Starting a company in Austin? Join the club. As one of the most active startup communities in the entire US, Austin has entrepreneurs (or 150 people per day) coming to the city every day to try and make their entrepreneurial dreams come true.
Luckily, these entrepreneurs have plenty of accelerators in Austin to help them “accelerate” their companies from small, one man and woman shops to profitable enterprises helping to spur the Austin economic engine. Whether your startup is looking for its seed round, or has been through two different accelerators and is looking for that extra push, Austin offers an accelerator for everyone.
Capital Factory
The largest accelerator of the bunch, plenty of startups you see all over Austin have gone through the Capital Factory accelerator program. While most accelerators are three months long, SchooLinks founder Katie Fang spent eight months in the program and found that “once you’re in the program, you’re in it for life.”
For Fang, she wasn’t sure if three months was long enough for an accelerator when she relocated her company from Los Angeles. She also was attracted to the deal terms at Capital Factory, where the accelerator only owned two percent of her company, compared to 6% for other accelerators. She went through plenty of unstructured mentor hours during her time in the accelerator as she built her product.
The real speciality about the Capital Factory accelerator, according to many entrepreneurs, is the network. Sam Ulu, the founder of Kandid.ly said that Capital Factory helped to “mold him and connect him to the tech ecosystem in Austin.” He joined Capital Factory because in his mind it was more “grassroots, and helped me figure out my business model and other things I should be focusing on.” He also wanted to raise $250,000 to $1 million.
Joe Troyen, founder of PenPal Schools, got a lot out of his Capital Factory accelerator experience; he managed to find both his cofounders and multiple investors.
Many of the entrepreneurs interviewed said that Capital Factory was perfect for the early stages of their company. Bryan Thomas of PopUpPlay went through Capital Factory in 2015, taking advantage of meeting with mentors and partners while also working on their product, which they actually launched at Capital Factory.
Some of the more successful companies that came out of the Capital Factory Accelerator include Sparefoot, uShip and Aceable, among others.
Techstars
If you get ahold of a few startup founders in Austin, you’ll find that some of them participated in the Capital Factory accelerator, some did Techstars, and some were in both of them, though not at the same time.
For Ulu, he harbored dreams to raise a larger round through Techstars than he did at Capital Factory. TechStars gave him that “kick in the butt” he needed and Ulu “lived, breathed, and ate Techstars” for three intensive months, getting a master’s in startup education through classes geared toward driving sales, creating products and streamlining operations. He ended up finding a key investor who understood the nuance of his product in the marketplace, and that investor ended up being the key businessperson on the Kandid.ly team.
While some accelerators want the entire company to participate, Techstars allows for a “divide and conquer” mentality, one which Ulu took advantage of as he participated in the program, while other members of the team focused on the Kandid.ly product.
Most of the entrepreneurs who had larger fundraising goals went to Techstars after Capital Factory, with Thomas noting that Techstars “taught (PopUpPlay) how to go from two people in a garage, to a fully operating company.”
In Austin, companies that have come out of Techstars include Convey, LawnStarter and Patient IO. Class Pass and Twilio are alumni companies who have come out of other Techstars groups nationwide.
Texas Venture Labs
Startups who are looking for something a little different might want to look at Texas Venture Labs. This accelerator doesn’t have office space, but does bring eager University of Texas graduate students looking to help you out. But Texas Venture Labs doesn’t pair startups with just any graduate student. Students are hand-selected and can be in any post-bachelor’s program, though many are MBA students or in engineering and law programs.
“Our goal is to accelerate your startup,” says Assistant Director Harlan Beverly. “Forty percent of companies we work with end up getting funded within one year of working with us.”
Texas Venture Labs does not take equity from the companies in its accelerator. Beverly says many companies that go through Texas Venture Labs are associated with other accelerators as well.
The accelerator has a diverse array of companies and likes to have 50% of its companies in the accelerator be pre-revenue, and 50% post-revenue so students have experience working with both stages of companies.
Sterling Smith, founder of Sandbox Commerce, participated in Texas Venture Labs during the last quarter of 2016.
“We were a team of five and there was only so much time in the day," he said. "Many of us on the team were engineers and couldn’t focus on other things needed to make Sandbox Commerce successful.”
Smith credits the research done by the group of students he worked with at TVL in helping them to change their pricing structure from a shared model to one that was more SaaS-focused. This in turn helped the company with a better product-market fit.
Not only that, but Smith received even more benefit from TVL, he said, as the students’ preparedness helped him during Demo Day. He found the experience at the TVL Demo Day rewarding, and has had ongoing discussions with several investors that he met there.
Some alumni companies that have participated in the Texas Venture Labs accelerator include Beatbox Beverages, Vera’s Pharmaceutical, Broomly, and Wondercide.
Austin Technology Incubator
One of the oldest accelerators in the country is Austin Technology Incubator, located in far North Austin. Founded by George Kozmetsky, the incubator has graduated over 150 companies, and has raised the most money among accelerators in Austin. There is a debate as to which accelerator was first, MIT’s Media Lab or ATI.
Robert Reeves has a long history with ATI. The cofounder of Phurnace Software (acquired by BMC) and CTO of Datical started with ATI as an intern in the ‘90s, before having both his companies go through the accelerator. Reeves' first company went through the accelerator for 18 months before raising its Series A funding. He notes that companies in biotech, hardware and smart energy tend to stay the longest in the accelerator.
“The secret for ATI is that there isn’t any BS,” he says. “They surround you with talent that you can’t afford as a startup.”
“The only thing they care about is creating jobs in Austin.”
ATI is also different from some of the other accelerators in that it is owned by the University of Texas, but funded by the federal government, City of Austin, investment firms, and other government grants.
Some major companies that have gone through ATI include RideScout, Webify and Calxeda.
UnLtd USA
For those in the social impact space, UnLtd might be just what the doctor ordered. After their Capital Factory accelerator experience, Troyen and the PenPal Schools team went through the UnLtd accelerator, which was three months long.
Founded by Zoe Schlag, UnLtd focuses on social impact startups. Troyen used UnLtd to meet people who shared similar goals about making a positive social impact on the Austin community.
“UnLtd helped me tap into community leaders like the Mayor, Austin local schools and other key stakeholders who could help me create positive social change with PenPal Schools,” he said, noting that the accelerator also taught him principles of social entrepreneurship and impact investing.
UnLtd does not take any equity but relies on the “pay it forward” model, meaning if one company is successful, the goal is that they will make a grant to a future investee.
Past companies of the program include Mentegram, PelotonU and Compost Pedallers.
Other Accelerators
Other accelerators in Austin include Tech Ranch, SKU, and a new minority-focused accelerator called DivInc. Austin continues to be a growing hub for accelerators as more and more companies continue to move down to Silicon Hills in search of money, mentorship and a way to move their company forward.
