TEN's Startup Funding Report for Fourth Quarter, 2013

 Here's our latest report on startup funding in the state of Texas for Q4, 2012.  You can see the full report here. 

The Texas Entrepreneur Networks Startup Funding Report represents private investments made into Texas startup and early stage companies for the fourth quarter of 2012.  This report includes registered investments as well as the business entity filings for the state.  There is also a report from Gust, (www.gust.com) that highlights dealflow in the Texas-based angel networks.  Trends are noted as well as a forecast for early stage investments.  Also, the Texas Entrepreneur Network Startup Index which measures the health of startup businesses is shown.

TEN Startup Index

For Q4, 2012, the TEN Startup Index remained at 43, the same as the previous quarter but up from 30 over the year ago quarter.

Trends in Sectors

Overall the leading category for funding sector was Biotechnology at $72M with 16 deals, followed by Other at $67M comprised of 34 deals and Semiconductor at $59M with 2 deals, and Healthcare at $23M with 20 deals. 

Trends in Regions

The Central Texas region came in first with 48 deals worth $139M in funding, followed by the North Texas region with 35 deals worth $92M.  Following that is the Gulf Coast region with 20 deals worth $35M, the South region with 4 deals worth $28M, and the West region with 2 deals worth $2M.

TxEN Funded Companies

Startups seeking funding who participated in the TxEN program raised over $1.75M in the 4th quarter of 2012.

Texas Startup Investment Trends

Crowdfunding skyrockets in attention and traction with the passage of the JOBS Act of 2012 in April.  While the laws are still under review, there is an explosion in the number of crowdfunding sites coming online. According to Massolution, there are over 520 crowdfunding websites today.   Equity-based sites are growing the fastest at 30%.

Business Filings

Business filings of new entities in the state of Texas in the 4th quarter added 29,861 new entities which is a 20% increase over the number of new entities filed in Q3, 2012.

GUST Data

In the fourth quarter of 2012, there were 1021 funding applications forwarded to investor groups in Texas. Texas remained in fourth place in the top 10 list of deal-making US states.  The leading industry seeking funding was Web Services at 9% of the deals.

Greg Vendetti Talks about JointAustin

Greg Vendetti Talks about JointAustin 

Where are you from originally?

Guilford, Connecticut.

What university did you go to?

Loyola University of New Orleans

What brought you to Austin?

My degree at Loyola was in Music Business Studies and Vocal Performance. Austin offered an opportunity to learn and cultivate a career and a place where I could create positive change in my industry. What made Austin different from other cities was its highly creative and entrepreneurial spirit, and in an evolved music business, such a mentality was something that I felt was valuable.

What is your company’s mission?

By partnering local businesses with local artists, our mission is to create quantifiable change in the music industry through innovation and sustainability.

What need does it fulfill?

Joint partners local businesses with local artists in a more efficient form of music sponsorship. As a result, it offers a more cost-efficient and differentiating marketing solution to local businesses while providing qualified musicians with a brand new way to generate revenue from being on stage.

What exactly does it bring to customers?

Joint brings a number of benefits to the table for everyone involved. However, in short, local businesses receive a more cost-efficient way to reach their customers, artists receive a new way to way to get paid on stage, and audiences are rewarded for their love of live music.

Our focus with local businesses is to provide a more engaging and precision-based tool for marketing and promotions. By focusing on artists with similar audiences to their own, businesses can partner with multiple artists across multiple genres and reach various subsets of their customer base effectively and in different ways. 

As an artist, Joint will provide a new opportunity to generate revenue and increase the size of your audience. Whether the money earned is used to subsidize promotions surrounding live shows or buy much needed equipment, we want to provide a balanced approach that keeps the artist in control of their responsibilities, while helping to bolster their audience size and increase their credibility. 

In saying all of this, giving the audience a new way to experience live music is irreducible to Joint’s success. Therefore, as fans walk through the venue door, they receive music content from the Joint artist on stage and rewards from their favorite local businesses. This opens the door for a number of opportunities in expanding how the audience interacts with the artist, and how businesses reach the community. To us, that’s very exciting.

What type of artists/businesses would benefit from your company?

