Why Capital Factory?

The application deadline for Austin-based Capital Factory‘s 2011 program is Sunday, and momentum for tech startups and entrepreneurship in general are riding high as the SXSW Interactive festival wraps up. Signs of the frenzy include an increase in Startup Buses from one to six this year, a busload of MBA students from Michigan who are out to networks with startups, and recent tech investor Ashton Kutcher making an appearance at the Foursquare party. With the number of technology accelerators on the rise, the most frequent question I get asked is how Capital Factory is different from other programs. I posed this question to FamigoGames co-founder Q Beck. “One difference we found very important is the fact that the program mentors are also the investors in the fund, and they’re active practitioners themselves,” Q told us. “With only 5 companies in the program, and 20 mentors you get some very hands-on advice and a lot of attention compared to other programs we looked at.”

In some ways the answer to this question lies less in comparisons to other programs, and more in the value of the startup ecosystem in Austin, and the role that Capital Factory plays in it. In the selection process, I get the chance to meet with founders with varying motivations. In today’s bubble-like environment, many think they are going to emerge from a summer program with a fist-full of term sheets. Some of them will. Is that an indicator of success? Maybe. I look for founders with somewhat of a “built to last” attitude because starting a company, and indeed even being an entrepreneur is not a destination but a journey. Austin is a great place to support that journey.

Let’s talk about a real-world example of the path that I think is going to be more common in the future. In our inaugural year, we supported one of those long weekend programs where startups were formed in three days. We agreed to fast track the winner into our top ten list. That company, FamigoGames, was indeed selected for our very first program in 2009. They received $20,000 in cash, lots of free services (including their logo and branding), and mentorship from our twenty mentors. After our summer program, the company went into the Austin Technology Incubator where they continued to learn, iterate, and grow. Today the company has successfully raised angel financing, and they are investing in faster growth and adoption of their family gaming platform.

The timing of this growth path — 3 days, 3 months, 12 months — is going to be more common in startups that are going to run lean, be nimble, and be successful in the long term. Austin is one of the few cities in the country that has the ecosystem to support the full lifecycle of this journey. The side benefit is that these young 20-something entrepreneurs are going to carry this experience into the next companies they start in Austin.

For five days every spring, thousands of people come to Austin to experience a small taste of our community, and maybe even catch a little spark for themselves. In the end, that is what makes Capital Factory different. I find myself selling the Austin lifestyle and ecosystem, rather than the program itself. For tech startups, I think the decision process is simple; experience Austin and if it resonates with you, you’ll know it right away.

Why Capital Factory?

2 thoughts on “Why Capital Factory?

  1. Duke says:

    It makes sense for anyone in start-up mode to be interested in the one-on-one attention from these successful investors. A good friend send a link to the Capital Factory site…she said, “I know it's late notice, but check this out…maybe you could get something turned in in time…” We're scratching all plans for the next two days, shooting some video and packaging our business to submit by the 27th. I looked at the Mentor roster and look forward to spending time learning…Lord knows we've made enough mistakes…would be nice to avoid a few pitfalls!! Thanks for the opportunity…


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