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.

Jonathan Sandlund of CrowdCafe Talks about Equity Sites

Jonathan Sandlund of CrowdCafe Talks about Crowdfunding Equity Sites

Where are you from originally?

I originally hail from Zanesville, Ohio. A Buckeye through and through!

What university did you go to?

I attended the The University of Akron Honors College

What is the idea behind your startup?

Well, I’m doing a couple of things. First, I’m developing a crowdfunding concept for local communities via localinvestors.org, looking to connect small businesses with capital in more meaningful ways through. Concurrently, I’m operating thecrowdcafe.com, a source for crowdfunding industry news, research and resources.  

What need does it fulfill?

To keep things simple, I’ll speak only to thecrowdcafe.com. It fulfills a tremendous demand for knowledge and information around the investment crowdfunding industry; an industry still in its nascent, but one that holds enormous implications for our financial markets in the coming years.   

What exactly does it do?

Mainly, it aggregates resources and research for those operating in or interested in the crowdfunding industry. Lately, I’ve also taken to more aggressively pushing for more intelligent data-driven debate, as well common sense regulation, through my Opinion pieces.

Who is it for?

I write mostly for an industry-based audience, those mostly already operating or preparing to operate in the industry.

What was the most challenging aspect of starting up?

I’ll switch back to localinvetors.org, where we’re still validating a number of our assumptions around what will work. The most challenging aspect is the operating with a large degree of regulatory uncertainty. As the JOBS Act is still in the rulemaking process - and the SEC & FINRA have given limited guidance as to their direction - we’re still not sure exactly what we’ll be able to do as a portal.

What is the next step for you and your business?

I’ll switch back to localinvetors.org, where we’re still validating a number of our assumptions around what may work. The most challenging aspect is the operating with a large degree of regulatory uncertainty. As the JOBS Act is still in the rulemaking process - and the SEC & FINRA have given limited guidance as to their direction - we’re still not sure exactly what we’ll be able to do as a portal.

What advice do you have for entrepreneurs?

I’ll defer until I succeed or fail myself ; )

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

The startup blogosphere - Fred Wilson, Steve Blank, Brad Feld, et al. - has been an invaluable resource as it covers every conceivable angle of starting a new company. Steve Blank has a new Udacity e-course on his startup methodology that I’ve found to be a great resource as well.  


Best regards,
Hall T.

The TEN Startup Index -- Measuring the Health of the Startup Community

The Texas Entrepreneur Network Startup Index calculates the state of the early stage business environment by measuring the number of new business filings, the number of funded companies, and the average funding per company during the time period.  The TEN Startup Index is calculated as follows:

TEN Startup Index = Business Filings/1000 + Funded Companies/10 + Average Raise/1000000

Business Filings account for 60% of the score, while the number of funded companies account for 25%, and funding accounts for 15%.  Business filings represent new entities that have been created and comprises the majority of the index.  The number of funded companies and their average comprise the rest.

For Q3, 2012, the TEN Startup Index rose to 43 over the previous quarter of 40 and over the year ago quarter of 42. The third quarter is typically the highest quarter of the year for the index.  

For a list of all the reports for the past year check out  this link.

Best regards,

Hall T. 

Funded Deals for 2nd Quarter in Texas are Up

The Texas Entrepreneur Networks Startup Funding Report represents private investments made into Texas startup and early stage companies for the third quarter of 2012.  It 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 Q3, 2012, the TEN Startup Index rose to 43 over the previous quarter of 40 and over the year ago quarter of 42.  The Index measures the health of the startup business community by looking at the number of new business entities filed, the number of funded companies, and the average raise.

Trends in Sectors

Overall the leading category for funding sector was Healthcare at $159M with 34 deals, followed by Biotechnology at $128M comprised of 15 deals and Information Technology at $73M with 18 deals. 

Trends in Regions

The North Texas region came in first with 60 deals worth $249M in funding, followed by the Gulf Coast region with 22 deals worth $131M.  Following that is the Central region with 50 deals worth $73M, the South region with 8 deals worth $51M.

TxEN Funded Companies

Startups seeking funding who participated in the TxEN program raised over $7M in the 3rd 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 3^rd quarter added 24,922 new entities which is a 4.7% decrease over the number of new entities filed in Q2, 2012.