Businesses large and small are able to benefit from Joint as we have made it affordable, rewarding, and convenient. In order to qualify as a Joint artist, you need to play at least one promoted show in Austin per month, have a website and social media efforts, and average at least 30 people at each promoted event. A promoted show would be a performance where you’d expect the largest possible audience to be in attendance. 

What was the most challenging aspect of starting up the initiative?

I always feel like the most challenging aspects of this undertaking are still ahead. Right now, we are still testing our basic operations and how the market reacts to our initial thoughts. But as we begin to introduce elements of technology into the mix and increase our value propositions, we’ll see new hurdles that are absolutely unexpected. Regardless, as it is the case with any long-term project, it’s a challenge to stay focused and motivated toward accomplishing the goal you set out to achieve in the first place. Our remedy has been to keep moving forward in a way that builds value behind the concept and momentum in its importance.

What advice do you have for entrepreneurs?

1.       Persistence is one of the most important tools to have in your arsenal.

2.      Your mission to change the world is important, but balance keeps you sane. Manage your stress, stay healthy, and you’ll be much more effective. 

3.      Everyone has an opinion about how your concept could be better. It is important to learn from others, but it is equally important to be a good judge of worthy critics. 

What Austin-based resource have you found to be the most helpful and why?

There are number of tremendous organizations and groups in this city, many of which have benefitted me and my business. However, (at the risk of sounding corny) I found that the best resource for me has been the city itself. When I first moved to this city, I became addicted to meeting new people mainly because everyone seemed so open to helping you move forward and in the right direction if asked. One of the most important skills I have developed over time in Austin has been the ability to be social and develop genuine relationships. Just like any skill, it takes practice. As a result of all the countless times I’ve said the wrong thing at the wrong time in conversations with strangers, or fumbled over my words, or accidentally alienated someone from the group, I am able to create new opportunities for myself simply by learning from my mistakes and developing confidence in the most foreign of situations. 

Chris Camillo Talks about His Startups and the Crowdfunding Conference in Austin

Chris Camillo Talks about His Startups and the Crowdfunding Conference in Austin

Where are you from originally?

I moved to Texas from NY at age 14 

What university did you go to? 

Southern Methodist University

What is the idea behind your startup? 

In early 2007, I invested $20k in the stock market, and in just over 3 years grew it to more than $2mm. My investing methodology is based simply on my ability to leverage physical and online networks to indentify trends faster than Wall Street. I’m not a stockbroker, financial analyst, nor hedge fund manager – yet in 2010 I became one of the world’s top ranked self-directed investors and was offered a publishing deal by MacMillan St. martin’s press to write an investment book.  It’s called Laughing at Wall Street (laughingatwallstreet.com).

Beyond my investments in publicly traded companies, I have made a career of bringing new business concepts to market – most recently:

eCarList - an 80 employee automotive software and interactive marketing company that was sold in 2011 to publicly traded DealerTrack Inc. for $48mm. Launched in 2006 with 3 employees and $250k start-up capital. (I served as the company’s sole investor, Senior Partner, and COO)

TrueLinkswear – In just 2 years has evolved from a novel idea to one of the fastest growth golf shoe companies in North America- and in 2012 became the first shoe to run a marathon and win a PGA TOUR event in the same day. Launched in 2010 with $350k of start-up capital and virtually no marketing budget. (I served as lead seed round investor and active adviser to the company’s founders)

What need does it fulfill?

eCarList provides a SAAS platform for car dealers to manage and market their inventory more efficiently online.  True Linkswear provides golfers with the ability to “feel the course” with a minimalist, super comfortable on-course / off-course golf shoe.  Kind of what like what Vibram 5 finger shoes did for running.

What was the most challenging aspect of starting up?

Recruiting talent.  As a bootstrap entrepreneur on a constrained budget your livelihood is dependent upon your ability to identify, recruit, and retain top talent – often at below market wages.  This quickly becomes a game of trade offs.  If successful, your staff’s resourcefulness, hunger to win, and commitment to your company’s mission more than compensates for their lack experience. 

What is the next step for you and your business?

When looking into the future I see no bigger investment opportunity then the crowd-vetted deal-flow that will result from the legalization of crowdfund investing. My endeavor for 2013 is the production of Crowd of Angels - a documentary film following a small, scrappy group of ordinary Americans who, through collaboration and shared hope, successfully get one of the most important pieces of financial legislation in a century signed into law. Their efforts ignite a cultural crowdfunding movement of innovation that is energizing ordinary people of all socio-economic backgrounds and ethnicities to follow their dreams, and to join others that they believe in.

