners last July. The details of its investment into Maintenance Assistant have not yet been made public.

BuildGroup doesn’t do consumer investments. It does invest in business to business software companies, vertical software as a service companies, open source innovations, data, analytics, machine learning, artificial intelligence, sales and marketing automation. It does not invest in biotechnology or medical technology companies.

Three former Rackspace executives founded BuildGroup last March. They include former Rackspace CEO Lanham Napier, former Rackspace General Counsel Schoenbaum and Curry, former senior vice president of strategy and corporate development. Klee Kleber, former Chief Marketing Officer at Rackspace and WP Engine also joined BuildGroup. And Peter Freeland, a venture capitalist in Boston, became a founding partner recently.

During the event, Curry, who graduated from UT and started his career as an investment banker in private equity, said he joined Rackspace in 2006 and he worked with Schoenbaum on 11 acquisitions. They also saw San Antonio-based Rackspace, which was founded in 1999, grow from a tiny company to a publicly traded tech giant with more than $2 billion in revenue. Rackspace went public in August of 2008, during the height of the financial crisis.

“We want to help entrepreneurs get the help we didn’t have previously in our careers,” Schoenbaum said.

BuildGroup is all about hands on investing. The firm wants to provide the guidance and services that Rackspace’s investors didn’t do, Schoenbaum said.

Schoenbaum graduated from UT’s law school in 1984 and became a corporate lawyer. He worked for the Akin Gump law firm for 21 years before he joined Rackspace.

“After nine years I really learned a lot about what it takes to run a business,” Schoenbaum said.

As it scaled, Rackspace was hiring 100 people a month, Schoenbaum said. The executives had to shift between many roles at the company, he said.

“We got really good at scaling and we think we know something about that now,” he said.

BuildGroup is not focused on making seed stage investments. It’s focused on people who have a market for their product and know how to scale their business, Schoenbaum said. It’s focused on finding entrepreneurs who want to build something big, he said.

“We’re looking for companies where we can help with that execution,” Curry said.

For example, with its first investment in Continuum Analytics, Napier serves on the board. Curry helps coach product and engineering and Schoenbaum helps with human resources and legal issues and Kleber with marketing.

“We’re spending a lot of time beyond the board time with the companies,” Schoenbaum said.

And even though one of its initial investments is in Canada, BuildGroup prefers to invest in startups in Austin, he said.

Speak Your Mind

*