The September meeting of the Austin Chapter of TEXCHANGE featured a seasoned panel of start-up veterans talking about the current situation entrepreneurs find in launching and funding their companies.
The Panel consisted of:
Jonas Lamis - TechRanch
Rob Adams - MOOT Corp.
Kevin Koym - TechRanch
Bryan Menell - Capital Factory
The competition for start-ups can often be real companies that offer steady paychecks to both potential founders and employees. While many MBA students leave college to launch businesses, many more would rather have six-figure jobs with big firms (those have dried up in the last year, too). To start a company you have to sacrifice. There is nobody out there any more who will fund large salaries for founders before there is any proven business.
A decade ago the whole ecosystem revolved around raising venture capital. Every business plan had several rounds of venture funding followed by a fast exit strategy. This heady time (I worked in and around this climate in 1999 - 2001 and it was seductive to have hefty expense accounts and eat dinner at Sullivan's twice a week!!) is now known as the "Bubble" because it popped.
Now it is easier to sell product than it is to raise money, so start-ups are forced to be more focused on client acquisition. Closing your first customer is more important than the details of the company formation. Unlike the years of unrealistic funding expectations, entrepreneurs today need to "put a dagger in their teeth and go close deals" (said Rob Adams). FYI...this is a good thing! When you don't have big sums of money in the bank you do not fool yourself into thinking that something is happening... when it is not!
You do not need other people's money to get started, and a rough economy (like the last year) often sparks great start-ups. The panelists were bullish that there is a place for start-ups in Austin...and beyond.
Since the "Bust" of eight years ago, Austin has never lost its technology start-up culture. There has always been a double dose of entrepreneurial spirit that is weaved through the city's business culture. But Austin is still in a bit of a "stealth mode" nationally as being the place to launch tech companies. But besides the Silicon Valley or Boston, other tech center cities still want to be like Austin.
We do not see all the activity playing out in the paper, as most of the most interesting tech companies are bootstrapping, which does not lead to the same level of press coverage as big venture rounds. But they are out there (and many attend TEXCHANGE).
The University of Texas is a big plus for Austin. The engineering and business schools have a good track record for putting out young ambitious talent, and helping these entrepreneurs launch and fund their companies. Coupled with the supportive and experienced entrepreneurial community, which desires to help, there is a foundation that makes Austin ideal for start-ups. Bryan Menell pointed out that "Austin does not need to be the biggest tech city to be the best!"
The Capital Factory, Tech Ranch and other resources for entrepreneurs are all striving to be complementary to each other rather than competitive. There are many areas that need to be served for different types of businesses and the variety of experience levels of the entrepreneurs involved. There is no one answer or group that can be all things to boost our tech community, and the panelists hoped that Austin would continue to experiment with ways that we can tap the green young energy of the college students, the drive of the established entrepreneurs and the support of larger corporations to foster more success across the board.
Getting people together brings better ideas. One audience member pointed out that the people at his table, and everyone in the room, had the ability to help each other. If everyone in the room of over 100 people found a way to give a boost to another person.... we would see immediate positive impacts all over town. He is right. All opportunities come from people, and when we can get past our own wants and needs, it is often easy to be the catalyst that helps others (then it comes back around and someone helps us!).
For more information on TEXCHANGE visit www.texchange.org.
Have a great day.