I am a founding board member of the Crowdfunding Professional Association (CFPA) and recently became the Investment Subcommittee Co-Chair for the Crowdfund Intermediary Regulatory Advocates (CIFRA) where I will be working with the Securities & Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and other affected governmental and quasi-governmental entities to help establish industry standards and best practices for crowdfunding.

At the moment I am most excited about Crowdfund Texas, a conference I am hosting in partnership with the CFPA and Startup Texas this January 8^th in Austin. Crowdfund Texas (crowdfundtx.com) is a premier crowdfunding conference showcasing America's most knowledgeable crowdfunding subject matter experts.

What advice do you have for entrepreneurs?

Stay focused on building the best possible product/service/company for your target customers.  If you get that part right, all the other pieces (including your funding and exit strategy) will come together.

Deep pocketed, established competitors should never discourage you or overly influence your company’s roadmap.  Those companies who keep you up at night would likely pay unimaginable sums to possess your company’s agility, culture, and freedom to think differently.  Embrace your innate advantages as the nimble underdog and you very well might end up on the receiving end of a buyout offer from one of those mammoth sized competitors you once feared.

What resource have you found to be the most helpful and why?

Google.    I recently learned that Angel investors who conduct 20 hours of due diligence can expect an ROI of 1.1X while those that conduct 60 hours of due diligence can expect an ROI of 7X.  If a future prospective investor will spend 60 hours researching your business how much time should you spend doing the same before launching your venture?  I recently spent nearly 100 hours conducting Internet research on a new venture of mine before ultimately deciding to go another direction.  What might seem to some like a lot of work prevented me from starting what would have been a dead-end venture that could have tied me and my capital up for years.  

The New Normal for Venture Capital

The New Normal for Venture Capital

The Texas Entrepreneur Network focuses on helping entrepreneurs raise funding.  We also work on launching accelerator programs and providing mentorship but surveys of the entrepreneur community continually place fund raising at the top of the list so that's where we spend most of our time.  In our fund raising process, we hold open funding forums which allows anyone to come and observe the pitches to see what it takes to raise funding from investors including angels, venture capital, and family funds.

Over the past six-months I've begun to observe where venture capitalists (VCs) are going.  Their model is challenged these days as most deals are no longer raising $5M but are now raising $500K.  The day of the large fund with 2% management fees and 20% carry are coming to an end for early stage groups. VCs who had a fund are finding it increasingly difficult to raise the next one.  The IPO market doesn't provide phenomenal returns like it did a decade ago and most can't get paid or paid much until the exit occurs. Family funds and pension funds, long-time supporters of the VC world are moving away.    Pension funds and family funds don't want to pay out for management and consulting fees unless the exit was successful for all involved.  Even in the golden age of the venture capitalist (the 1990's) only 25% of VC firms made a profit, and only 10% made a good profit and only a handful made a consistent profit.  In particular, family funds are now coming into the forums seeking to make investments directly in the deals.

The only way for the VC to get from here to there is to provide consulting services till the exit comes to fruition.  The new normal for VCs is to form a team who provides strategic growth consulting or financial services, with a small fund on the side.  The fund consists of their own money and maybe a few investors.

I've sent entrepreneurs to VCs for funding only to have the entrepreneur come back and say, the VC was not an investor but rather a consultant.  I have to explain to them that many venture capitalists have to take on additional consulting roles in order to keep the lights on.  The VCs are still there and they do invest but don't be surprised to learn that they have to pay bills just like everyone else.

Have a Happy Holiday,
Hall T.

Chris Camillo brings Crowdfunding Conference to Austin

Chris Camillo brings Crowdfunding Conference to Austin

I recently attended the Crowdfunding Conference in Las Vegas in which 200 people gathered to discuss the issues, tools, and topics surround Crowdfunding.  I met several of the presenters who from the conference and have run a series of webinar these past weeks to highlight their experience.  You can see the webinar presentations of Jonathan Sandlund of CrowdCafe, Ruth Hedges of Funding Roadmap, and Brian Knight of CrowdCheck at the webinar linkon our home page.