GUST Data

In the third quarter of 2012, there were 1229 funding applications forwarded to investor groups in Texas. Texas remained in fourth place in the top 10 list of deal-making US states. Even though Texas did not move in rank, there still was a 7% increase in the amount of deals in Texas from Q2 2012 to Q3 2012.

The Texas Entrepreneur Networks Startup Funding Report for Q2 2012

The Texas Entrepreneur Networks Startup Funding Report represents the equity investments made into Texas startup and early stage companies for the second 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, that highlights dealflow in the Texas-based angel networks.  Trends are noted as well as a forecast for early stage investments.  Here are some highlights from the report. 

Trends in Sectors

Overall the leading category for funding sector was Information Technology at $28M with 11 deals, followed by Healthcare at $28M comprised of 29 deals and Energy at $20M with 6 deals. 

Trends in Regions

The Central Texas region came in first with 35 deals worth $88M in funding, followed by the North region with 53 deals worth $79M.  Following that is the Gulf Coast region with 25 deals worth $46M, the South region with 6 deals worth $8M and the West region with 1 deal at $1.3M.

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 2nd quarter grew 39% over the 1^st quarter of 2012 across the state of Texas.   Central Texas grew 41%, North Texas grew 38%, South Texas grew 37%, Gulf Coast grew 41%, and West Texas grew 34%. 

GUST Data

In the second quarter, 1151 deals were forwarded to Texas-based angel networks.  Deal flow within the state increased by 60% from 2012 Q1 to 2012 Q2. The state of Texas falls from 3rd place in the US to 4th place for dealflow. 

TxEN Funded Companies

Startups seeking funding who participated in the TxEN program raised over $21M in the second quarter of 2012. 

You can see the full report at this link.

Best regards,

Hall T. 

Lee Blaylock of Who@ Talks about Startup Grind Dallas

Lee Blaylock of Who@ Talks about Startup Grind Dallas (http://www.meetup.com/Startup-Grind-Dallas/)

Where are you from originally?

Born in Houston, raised in Dallas. 7^th generation Texan on both sides of my family, but all that means is my ancestors were running from the law in Kentucky and Tennessee and didn’t have enough money to fix their wagon wheel while headed to California.

What university did you go to?  


Hook’em.

What brought you to Austin?

The University

What is your group’s mission?

Who@’s mission is to increase business productivity on a global basis by enabling you to leverage who you know, and do it in ways you never dreamed of.

What need does it fulfill?

The need to differentiate yourself  by leveraging your relationships

What exactly does it bring to startups?

Faster access to capital, customers, investors and advisors.

What type of startup would benefit from your group?

Anyone raising capital or looking to sell their product or service in an environment where relationships matter.

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

Getting it capitalized outside of silicon valley.  Both coasts refer to “flyover territory” unless you’re on the coasts.  They invest in business where the exit is a multiple of revenue.  Here in the heartland, too many investors are looking for business that exit as a multiple of EBIDA.  The venture capital market in Texas is embarrassing.  Texas is the 8^th largest economy in the world and the amount of early stage investors is disproportionate to the talent here.  It is a real market opportunity for savvy investors.  The problem is, the smartest money is in CA, NYC and Boston and there’s too much money chasing too few deals so their supply demand equation isn’t out of balance and they don’t see the need to travel + travel for them means lost opportunity to spend more time with other deals.  They do invest here, but not at the seed stage and not at a true A stage either except where there is a previous relationship.   But hey, you have to bloom where you are planted.

What advice do you have for entrepreneurs?

Never ever stop believing in yourself for when you do, bad things can happen.  But remember there is always a delicate balance between self-belief, self-doubt and self-aggrandizement.  Too much of either of those and you will suffer as Icarus did. 

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

The engineers and research that comes out of UT.  Without UT, Austin would be a nice little town with outstanding Mexican food,  watersports and too many lobbyists and lawyers.  Not much else.

Andi Gillentine Talks about Launching Startup Grind Austin

Andi Gillentine Talks about Launching Startup Grind Austin

Where are you from originally?

 This is never easy for me to answer. I was born outside of Chicago, but I barely remember it. My family moved frequently thanks to the Air Force. I went to 13 schools before I graduated from high school. I spent time in Texas, Colorado, Illinois (twice), Michigan, Ohio (twice) and Alabama. I have been living in Texas for the last 17 years.

