BY L.A. LOREK
Founder of Silicon Hills News
The buzz surrounding the Initial Public Offering of Facebook and the billions Mark Zuckerberg will receive might make people think that running a startup leads to fame, fortune and fun.
But several entrepreneurs offered up a different view at the Texas Venture Labs “Been There, Done That” panel last week at the University of Texas’ McCombs School of Business. The panel was made up of alumni of the Texas Venture Labs Investment Competition. They also served as judges for the finals competition.
“Expect extreme highs and extreme lows,” said Robert Reeves, director of the IT and Wireless Portfolio at the Austin Technology Incubator. He cofounded Phurnace Software with Daniel Nelson. They won the Texas Venture Labs Competition in 2006. They went on to raise $5 million in venture capital from S3 Ventures and in 2010 sold Phurnace Software to BMC Software.
“You have got to have a certain intestinal fortitude that you don’t have yet, but you’ll get there,” Reeves told the audience of about 100.
Jay Manickam, UT class of 2004, started UShip with two other UT graduate students: Matt Chasen and Shawn Bose. They entered the TVL Competition during its second year and they finished in last place.
Since graduating from UT, Manickam and his cofounders have raised a little more than $7.5 million in two rounds of funding and now have 100 employees at UShip. The company also recently launched a reality TV show on A&E called “Shipping Wars.”
“It’s not where you finish in this competition, it’s the fact that you’ve done it,” said Rob Adams, director of the TVL Investment Competition. “I was an investor at the time and I turned the deal down.”
“In the first stages, things are very, very emotional,” said Hassan Johnson, who created ThaTrunk while at UT as a platform for hip-hop artists. “It’s a rollercoaster, just enjoy.”
ThaTrunk has since evolved into a mobile proximity sharing app for creative content. It was one of TVL’s first portfolio companies. Last summer, Hassan participated in DreamIt Ventures accelerator in Philadelphia and has raised six figures in angel investments.
“Now we’re back on the fundraising trail,” Johnson said.
Angel networks, in general, play a vital role in any entrepreneurial venture, said Jeff Harbach, he serves as executive director of the Central Texas Angel Network. He also owns several small businesses including two 7-Eleven convenience stores. He received his MBA from UT where he co-founded Texas Venture Labs.
He advised entrepreneurs to start off going to the local angel network, accelerators and incubators.
“Start getting feedback as soon as you can,” Harbach said. “Be active in your ecosystem.”
A big mistake entrepreneurs make when talking to potential funders is saying they need money right off the bat, Harbach said.
“That’s the wrong way to go about it,” Harbach said. “If you’re looking for money, ask for advice. If you’re looking for advice, ask for money.”
Texas Venture Labs works closely with the Central Texas Angel Network, Adams said.
“If you look at how deals get funded in today’s environment it’s usually an angel type investment,” he said.
One of the biggest highs as a new entrepreneur comes from getting a customer’s first payment, said Sangram Kadam, who received his UT MBA in 2010 and co-founded Ordoro, inventory management software for online retailers.
But for every customer that says yes, 100 will say no, he said.
Ordoro received a $600,000 angel investment late last year.
“Since then we’ve been growing fast and furious,” Kadam said.
But as a startup founder, he’s gone without a salary and he has eaten many meals consisting of raman noodles.
Aaron Lyons, who finished his MBA in 2011, has launched a restaurant concept called Urban Dish. He’s raised $600,000 toward a $700,000 goal to fund his company.
To launch his venture, Lyons sold his car.
“I got real familiar with the bus schedule,” he said.
He also maxed out a lot of credit cards.
“Just in a day, you hit huge highs and huge lows,” Lyons said. “I’ve gotten used to something bad happening tomorrow, “ if he gets a huge check from a funder or some other good news.
When asked when is the right time to start a company, Johnson said “right after school.” That’s when you’re used to being poor. If you go work for a big company, you might get used to the perks and nice environment, he said.
Reeves said “another good time to start it is after you get fired.” He referred to unemployment checks as startup capital.
Reeves and Manickam also said it really helps to have a technical founder.
“We didn’t have one,” Manickam said. “Nowadays it’s almost a prerequisite.”
“You’ve got to have a geek on staff,” Reeves said. “No one is gong to fund anything with just a Powerpoint presentation.”
Make sure to get family support on your venture, Lyons said.
“If you do have someone else in your life, it’s not just you making the decisions,” he said. “It can add additional strain and pressure. When you have a family to support, you just have that much more on your shoulders.”
But families can also support your venture.
Reeves said his wife “called me on my bullshit.” She supported him, but she also kept him grounded.
“It’s important not to have just a good coach but an ass kicker,” Reeves said.
When seeking investment capital, always check out the profile of the investor to find out what they back, Reeves said.
“Meet the investors on a regular basis,” Kadam said.
Also, share your idea with people who will listen, Harbach said. “Get their feedback.”
The idea is all about the execution, he said. And feedback is essential, he said. The Central Texas Angel Network has office hours on Wednesday from 9 to 11 a.m. at Mozart’s coffeehouse.
Also, things take longer than you expect, Reeves said.
“Much, much longer,” he said.
Never come back from having coffee with a potential investor and tell your significant other you’re getting funding, he said. He made the mistake of doing that.
“Keep your perspective. This is one of many meetings. Tell everyone about your venture,” Manickham said. “Live it. Be proud of what you’re doing. You never know who will be able to help you.”
Tag: ATI (Page 2 of 2)
ChooseWhat guides entrepreneurs through the process of starting up a business.
And now the Austin Technology Incubator has announced a formal partnership with ChooseWhat.com.
