BY L.A. LOREK
Founder of Silicon HIlls News
Steve Waters and Jonathan Berkowitz, two of the principals of Thinktiv, a new kind of technology accelerator and venture fund
The Austin-based accelerator seeks to remove some of the uncertainty from the startup process through its special formula to take ideas to market quicker and more efficiently than a traditional technology incubator or venture capital fund.
“The whole infrastructure of the VC industry didn’t work for us,” said Jonathan Berkowitz, Thinktiv CEO. So he and the other three principals, all veteran entrepreneurs, invented a better process. “We’re in the game to build a very big VC firm with talent as the currency as opposed to money.”
Thinktiv has developed an entrepreneurship recipe and they adjust it to fit the needs of the companies they take on as clients. They take a batch of developers, based in India and the Ukraine, mixed with a bunch of seasoned executives drawn from their own ranks and combine that with a creative marketing and branding campaign. They brainstorm, create and innovate for a company. And sometimes they add to that some capital funding, and then they launch the business into the marketplace.
And voila, they’ve taken some of the pain out of the startup process for entrepreneurs struggling to do it all themselves.
“It’s very different and we’re getting recognized for being very different,” Berkowitz said.
Like in the Wizard of Oz, when Toto pulls back the curtain on the wizard, if someone peeked beneath the veil of more than a dozen local startups they would find Thinktiv.
Thinktiv’s client list reads like a “Who’s Who of Startups in Austin” and includes Adlucent, BazaarVoice, OtherInbox, BlackLocus, Socialware, Icon and Rockify, among others.
The company, founded in 2007, has helped hundreds of entrepreneurs. It acts as an accelerator by supplying resources like software developers, project managers, designers, branding and marketing experts and more to bring a product to market quickly. It charges anywhere from $50,000 to $250,000 to transform or launch a company, usually within 90 to 120 days.
In addition to providing services, Thinktiv can also act as an investment firm. The company can take an ownership stake, ranging from 1 percent to 5 percent in a company in exchange for providing services. It might also act as a cofounder and bring initial capital to the table – taking a larger stake from 10 percent to 35 percent, depending on the extent of its involvement.
A lot of times Thinktiv works with companies that just land financing so that they don’t burn through all of their money just to hire big-name talent.
“Talent is the hardest problem to solve and we are in a position to solve it every time,” said Steve Waters, co-founder, chief ventures officer and also Thinktiv’s marketing wiz.
The commonality of the principal owners is Trilogy, a successful software company founded in Austin in 1989. Three of the four founders were recruited to work at Trilogy from Carnegie Mellon University in Pittsburgh and they jokingly refer to themselves as being members of the Trilogy Mafia. The Thinktiv principals include Berkowitz, Justin Petro, chief product officer and Paul Burke, managing partner, and Waters, who was employee number 20 at Trilogy.
“The biggest challenge a startup faces is that they can’t hire big talent,” Waters said.
Thinktiv has the talent and deploys it to rebrand and revitalize a business with 90 to 120 days, Waters said.“Each of us brings a totally unique set of skills that complement one another,” Waters said.
Berkowitz focuses on product strategy and Petro’s specialty is User Interface design for Web and mobile products, Waters said. Burke is focused on building brands and demand generation, and Waters has years of experience as both a Chief Marketing Officer and investment banker.
In addition to startups, Thinktiv also works with companies with strong assets in need of a turnaround.
“We work with a lot of Austin companies in the background building and contemplating their second product,” Waters said.
If a company’s brand and customer acquisition processes are broken that creates an opportunity to create a huge uptick in the business and Thinktiv can help make that happen, Waters said.
“One of the most impactful things about us is that we connect the dots all the way from that big picture concept to where should a pixel be on a screen,” Waters said.
Thinktiv’s team of 50 employees looks at more than 250 deals every year, but only works on 60 of them.
“We deploy really big talent into their companies that would otherwise be impossible for them to deploy,” Berkowitz said.
Also, Thinktiv has access to a deep pool of capital through its network of 60 high-net wealth investors. It invests in about 10 companies a year.
With its unique fund and accelerator, Thinktiv is disrupting the venture capital industry. The company can create transformation with modest amounts of capital at every stage of a company’s growth from seed stage and beyond.
Since 2011, Thinktiv has invested $2 million worth of services in seven companies. Its Thinktiv Network has invested more than $3 million into Thinktiv’s portfolio companies and it expects to have more than 30 companies by the end of this year. Two of its investments in Collider Media and Otherinbox have already achieved successful exits.
“The thing we wanted to go after wasn’t going after the people in the seed stage investment,” Berkowitz said. “We wanted to go after the VC model. We thought there’s a better way to do this. This can’t the only way to capitalize a company. We have to provide big talent. We’re building a product, brand and attracting customers.”
