Startups Venture

The Texas Accelerator Community Is More Robust Than You Might Think

While Texas may not be the first state that pops to mind when you think of startups, its capital city of Austin actually ranked No. 2 in The Kauffman Foundation’s 2017 startup activity index.

And that startup activity is reflected in the growing number of accelerators in the city and state as a whole.

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As expected, Austin has the highest number of accelerators with Capital Factory likely being the highest profile. (Next week, we plan to take an in-depth look at Austin-based Capital Factory, which operates an accelerator, two funds, and a 60,000 square foot co-working space.)

This week, we’ll highlight a handful of accelerators that are working to boost the Lone Star State’s startup ecosystem via funding, workspace, education, and mentoring.

Techstars

We want to personally be excited about the market

The first Techstars Austin program ran in 2013. Since its inception, the accelerator has held six classes of about ten companies each for a total of 62. Another class will start in June, bringing the total to 72, according to Managing Director Amos Schwartzfarb. It’s a three-month program open to companies from anywhere in the world that must come to Austin for three months and “immerse themselves,” he said.

When it comes to criteria, Schwartzfarb said TechStars first and foremost wants “to have conviction around the CEO being able to build a meaningful business and the ability to hire and motivate a great team. Second, we want to personally be excited about the market.”

TechStars provides startups with capital, a mentor network, and, more tactically, resources and discipline around being metrics driven and focused.

“It’s been a very successful region,” Schwartzfarb said.

DivInc

DivInc is on a mission to improve diversity in the tech ecosystem “by providing black, brown and women founders with the critical resources they need to grow and scale their tech startups.”

Co-founded by former Dell executive Preston James and Dana Callender, DivInc is a nonprofit pre-accelerator that holds 12-week programs for underrepresented tech founders. The group’s first cohort kicked off in September 2016 with a group of founders that included three African-American men, two Latinos, one Caucasian female, and four Asian women.

Since its launch, DivInc has worked with 47 founders who’ve started 36 companies that have collectively raised $1.9M and generated $994,000 in revenues. The accelerator is currently in its fourth 12-week program, which will end June 22. Applications for the Fall 2018 program will open in June, and the program will begin on September 4.

MassChallenge Texas

We are industry agnostic and seek high impact and high potential startups

MassChallenge Texas launched in October 2017, operating out of the WeWork facility on 221 W. 6th St.

Managing Director Mike Millard said the accelerator aims to be an additive force for the innovation community (such as startups, accelerators, universities, corporations, venture capitalist, angels, and the media) by helping startups with networking, mentoring, education, and resources.

“We are driven by impact over equity so as a non-profit, we don’t take any equity from the startups,” he wrote via email. “And this year the startups will compete for up to $500K in equity free prizes.”

MassChallenge’s cohort accepted 84 companies, launching on April 2 with a four-month runtime. The organization draws applications from all over the world. For its first round, it received more than 500 applications from 32 countries and 29 states.

“We are industry agnostic and seek high impact and high potential startups,” Millard said. “We help the startups with networking, mentoring, education, and resources. The curriculum is an extension of the Business Model Canvas and includes sessions on pitching, raising money, sales and marketing, and leadership among a host of other topics requested from the startups.

Sputnik ATX

If you’re at the dream stage, then we’re not the people for you

Sputnix ATX is an accelerator that launched on Oct. 4, 2017, the 60-year anniversary of the Sputnik launch – a deliberate move on the part of co-founders Oksana Malysheva and Joe Merrill.

“Sputnik actually means partner in Russian,” Merrill noted, “and it just seems so appropriate that we would name ourselves after such a revolutionary event than in of itself so we can help technologists and makers take their products to market.”

Sputnik ATX is looking for startups with a minimum viable product and at least one customer. Chosen startups will come to Austin for required classes, free office space, mentoring and funding guidance. They are presented with a $100,000 investment via SAFE note. Early-stage companies, rather than proto-companies, that need help with product/service marketing and sales are encouraged to apply.