The Austin-based company, founded in 2007 by Gaines Kilpatrick and Leo Welder, seeks to solve problems for small business owners such as how to get the best deal on a fax line or phone service provider or tax service. ChooseWhat.com has set up a special site tailored to the needs of ATI’s technology companies. My favorite piece of advice? How to choose a coffee maker.
This year’s graduating class at the Austin Technology Incubator really encompasses a couple of years of companies, said Isaac Barchas, its director.
He skipped a graduation year last year, he said.
But the group of 21 companies have “tremendous diversity of focus from social media management to drug delivery to robotics controls.”
“What most of them do is hard and valuable,” Barchas said. “It’s not flashy and sexy.”
ATI focuses more on companies that serve business to business markets than consumers, Barchas said. ATI is the nonprofit unit of the IC2 Institute at the University of Texas at Austin. Since its founding 23 years ago, ATI has assisted hundreds of companies and helped them raise more than $1 billion in funding.
“In general we work with technology companies rather than marketing companies that are enabled through technology,” Barchas said.
One such company is Calxeda, which Barry Evans founded at ATI. Calxeda makes high-performance low power semiconductors that power Hewlett Packard’s servers used in large data centers.
“Creating something out of nothing, that’s the audacious idea of the entrepreneur,” said Evans during his graduation keynote address.
In a little office by himself in 2008, Evans re-worked his business plan “a thousand times.” His favorite time of the day was when he ran out of coffee and he would venture into the hallway to meet with other entrepreneurs. And at night, he would cruise the incubator looking for a better chair, he said.
“ATI helped me create something that was special,” Evans said. “And something that I think will be big.”
Massachusetts Institute of Technology agrees. It named Calxeda one of the 50 most innovative companies in the world. (Google, IBM and Facebook also made the list.) Venture Capitalists also see the company’s value. They’ve invested $48 million in Calxeda.
“I thought Calxeda would be big, but I didn’t know what that would look like,” Evans said.
While dreaming up big ideas is nice, “there’s power in the doing,” Evans said. “Big, when you find it, is awesome.”
Calxeda has a lot of potential, Evans said. But the company tries not to wallow in its success. Its mantra is “TSBW – This Shit Better Work,” which it ends every meeting with, Evans said.
“When you are running a marathon and you finish two miles, you don’t say wow this is great, you think I’ve still got 24 miles to go,” Evans said. He says his company is in “corporate puberty.”
ATI contributed greatly to Calxeda’s success by plugging Evans into that startup vibe and introducing him to startup veterans, Evans said. He told the other graduates to make it their personal mission to give back and make Austin a great place to start a business.
ATI also showed a short video highlighting some of its alumni’s successes like Big Foot Network’s sale to Qualcomm.
Ed Taylor, founder and CEO of Collective Technologies, gave a short talk about his experience with ATI as its first company. In 1989, Taylor read an article in the San Jose Mercury News about Austin trying to lasso tech firms through the formation of ATI. The article said the whole city was behind the project.
“That was so different than San Jose where everyone is trying to cut your throat everyday,” Taylor said.
He called up Laura Kilcrease, the ATI director, and flew to Austin. She met him wearing a black and white dress and took him around town in a red porsche to meet everyone from the Mayor to George Kozmetsky, founder of ATI. Taylor moved his company to Austin.
The first offices were depressing and run down in an old warehouse building at Metric Blvd. and Kramer Lane, Taylor said. When Taylor was trying to land a Lotus software contract with IBM, the team wanted to do a site visit. The place was nearly vacant and a mess. But Kilcrease called a local office supply store, which agreed to lend a warehouse worth of Herman Miller office chairs, desks and other furnishings. Taylor convinced some of his contractors to sit in the chairs and act like they worked there. Pencom landed the contract. Taylor took the company public in 1997. He has since started two other companies in Austin.
“I still very much feel a sense of responsibility to pay back people along the way,” Taylor said. “Truly successful entrepreneurs always find the time to give something back.”
The Austin Technology Incubator, a non-profit organization affiliated with the IC2 Institute of the University of Texas, will host a graduation ceremony tonight for 21 of its member companies.
The event also celebrates the 23 years ATI has helped incubate central Texas companies. Founded by Dr. George Kozmetsky and first directed by Laura Kilcrease, ATI has worked with more than 200 status companies and helped them raise more than $1 billion in capital, according to this news release. Silicon Hills News will be there tonight to cover the event. So stay tuned for more information.
ATI graduates
View more presentations from Laura Lorek
In 2011, 13 companies moved to Austin with the assistance of the Austin Technology Incubator’s Landing Pad Program.
The companies included Amatra, BlackLocus, Convergence Wireless, Digital Harmony Games, Drivve, DXUp Close, SceneTap, Social Muse, Tactical Information Systems and V-Chain Solutions. Also, Ben Dyer, a serial entrepreneur, moved here from Atlanta with TechDrawl, and has since helped NightRaft and BeHome247 relocate here, according to this news release.
The Austin Technology Incubator’s Landing Pad Program helps companies relocate to Austin or establish headquarters here. It focuses on early-stage high technology companies in the biosciences, clean energy, wireless and IT industries. The nonprofit incubator is part of the IC2 Institute of the University of Texas at Austin.
“We are so proud of the business environment that exists in Austin, all the right ingredients for success, but via a supportive, community approach,” Robert Reeves, ATI’s director of IT and wireless, said in a news statement.
“ATI has always been focused on finding, welcoming, integrating and helping make successful new technology companies, whether from Austin or not,” Eve Richter, the city’s emerging technologies coordinator, said in a news statement. “Over the past few years, the Landing Pad concept has brought two dozen companies to town, and we are so thrilled ATI has really taken the program up a notch, formalizing it in 2011. The City of Austin is proud to support ATI in all efforts, including the Landing Pad Program.”