Chris Camillo was one of the presenters at the conference. He’s now bringing the Crowdfunding Conference to Austin, on January 8, 2013.  Chris is making a documentary film about crowdfunding and plans to use the event to capture interviews and gain insights into the process.

While most crowdfunding conferences are geared solely towards helping entrepreneurs prepare for Crowdfunding - Crowdfund Texas will connect national crowdfunding thought leaders with investment, entrepreneurial, and academic professionals for in-depth solo and panel discussions on how our startup community can benefit from this new financial vehicle.

The event will be held at the Omni Hotel downtown Austin from 8am to 7pm. For more information on Crowdfund Texas you can visit http://crowdfundtx.com.

Tim Rothwell of UMeTime Talks about His Startup

Tim Rothwell of UMeTime Talks about His Startup

Where are you from originally?

I was born in Richmond, Virginia and moved around to ½ dozen states before settling down in Westlake Village, CA, which is 45 min. north of Los Angeles.

What university did you go to?

San Diego State University to study Business Management and a semester at Stockholm University School of Business to study Business Entrepreneurship.

What brought you to Austin?

I’ve been coming to Austin for the past 3 years on and off. I have good friends that grew up in Austin and we would travel here every opportunity we could. (ACL, Halloween, UT Football games). This city began to grow on me, and I soon realized that I belong in Austin.  In search of a launch market for UMeTime, we quickly recognized that Austin would be the best market to launch the technology in a University-based setting … much different than our sister launch markets of Santa Monica and Venice Beach, California.

What is the idea behind your startup?

I moved up to Los Angeles following my studies with Brett Berman, who has been my best friend of 12 years and business partner in UMeTime. It’s quite funny how we came up with the concept of UMeTime. The very first bar that we went to was a hip place on Abbot Kinney in Venice Beach. We were shocked when our beers were $9 a piece, given that we were absolutely broke! Our solution at the time was to subscribe to all of the daily deal sites to receive all of the best offers from businesses in our local area. Within a few days we quickly realized that this was a mistake as our email inbox began to overflow with Brazilian Bikini Wax-type offers from “local” businesses that happened to be 45 minutes away. Out of curiosity, we began to research how participating merchants of these daily deal services were treated, and the types of customers who were redeeming the offers.

What need does it fulfill?

9 out of 10 businesses require marketing solutions that are targeted to deliver local, loyal and regular customers on terms that do not cannibalize their current profit margins. The market response of the early entries to the "discount" marketplace, including household names such as Groupon and Living Social, deliver distribution channels for deeply discounted offers BUT only on terms and conditions that the merchant cannot possibly sustain.

On the other end, UMeTime allows locals to see what’s happening around them right now, from businesses that they actually like. Everybody likes to support local business, they just don’t really know how to do it.

What exactly does your product do?

UMeTime is a tool that allows businesses to connect with local customers in real-time.  Business owners are in complete control of the technology, and can use it however and whenever they’d like … speed up their slow hours, fill empty chairs and tables, and sell a new product or service. UMeTime delivers local customers into the door, so the chances of them turning into a repeat customers is much greater. Plus, merchants can test the effectives of their campaigns with UMeTime’s Merchant Management Tool Suite, which provides real-time analytics and reports. Think of UMeTime as a marketing solution rather than a daily deal website.

UMeTime is also a free mobile application that connects consumers with local businesses and deals that are happening around them right now. With the “Blast Out” technology, users have the ability to receive notifications from all Food and Beverage merchants that are running specials at any given time in their immediate area. “My Tab” is a consumer’s personal filter tool to customize their “deal-feed” and choose individual merchants that they want to receive instant offers from. No more spam, no more distant offers, and no more Botox specials! Support local Austin businesses and connect like never before!

Who is it for?

UMeTime focuses on businesses with four primary offerings: Food and Beverage, Health and Beauty, Shopping, and Entertainment, this also includes the music venues.

The mobile application is meant for anyone who spends time downtown. UMeTime is a great way to experience new, local businesses that you otherwise don’t know about, while saving money and having fun at the same time.

What was the most challenging aspect of starting up a business?

I’ve found that the most challenging aspect of starting up a business is deciding to take that step forward with your concept. When the idea is first conceived, it is very fragile and vulnerable. Deciding to pursue your idea and launch a small business is a barrier that many do not break past.