What university did you go to?

I attended Bryn Mawr College, outside of Philadelphia for undergrad and went to the University of Texas School of Public Health in Houston for graduate school.

What brought you to Austin?

My first job out of graduate school was in Austin and my husband and I loved it.

So we found him a job here as well.


What is your group’s mission?

Startup Grind in a community of founders, entrepreneurs, and wantrapreneurs looking to be inspired, educated, and network with the smartest startup minds. You can learn more and see past interviews at startupgrind.com

 What need does it fulfill?

 Startup Grind provides support and help startup founders and early employees through the ups and downs of Startup life through blogs, interviews and networking with others people who have been there.

 What exactly does it bring to startups?

 For tech entrepreneurs, Startup Grind provides the opportunity to learn from others who may have already faced the challenges that your startup is going through.

 What type of startup would benefit from your group?

 The focus is primarily on technology startups at any stage.

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

 Finding the right speakers and the right space. I really wanted the first event to bring a founder or early employee from a company started in Austin, but that is a household name. I was lucky enough to connect with Ross Buhrdorf, the CTO of Homeaway, through running buddies and he agreed to be our first speaker. It was a fantastic event. As for the space, I really wanted the space to be part of the Austin Startup Community and CoSpace is exactly that. It’s a co-working space supporting startups in North Austin.

 What advice do you have for entrepreneurs?

 You are going to make mistakes. One of the ways to identify and fix those mistakes is through talking with people, reading the blogs and books they recommend and listening to people who have been there. Most entrepreneurs will talk candidly about things they wish they had done differently or things they wished they had known a year ago. (My list is long.) And, find a co-founder who has different strengths and a different perspective than you do. This will not always be easy, but it will make your company and product stronger. 


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

Capital Factory is doing great things in Austin, really supporting and growing local startups through their incubator. Best regards, Hall T.

Interview with Rethink Books Entrepreneur Jason Illian

Where are you from originally?
I was born in the Omaha, NE, but I grew up in Lake Havasu City, AZ. Both of my parents were educators, so we moved around quite a bit until high school. My parents were always looking for the best educational and athletic opportunities for their three boys.

What university did you go to?
I attended TCU (Texas Christian University). I played collegiate football for the Horned Frogs and studied International Finance.


What brought you to Dallas?
I originally came to DFW to go to school at TCU. After school, I moved to London for about 6 months and then took a job with a large institutional money management firm in the Midwest. After being away from DFW for 3-4 years, I moved back with the intent to re-engage the growing startup and technology ecosystem in the metroplex.


What is the idea behind your startup?
Our company is called Rethink Books, and our flagship technology is called Bookshout! Bookshout! is a group and social reading platform designed to build community around books. It is our belief that long-form content can be more viral, collaborative, and engaging when like-minded people can interact with it.


What need does it fulfill?
For readers, Bookshout! provides a number of social and collaborative tools that make the reading experience more robust and interactive. For publisher and authors, it creates viral marketing and sales, as well as a creative distribution channel. It leverages the concept that people sell books to each other better than any retailer can.


What exactly does your product do?
Bookshout! is a social and group reading platform that allows friends to read a book together. Imagine a teacher reading and sharing her notes with the class and the students with each other. Imagine a CEO having a virtual book study with his executives. Imagine a pastor sharing his thoughts over multiple books with his congregation. These are the types of things Bookshout! can accommodate.

Who is it for?
It’s a B2C play. It’s for readers and individual users. We have developed partnerships with major publishers and key organizations, but the end game is to provide the best reading experience for the users.

What was the most challenging aspect of starting up a business?
In DFW, one of the most challenging aspects is raising capital. It’s ironic, really, because DFW is packed full of successful businessmen and thriving companies. But very few have experience in funding or operating a tech start-up. Once we are able to redirect some of the capital that now goes to more traditional ventures, we’ll have the ability to create a vibrant tech ecosystem which will draw and retain talented entrepreneurs, unlock the resources of larger corporations, and create wealth in the metroplex.

What is the next step for you and your startup?
We just launched our Bookshout! platform, which is a group and social reading application connecting users around books. We are in the ramp-up phase of our company, generating growing revenues and acquiring new users.