The traditional venture capital space had “a lot of years under its belt,” Berkowitz said.
“The economic equation is kind of the same as it was decades and decades ago,” Berkowitz said.
A lot of VCs don’t understand the companies they invest in, Waters said.
“A lot of venture funds are operated by people who have never operated companies,” he said.
All of the principals at Thinktiv have been involved in numerous startups, he said. They understand the process. They know the problems entrepreneurs face.
“It’s not just hard to find talent, it’s also hard to find financing,” Berkowitz said.
Thinktiv can bring financing to a company but it’s not the same as angel investing. They don’t have a network of mentors. They vet the companies and then provide services to them to reduce the risk of investing.
“In our network, people are first and foremost investing in our model,” Berkowitz said. “We’re the trusted filter.”
A 90 percent failure rate exists with traditional venture investments, but Thinktiv doesn’t accept that, said David Wieland, an active investor, advisor and board member in the Thinktiv Network.
“With their seasoned executives, nine out of ten deals succeed,” Wieland said. “I believe firmly in the Thinktiv model.”
Thinktiv can dramatically change the success rate of startups and they don’t do that with money, Wieland said.
“The level of engagement from the Thinktiv model is far beyond what you would see from a traditional incubator or accelerator. I think it’s incredibly unique and incredibly successful.’’
Thinktiv “chiropractically” adjusts some companies that don’t get it right the first time, Berkowitz said.
Take Austin-based QuickGifts. Thinktiv helped rebrand the company and redesign their customer experience, Waters said.“When we started working with them they had 35 local merchants on their platform,” Waters said. “Last year, they had 4,300. They are now the dominant player in local gift cards.”
QuickGifts started in 2002 and developed a marketplace for big name national merchant gift cards, said Stacy Young, the company’s founder and CEO.
Thinktiv’s involvement resulted in a 40 percent increase in revenue last year and a 250 percent increase this year, Young said. They did a lot of development work and overhauled the site, he said.
“I can’t say that it was just instant,” Young said. “But you can see the work that they did taking hold in the marketplace and how it’s accelerated our business.”
Thinktiv also helped the company close on a Series A investment round of $750,000 and a Series B investment round of $1.4 million, which the company closed in September last year.
“They brought more than half the people to the table in both rounds,” Young said.
Today, QuickGifts, with 25 employees, still goes back to Thinktiv to help out with holiday campaigns, Young said.
“I don’t hesitate to refer them to a lot of people and promising startups in town,” Young said. “I believe in their process and their commitment to their customers. I would advise anyone starting a company to go to them. There’s a go to market strategy that they’ve mastered. It’s something that entrepreneurs don’t necessarily think about – like how to go from A to B. When you bring that product to Thinktiv they’ll give you a holistic approach on how to get from A to Z.”
They simplify the process, Young said.
BootlegMarket hired Thinktiv to help develop an online community for shoe lovers.“They’re like me,” said Sarah Ellison Lewis, founder and CEO of BootlegMarket. “They’re curious, passionate and driven. It’s just an enormous relief. I worked with another company before them. All they could do was sell me on their creative projects that would cost a ton of money.”
As an entrepreneur, Lewis felt like she needed to be in an invested relationship.
“They shifted out of what can we do for you to what can we do together,” she said. “That attitude is what makes everything great.”
The teamwork at Thinktiv created a whole lot of new opportunities, she said.
“It’s the nature of the founders,” she said. “It’s a cool, good group of people. It’s the kind of people I want to be associated with and I’m a perfectionist.”
Thinktiv is also flexible and amenable to the passion of entrepreneurs, she said.
“They know how to deal with entrepreneurs,” she said.
Lewis, a fashion industry expert who just returned from the Paris Fashion Show, opened Bootleg in an Airstream trailer in Austin a year ago. She filled it with shoes from all over. Her customers gave her the idea to start an online community for shoe lovers. BootlegMarket enables anyone to buy, sell and stalk shoes. Consignment shops, wholesalers, designers and regular people can all create closets to showcase and sell their shoes.
“I was haunted by the idea and I had to do it,” she said.
Her friend had just moved to Thinktiv from Chaotic Moon and that’s when she decided to approach them with her venture.
“It was really an incredible experience,” she said. “It was an honor. They don’t do that many projects.”
Lewis expects to launch the e-commerce portion of BootlegMarket within a few weeks. Thinktiv has built the site and the e-commerce engine behind it. They also helped with the business side of stuff along with branding and marketing, she said. They also helped her raise angel capital.
“This is the way of digital ventures in the future,” she said. “It allows startups to thrive instead of struggle.”
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