What is the next step for you and your startup?

The next step for UMeTime is to launch the technology in Austin. We think were off to a good start. We have over 100 businesses on board who will be using the technology when we go live. Our goal is to integrate into the community, and become the “local app” for Austinites and local business. We are working to establish a strong presence at UT, as well as in the community. We’d like to create a very unique experience for our customers, one that they’d be happy to share with their friends and family.

What advice do you have for entrepreneurs?

Always be innovative and trust your gut! Never be afraid to make the tough decisions that will benefit your company in the long run.

What Austin-based resource have you found to be the most helpful and why?

UMeTime has turned to the resources provided by the Texas Entrepreneur Networks in regards to funding, building strategic partners, and identifying the various networking events throughout Austin. 

Valuations Rising throughout the Country but not Texas

The Angel Capital Association surveys select angel groups throughout the country each year regarding valuations.  For those who are new to angel investing, valuation is the price the investor pays to take an equity stake in a company.  The higher the valuation of the company, the lower the percent ownership the angel investor receives.  You can see the current survey results here. The Baylor Angel Network is listed in the survey.  While their number is higher, it represents a limited number of deals and doesn't necessarily reflect valuations overall.

In short, the survey says valuations are going up in angel groups throughout the country.  During the last Angel Capital Association Summit which is the annual gathering of angel groups, I spoke with several group leaders about what they saw in valuations.  Most of the group talked about how valuations were going up.  Some attributed the lower starting point to the depressed stock markets from 2008 and as the stock market recovers so too would valuations.  Others pointed to the lack of other alternative investments.  There appears to be a definite move away from venture capital funds and private hedge funds.  In talking with investors, they are tired of paying the management fees and carry on what has turned out to be mediocre if not outright disappointing results. Many investors are opting to make investments directly into startups which is pushing up the price.  

Watching dealflow throughout the state of Texas, I haven't seen a strong increase in valuations, yet.  I say, "yet" because I predict the valuations of startups will rise in Texas.  It may be 2013 will be the year that valuations will take a step up.  While there are many deals seeking funding there are a limited number of deals that are attractive to investors.  So what is attractive to investors?  Deals that can pay out sooner in the form of revenue-sharing or dividends are quite attractive.  Fo entrepreneurs who have 40% gross margin or better  I now talk with them about paying back investors through cash flow.  This is called revenue based funding because the investor gets a piece of the revenue rather than equity.  Five years ago, if you offered this deal to investors they would have said no thank you, wanting to see a large return through the sale of the company. since then, buyouts have stretched from a 3 to 5 year window to closer to 9 to 11 years.  The average life of a company today from startup to exit is just under 12 years. This is why investors today find the revenue model much more attractive.  

If you are raising funding, consider a model in which you offer a share of the revenue rather than or in addition to equity.  You'll find an attentive audience with the investors.

Best regards,

Hall T. 

Jon Wroblewski of Wyman Talks about His Group

Jon Wroblewski of Wyman Talks about His Group

Where are you from originally?

Cedar Park, TX.  North Austin.

What university did you go to?

Texas A&M University - Thanks & Gig Em.

What brought you to Austin?

Took a job doing sales for Dell Inc. in Round Rock.

What is your group’s mission?

Our mission is to be the one of the largest self-sustaining philanthropy funds for the entertainment industry & small-to-medium sized businesses.   

What need does it fulfill?

We help startups & investors develop projects & ideas by providing a platform for development, launch & into the next phases of growth.

What exactly does it bring to startups? 

Well all of our services are focused on providing our clients with core business components in order to create a long-term structure for organic growth.  Think of us as a hybrid think tank, business services firm, digital agency & production house all rolled into one. 

A place where entrepreneurs & creative people can come together to learn and grow, with the capability to build nearly anything, allowing us to work on projects that other companies simply don’t have the infrastructure to support.

What type of startup would benefit from your group?

All of them. Every startup can benefit from our services because we provide services that are essential to properly structuring a company.  With the recent explosion of digital data, growing mobile utilization & on-going changes being made to specific investment vehicles, business owners are having to make adjustments to keep up with current trends. 

This is where our multi-service approach helps because we can take a startup idea and help with everything from start to finish.  Providing services like financial advisory, group benefits, funding, media production, web development, digital asset management, SEO, graphic design & application development, just to a name a few.  

