Friday, January 30, 2009

Austin Gets Its Own Startup Incubator

I love having a startup in Austin. I think it's a great place to do a startup right now. At the Tech Happy Hour last night, one early stage investor likened Austin to a gasoline soaked pile of rags just waiting for a spark. Indeed!

For a while I've felt that the missing element in the Austin startup scene is an early stage, small investment startup incubator in the spirit of Y Combinator and TechStars. Austin is a great place to bootstrap, and angel and VC funding are available, but for many young entrepreneurs the best way to get started is with a startup incubator. You get to meet people with startup experience, you get to pitch, and you get some press. It's one of the best ways to get started, especially if you're on the engineering side and you need to meet people with business experience.

Austin finally has such a venture, and it's called Capital Factory. You can read their press release to get the sales pitch, but let me just break down the numbers for you. If you're one of the three companies picked, you get $20,000 for 5%, giving you a $380,000 valuation, which is comparable or slightly better than YC and TechStars in terms of valuation. There are of course many intangibles to compare between the various incubators, but it basically comes down to where you want to start your company: the Bay Area, Boulder, or Austin. For myself, I choose Austin!

They're also still looking for a few good investor-mentors, so if you want to help the Austin startup scene and you've got some time and money to invest, check them out. I can't wait until pitch day to see what new startups are started!