“If you’re at the dream stage, then we’re not the people for you,” Malysheva said.

Sputnik is focused on Texas, so participating companies either need to be within a 300-mile radius of Austin or be willing to relocate to within 300 miles of Austin. Those startups then participate in a 13-week program that involves a twice-weekly class for two hours.

Its first cohort of four companies began in January, and demo day was April 12. Sputnik ATX will only hold two cohorts a year.

One of the companies, Pei Technology, has more than 120,000 people on its waitlist, according to Merrill. The company relocated from Los Angeles to participate in the program.

Station Houston

We’re starting to move the needle

Meanwhile, in Houston, Station Houston launched in March 2016 with a for-profit hub model, meaning it is membership-based versus equity-based, according to Co-founder and CEO John (JR) Reale. It has a sister company—Station Houston Ventures—that just closed its third investment and is working on two other deals.

Photo Credit: Local 002

Station Houston works primarily with early-stage software companies and has just over 200 members ranging from the “idea” stage to Series A funded companies, said Reale.

Over 90 percent of its members are Houston-based with some of them being international.

Co-founders include Reale, Mercury Fund Co-founder and Managing Director Blair Garrou, Grace Rodriguez and Emily Keeton, who now serves as head of M&A for WeWork in New York.

On April 12, Station Houston announced it would relocate to a new planned Houston Innovation District in Midtown. World-renowned Rice University is the innovation district’s sole equity partner and is investing up to $100 million in the project.

Station Houston now has 13 employees and works with more than 130 mentors. Its companies have raised more than $100 million in venture funding.

Station Houston recently launched a new membership offering separate services such as account management to its members and is working to build a more structured mentoring program.

One success story is Graylog, which is in the process of closing a Series B round and another is Arundo Analytics, which recently closed a $25 million Series A round.

“We set out to solve for a lack of startup density in Houston,” Reale said. “Every day is a grind, but we’re making progress in reaching our goals. I think we’re starting to move the needle.”

TMC Innovation Institute

TMC Innovation Institute was founded in 2014. The vision was led by the TMC board of directors and under the direction of both its former CEO Dr. Bobby Robbins and current CEO William McKeon.

The institute’s goal is to get products on the market that help patients and improve health care, said Erik Halvorsen, director of the TMC Innovation Institute.

“We do that by providing tailored curriculum meant to help startups gain the skills they need, or provide a refresher in areas such as business, finance, regulatory matters, engaging patients and hospitals, piloting in a hospital,” he said. The organization also introduces startups to clinicians, hospital stakeholders, and subject matter experts who can help them test and deploy their products.

Companies that are invited into TMC Innovation Institute’s programs typically already have a working prototype for medical devices or digital health although it takes companies at all stages of development.

“We have had companies that raised $100,000 to companies that have already raised $20 million,” Halvorsen said. “We also talk to our hospital partners about unmet needs they have where we can bring in new innovation to help them meet those challenges.”

Companies are not charged to go through its accelerator programs, nor does TMC Innovation Institute take equity in the companies. However, it recently launched the TMC Venture Fund to make select investments.

So far, more than 150 companies have gone through its accelerator program. Currently, it also has more than 50 companies that reside in its TMCx+ incubator and co-working space, as well as in Johnson & Johnson Innovation’s JLABS @ TMC space.

Accelerators are, of course, not limited to Austin and Houston. Dallas-based accelerators RevTech, Tech Wildcatters, Health Wildcatters are among that region’s most well-known accelerators. And San Antonio is home to RealCo, a long-term accelerator that invests in, incubates, and accelerates B2B tech startups.

Texas startups have a plethora of options when it comes to accelerators as there are dozens more not listed here. Here’s to hoping that these accelerators can continue to help companies that will enhance and enlarge the state’s startup ecosystem.

Editorial note: Article has been updated to reflect that Dana Callender, not Ashley Jennings, is a co-founder in DivInc. 

Illustration: Li-Anne Dias