When TechStars last month announced that Austin would be home to its next outpost, many of us had the same thought: We thought you would have been there long ago.
After all, the Texas capital is not a Johnny-come-lately on the technology scene.
“It’s not for a lack of awareness about Austin, but more about what is the timing for us to grow,” says David Cohen, CEO of TechStars and an Xconomist. “In funding startups, the most important thing we talk about is people, people, people. Just a good idea is not enough.”
He had thought seriously of expanding to Austin for about two years, but it wasn’t until this year that all the pieces fell into place. “We wanted to be brought there by the community,” he says. “We want to be community-owned and part of a community effort and leverage those resources that are so amazing.”
Foremost is a partnership with Austin’s Capital Factory, a co-working space and an incubator and seed accelerator for tech startups. “I’ve been lobbying them to come here for quite a few years now,” says Joshua Baer, a longtime Austin entrepreneur and founder of Capital Factory. “It’s long overdue.”
It will be an intimate relationship. TechStars Austin will be co-locating with the Capital Factory, showing an usual comfort level and non-competitiveness factor between these groups. “There’s a lot of connective tissue there,” Cohen says. “There’s a good knowledge and awareness of each other, and we’ve done stuff together.”
Capital Factory had a moment in the international spotlight when President Obama stopped by during his Austin visit last month. Two Capital Factory startups, Mass Relevance and Stormpulse, count the White House as a client.
Jason Seats, who has managed TechStars Cloud in San Antonio for the last two years, will head up Interstate 35 to head up the Austin franchise. He co-founded Slicehost in 2006, which was sold to Rackspace, where he then became vice president of software development in San Antonio.
Even with Austin nearby, TechStars Cloud will continue its program as usual. “It will run off-cycle from Austin, and continue its specific focus on cloud infrastructure companies,” Cohen says.
TechStars will bring 10 startups to its Austin program, an intense three-month boot camp designed to help entrepreneurs refine their business strategy, improve their prototypes, learn from experienced entrepreneurs, and meet with potential investors. TechStars also gives each company $18,000 in seed funding, provides office space, and offers the companies a $100,000 convertible note. In return, the companies agree to give TechStars a 6 percent stake.
Typically, about 1,000 companies apply to join a class of about 10. So far, Seats says they’ve received about 350 applications for the class that begins on August 5. The final deadline is June 30, but it pays to meet the early deadline of June 9: those companies will be invited to invitation-only events such as TechStars For a Day. “We get to know them better,” Cohen says. “And we do have historical data that shows you do have a higher chance to get into the program” if you apply early, he says.
Having Boulder, CO-based TechStars come to Austin is a great complement for Capital Factory and other organizations focused on nurturing the city’s startups, says Neelan Choksi, president and COO of Tasktop Technologies and an Xconomist (he’s based in Austin). Also, TechStars’ national reputation will help import more talent into the city.
“The overlap makes sense because you want to make sure all of the entrepreneurs here in Austin get help,” Choksi says. “TechStars is really well connected. They’re taking advantage of scale here now. You need scale and diversity to have a great fit.”