What advice do you have for entrepreneurs?
Know what time it is. There is a time for building companies, and there is a time for working for others. There’s a time to raise big capital, and there’s a time to bootstrap a company. There’s a time to swing for the fence, and there’s a time to just get on base. As an entrepreneur, very rarely will you find yourself in the same season of life for very long. If you do, it’s time to start hanging a question mark on some sentences that you often end with a period.


What Dallas-based resource have you found to be the most helpful and why?
Startup TX has been exceptionally valuable to me and Rethink Books. It has been so valuable that I volunteered some of my time to help ramp up the program on a state level. Through Startup TX, I’ve received access to discounted resources, connections, and potential capital. There is no substitute for connecting with other wise entrepreneurs and building out a network that can help you build, and later sustain, your company.

How to Find Angel Investors

So now that you have the idea, business plan, and (hopefully) a product that will change the world as we know it, all you need is a few thousand bucks--or a few tens or hundreds of thousands of bucks--to get get it up and running. All that stands between you and your success is finding the right angel investor. But where do they hang out?

It’s important to note that the rules for who is an angel investor were set in the late 1960s and have only changed once since that time, thanks to Bernie Madoff whose scandal forced lawmakers to make the recent revision. (They declared that you couldn’t count your house as part of your net worth for determining whether or not you were an accredited investor.)

Because the term angel investor is rather broadly defined, we’re going to talk mostly about the accredited investor or the professional investor that has some experience putting money into companies.

So where where do you find them? Here’s some ideas for starting your search.

Start close to home. Check out your family and friends, as your family members may qualify as accredited investors.

Start with your own rolodex -- Many of your coworkers and acquaintances may count as potential investors and you didn’t even realize.

Formal angel groups -- the Angel Capital Association (http://www.angelcapitalassociation.org/directory/) is the largest trade organization for angel networks and lists the groups that are members in their association.

Informal angel groups -- in your local community are investors who review deals. They are generally led by individuals with experience in angel investor and offer pitch sessions.

Pitch sessions and funding forums -- Other ways to find angel investors is through funding forums and pitch sessions which offer mentorship to practice in advance of pitching for funding. The mentors and coaches in these groups are angel investors or know those who are.

Business plan competitions -- these competitions draw mentors and judges who are angel investors.

Your attorney and accountant - often times your attorney knows potential investors

Social Networks -- LinkedIn is one potential source of finding investors

Web-based -- there are several web-based sites that offer to connect your with investors.

Building a Team for Startup

The team that you build has enormous importance when it comes to raising money from investors, and many entrepreneurs get this wrong.
In order to pique an investor’s interest, the entrepreneur must not only present a solid plan that details how they are going to make money (the business model) but also the team that in place with experience to get them there. If the management team fails to inspire confidence in potential investors, then the meeting is over at that point. .

The core team typically consists of someone that is building the product and someone selling it. You should also Identify those plan to hire in the future. As your company grows it will bring on more of the team you have identified and existing hires will increase their hours and salaries accordingly.

For positions you cannot afford to hire filling them with a board of advisors. This includes people who you don’t pay, but you do meet once a week for coffee/lunch and use as a sounding board. Make a list of the topics you need help with and then fill with board of advisors.

For key management positions, you can bring them on your board of advisors for a period of time (say 2 to 3 months) before deciding to hire them.

Finally, choose service providers (attorneys, accountants, etc.) who have worked for companies similar to yours and leverage their knowledge and experience beyond their stated tasks.

Another issue that you should be aware of includes the addition of management and board members that have fancy corporate pedigrees, but little in the way of actual entrepreneurial experience. (I’m talking about the one that has experience with Big Company X, that you go around touting so you can name drop). Be advised that this kind of experience is not impressive to potential investors. Why?

Because investors know that fundraising for startup is a much different skill than working as a corporate Vice President--much different. And most startups with this type of expertise only have a poor track record for success.

Having a capable, qualified management team enables a entrepreneur to do whatever it is that they do best. Founders need to know that hiring people or good investors doesn’t mean they have to give up control; nor does it make it any less their company. In fact, if you research the beginnings of many successful companies you’ll find the people responsible for the technology were not the ones who took it to market. Take Apple for example: Steve Wozniak was at the core of technology development while Steve Jobs was out evangelizing it.

Of course there will always be the exceptional exception, but I challenge founders to surround themselves with managers and board members who have both entrepreneurial and experience relevant to their venture and in its current stage.