Joshua Baer of OtherinBox Talks about the Capital Factory
Where are you from originally?
I grew up in Nashua, NH. It's basically a suburb of Boston, MA. I love New England, but I'm much happier dealing with a Texas summer instead of a New Hampshire winter!
What university did you go to?
I studied Computer Science and Information Decision Systems at Carnegie Mellon University in Pittsburgh, PA. The late 90's was a really fun time to be there - I felt like the Internet was sprouting up all around me. It was the kind of place where you could check a web page to see if the coke machine had any Dr. Pepper left and you regularly saw robots in the hallways.
What brought you to Austin?
I came here after graduating from CMU in 1999 to work in the incubator at Trilogy Software. I still am friends with and work with dozens of the people I met at Trilogy. I'm not the first person to credit Joe Liemandt for bringing thousands of smart, entrepreneurial technologists to Austin. Many of them stayed here and are running companies of their own now.
What is the idea behind Capital Factory?
First-time entrepreneurs want to ask questions of successful entrepreneurs. Successful entrepreneurs like investing in young entrepreneurs. Entrepreneurs of all kinds thrive on each other's passion. Capital Factory brings together first-time entrepreneurs with successful entrepreneurs in an intense 10 week summer program. Startups get $20,000 in cash, $20,000 in free stuff, and 20 successful mentors who work with them over the course of the summer to identify their first customers and secure their next round of financing if needed.
What need does it fulfill?
Gaps have formed in the traditional funding path for early stage companies. Many venture capitalists are moving towards bigger funds that invest larger amounts of money in lower risk companies that have already proven their model. Angel investors are banding together into syndicates that look more and more like venture capitalists. We think we can help to fill some of those gaps and then introduce companies to angel investor groups or venture capitalists at the right time.
How exactly will the process work?
Each week there will be a group session where one or more mentors presents to all of the companies and then there will also be one-on-one sessions with individual mentors. We have a good idea what the structure will look like, but we'll adapt the actual topics based on the companies that are selected and specific challenges they are facing.
Who is it for?
Most importantly, we want to get involved with companies that we can have the biggest impact on. After all, its not really about the $20,000 it’s about the 20 mentors who are going to spend time with the companies and help them to focus on the right priorities and with key introductions to customers, partners, employees and investors. If someone submitted a great company idea, but none of us had any real value add beyond the money, we'd probably pass on the deal and select another company that we thought we could really benefit from our advice and relationships.
We like lean companies that can get to profitability quickly and can scale rapidly. Most of us have technology backgrounds and while it is not a requirement, it is very likely that the companies we select will have technology components to them. We're happy to start with just an idea on a napkin, but we'll also work with companies that have some customers or angel investors and are now ready to scale their business.
What is the next step?
Applications are due this Friday, April 3 and so then we have about 2 weeks to work through more than 100 applications and select 10 finalists and 3 winners. Then its time to get to work!
What advice do you have for entrepreneurs?
If you are an entrepreneur starting a new company and want this kind of support, you probably should apply to a bunch of programs, see which ones you get accepted into, and select the one that has the mentors who you think can help your business the most.