So by combining all of our services to create an end-to-end solution helps cut down on cost & complexity for our customers.

What was the most challenging aspect of starting up the initiative?

Honestly I feel that our biggest challenge was first validating our end-to-end model, it’s not everyday you have a company wanting to provide 7 specific services at a high level & bring them all together. 

Once our model was validated our focus turned to continuing to educate clients, investors & employees on the film industry.  A film is nothing more than a business but it just so happens to be a very different business.  So it’s important to always be reading up on trends, laws & making sure you don’t get left behind. 

What advice do you have for entrepreneurs?

In beginning it’s a lot of trial & error, start failing early & often so you can get past that stage as quickly as possible.

Be proactive & talk to as many other business owners as you can about their experience, it can help you avoid mistakes & its great networking.

What Austin-based resource have you found to be the most helpful and why?

Capitol Wealth Strategies, a locally owned financial advisory firm.  As a business owner it’s overwhelming to try & structure buy/sell agreements, investments, insurance, group benefits & retirement plans on your own.

CWS focuses on working with business owners on all of these things & where able to educate me on what’s available to me as an owner of a company as oppose to just being an individual.  Like funding my retirement into a supplemental executive retirement plan as oppose to a IRA or 401(k) for tax advantages.   It’s working with resources like CWS & the Texas Entrepreneur Networks that can really take your company to the next level just by providing a little guidance/education.     

We're organizing a funding forum for film deals to be held January 10, 2013.  Please go to the Texas Entrepreneurs Network website to learn more.

Jarred Maxwell Talks about the Slow Money Austin group

Where are you from originally?

I was born here in Austin and grew up out in the Leander/Cedar Park area.

What university did you go to?

Graduated from The University of Texas.

What brought you to Austin?

I was born and raised here, doubt I’ll ever call anywhere else home.

What is your group’s mission?

Slow Money is bringing people together around a shared vision about what it means to be an investor in the 21st Century, and a new conversation about money that is too fast, about finance that is disconnected from people and place, about how we can begin fixing our economy from the ground up... starting with food.

What need does it fulfill?

Current investment strategies involve investments in banks, companies and opportunities that are completely disconnected from place. With the creation of electronic trading, complex derivatives and the expansion of global markets, money – particularly investing - is no longer tied to where we live. Slow Money is changing this by starting conversations about how people can invest in where they live, the people and companies in their community and how we can begin to Bring Money Back Down to Earth.

What exactly does it bring to startups?

Slow Money provides startups the opportunity to become more connected with the community they serve. We offer a way for these startups to communicate with members of their community, along with current or future customers. They can tell their story – who they are, why they wanted to start their business, how they might impact the local community. Lending should not be a faceless transaction, like it has been for decades now. We feel that a community becomes stronger when people connect with the businesses that they rely on and that they are a valuable source of capital for those businesses. Whether it be through Community Supported Agriculture, Crowdfunding or other opportunities, we think that businesses should look to their customers and community for capital rather than a faceless, large-scale banking institution.

What type of startup would benefit from your group?

We try to focus our efforts on local, sustainable businesses that can have an impact on the community in which they are located. We are currently focusing most of our efforts on local, sustainable members of our food system; ranchers, farmers, food delivery companies, farm to table restaurants, bakers, creameries and so on. Although the Slow Money principles can apply across the board, we have decided to start with food. We think food and our food system is one of the most important parts of our economy and everyday lives, so we are starting there and we will see where it takes us.

What was the most challenging aspect of starting up the initiative?

Slow Money is a national movement that began back in 2009, when Woody Tasch wrote the book “Inquiries into the Nature of Slow Money: Investing As If Food, Farms and Fertility Mattered”. After seeing what had been going on in the world of investing, he published this book based on discussions he had been having with others. It was really just a launching point and a framework for a set of questions that we are still working on the answers for. So, we started our local Slow Money Austin Chapter around the same time and have been growing since.

What advice do you have for entrepreneurs?

One of the most important things that we try to get entrepreneurs to do is really sit down and look at their business. We ask them to look at where they are, where they want to be – in 2, 5, 10 years and on – and then look at how they want to get there. Most entrepreneurs have become accustomed to going about acquiring capital via the same avenues; venture capital, angel investors, private placements or SBA loans. We think that these are the correct route for some businesses, but that they are not for everyone. What if a company truly doesn’t want an exit? What if they don’t want to open 15 stores nationwide? What if they want to stay small,  local or maybe family owned? These are all questions that should guide them and we think they should be key when looking at raising capital. They should look at their source of capital as a partner and as someone who’s goals are in-line with theirs, not just a source of much needed cash or a large ATM.

What Austin-based resource have you found to be the most helpful and why?

We have been appreciative of the help provided by the Texas Entrepreneurs Network from an investment standpoint. It can sometimes be hard to get your message out and they have allowed us access to the investment community that we are really trying to reach. With that said, the largest resource that we have here is the community itself. We are lucky to be doing what we are doing in a city that is so supportive of the buy local initiative. We are basically just trying to take that sentiment one step further – we’re hoping to get people to consider the idea of Invest Local as well.  We are trying to strengthen our community through bringing our investment dollars back into it. We are truly lucky to be attempting this in a city that is already trying to keep itself weird.

Al Lopez Talks about the Economic Growth Business Incubator

Where are you from originally?

Tucson, Arizona

What university did you go to?

I was a baseball player that got an undergraduate Accounting degree from the University of Arizona.  Subsequently, I earned a Masters in Business from the University of Northern Colorado.

What brought you to Austin?

After spending 21 years with IBM rising through the ranks in finance after starting my career as a sales rep, I left IBM to join Dell, Inc in 1998 where I was a vice president of finance until 2009.  At the very end of 2010 I assumed the role of Executive Director of the Economic Growth Business Incubator (EGBI).

What is your group’s mission?

EGBI is a 501(c)(3) non-profit organization with the mission of enabling economic development and job creation in underserved communities in the Greater Austin area by utilizing innovative, high-tech, and bilingual approaches in a business training and incubation setting.

What need does it fulfill?

EGBI equips mainly underserved individuals in the Greater Austin area with the educational toolset, resources and network to successfully establish or grow their businesses.

We are the low-cost provider of incubation services and entrepreneurial training in Austin, and we are the only provider with a fully bilingual training curriculum.

What exactly does it bring to startups?

Our entrepreneurial training is called Building Success Program. It is a comprehensive training program that teaches entrepreneurs the foundations for business plan development, business administration and marketing. Our training also includes a computer literacy segment and financial literacy training.  In 2011 we had 60 clients “graduate” from our program, 24 of which were in business by year end.  This year we expect to have 75 clients complete our program.

What type of startup would benefit from your group?

Any person that is planning to open a business in the service industry is an ideal candidate for EGBI. People with the need to develop business management skills and entrepreneurs in need of low-cost office space would benefit from our services.

What was the most challenging aspect of starting up the initiative?

I became EGBI’s first Executive Director at the start of 2011 after the organization had been managed on a part-time basis by the Greater Austin Hispanic Chamber of Commerce.  We were essentially a “restarted” non-profit.  We spent the first few months improving the curriculum and recruiting “subject matter expert” (SME) volunteers to have in the training sessions when we taught certain topics, e.g. legal, insurance, finance, marketing, etc…  We had to accomplish that on a “bootstrap” basis since we are in an environment with limited and decreasing investments in the non-profit sector.  As we drive to increase the number of “investors” (prefer that to donors) in our organization we are looking forward to our second ever celebration/fundraiser we call Celebrating Success 

(http://www.egbi.org/2012CelebratingSuccess/)

What advice do you have for entrepreneurs?

My advice is to go after your passion, but don’t fail to get advice from others and plan.  A plan doesn’t have to be a detailed novel but every start-up should have a plan.  Planning begins with bootstrapping from the start to ensure your own finances are in order.  Then do a very honest inventory of your strengths and weaknesses so that you know what areas you need help in, including getting objective input from 2 or 3 sources you trust would be candid with you.  I would also recommend working with an organization like ours which is a great place to get some of this input and assistance in laying out at a minimum a basic business plan.

What Austin-based resource have you found to be the most helpful and why?

We are a resource organization for start-ups and we hope our clients find us to valuable.  We have networked extensively and have relationships with the various chambers of commerce, the City of Austin Small Business Development Program office, SCORE, and alternative lending institutions like ACCION Texas, and People Fund.