Category: Community

Over the last 30 hours I’ve had the opportunity to get a glimpse of the Austin, TX startup community and partake in the Capital Factory Demo Day 2011. Jason Cohen of WP Engine (great WordPress hosting) treated me to an early dinner last night followed by a Capital Factory event in the evening. Today was packed with great speakers and pitches by over 20 startups.

Here are a few observations:

• Startups congregate downtown taking advantage of great nightlife and proximity to UT Austin
• UT Austin hasn’t had much influence on the startup community but that’s starting to change as of late
• SXSW is the most amazing gem of the city with respect to startups by bringing in people from all over and exposing them to what Austin has to offer
• There are many comparisons between Austin, TX and Boulder, CO
• Austin startups lament the lack of capital available locally
• Mobile apps are especially hot with many consultancy success stories
• Dell, based in the suburb of Round Rock, is completely absent from the startup scene (it isn’t the anchor tenant people think a startup community needs, in fact I heard it referred to as a logistics company and not a technology company)
• Capital Factory’s speakers were world class and told great anecdotes about building their billion dollar startups
• Engineers are in demand and startups are trying to recruit more to move to Austin from the West Coast
• HomeAway and BazaarVoice are two big recent success stories

Overall, I’m very impressed with Austin and Capital Factory and have several items to take back to Atlanta.

What else? What do you think of Austin’s startup community as well as Capital Factory?

Earlier this week I had the opportunity to spend time with Andy Ibbotson, CEO and co-founder of Digital Assent, which helps automate the patient check in process. Digital Assent was started in 2009 to provide a tablet-based software plus hardware solution for doctors’ offices. Specifically, they focus on simplifying the traditionally paper intensive and laborious process of signing in at fee-for-service specialty clinics like plastic surgeons and dermatologists (elective, out-of-pocket procedures). After starting the year with three employees they now have more than 30 and will end the year around 50 — crazy fast growth!

Here’s a quick snapshot of the company:

• Founded: 2009 in Atlanta
• Employees: 30
• Solution: PatientPad for doctors’ offices to have patients sign in digital and help start the transition to electronic health records
• Funding: $10 million+ ($2 million Series A in February and $7.5 million Series B in June, and a line of credit from SVB)
• Cool Fact: They picked the product name PatientPad and trademarked it before the iPad came out — good name selection!

Digital Assent is off to a fast start and the only Atlanta company I’ve heard of that’s closed a Series A and Series B investment in the first six months of 2011. I look forward to watching their success.

What else? Have you heard of Digital Assent and what do you think of them?

Next month I’ll be at the Capital Factory Demo Day 2011 on 9/7 in Austin, Texas. In addition to being my first time in Austin, I’m looking forward to learning how the startup community is similar and disimilar to the Atlanta community. Austin is like Atlanta in many ways — low cost of living, prominent university, numerous young professionals, and more. Atlanta wins when it comes to metro population, professional sports teams, and airport size but Austin wins when it comes to anchor technology company (Dell), coolness factor (Keep Austin Weird), and events (SXSW and live music).

Here are some questions I’m going to ask people in the local Austin startup community:

• What things are going well in the Austin startup community and what areas are struggling?
• What group or organization acts as the heart of the community and what do they do?
• Which local angels and VCs are actively investing and how many investments have they done in the past 12 months?
• What local startups are doing really well? Which ones are close to an IPO?
• What’s the B2B vs B2C startup mix like for the startup community?

These aren’t hard hitting questions but rather the goal is to get a feel for the community and get a feel for what is and isn’t working. I’m looking forward to the trip.

What else? What other questions should I ask and what should I look for in Austin?

One thing I want to start doing more of is highlighting successful Atlanta startups on a regular basis. The first one I want to talk about is SignUp4 event management systems. Now, you’re probably thinking EventBrite or 123Signup. Those event management tools are nice but are designed for more consumer type events or less customizable business events. SignUp4 is for businesses that need extremely customizable event management delivered as a SaaS product.

Here are some SignUp4 fast facts:

• Age: Started over 10 years ago in Buckhead by some ex North Highland consultants
• Employees: ~30 (according to LinkedIn)
• Market: Medium to large businesses
• Products: Event Management System, Travel Management System, Spend Management System
• Funding: Private, no institutional money
• Job Openings: Yes, see the site
• Customer Retention Rate: 91% (source)

SignUp4 is a solid SaaS success story that pioneered event management software in the cloud.

What else? What are some other successful Atlanta startups to cover?

Yesterday’s post Atlanta Great for Early Stage Startups but Not Idea Stage? prompted a flurry of comments and tweets. Today I’d like to take the other side of the argument and outline why Atlanta is great for idea stage startups. Startups in this context are capital light web businesses with little-to-no funding and little-to-no revenues.

Here’s why Atlanta’s great for idea stage startups:

• The low cost of living means the threshold for saving enough money to start your own business is lower than other parts of the county. In Atlanta, a person with no mortgage or kids can readily live on $1,000/mo (assuming no taxes). I know an entrepreneur that worked 60 hours a week on his startup and valeted cars at night to cover his living expenses — that shows serious determination.
• While there aren’t a ton of potential co-founders in town that can go with no salary, there are a number of entrepreneurially minded business people and software developers that will freelance part-time in exchange for a reduced hourly rate and stock options (full-time co-founders are the way to go, but sometimes that isn’t always possible).
• People in the Atlanta startup community are eager and willing to help entrepreneurs at no charge. The startup community in general is medium-sized compared to most cities, and the people in Atlanta are nicer on average, resulting in more opportunities to get help and guidance from people who enjoy giving back.
• Startup groups, with ATDC being the heart of the community, readily provide peers and mentors to work with during the often challenging journey that is building a company (don’t get caught up in going to events so often that you aren’t making enough progress on your venture)

In the end, an idea stage startup can be successful anywhere. Atlanta, like every other city, has its strengths and weaknesses. When it comes to startups, especially bootstrapped startups with some revenue traction, I believe it is the best place to be in the country.

What else? Do you think Atlanta is or isn’t a great place for idea stage startups?

Recently I was talking to an entrepreneur about the Atlanta startup community and I was arguing that it’s a hidden gem for reasons I’ve mentioned before (here, here, and here). He brought up a different opinion that I hadn’t heard: Atlanta is great for early stage startups but not idea stage. One way to think about the stage of startups is that idea stage startups are pre-revenue to a few hundred thousand in revenues while early stage startups are a few hundred thousand to a few million in revenues.

Here are a few reasons why idea stage startups struggle in Atlanta:

• There aren’t anchor technology companies like Google and eBay that acquire startups and recruit talent to the region
• The lore of local college drop outs building billion dollar companies doesn’t permeate the regional universities
• Regional universities focus on job placement at Fortune 500 companies and continue the culture of big company = safe employment
• The number of technical and business co-founders that can keep their lifestyle and not take a salary due to a previously successful exit is tiny
• The access to extremely risky capital for idea stage startups is minimal

So, the theory goes that even though Atlanta has the largest engineering school in the country with great technical graduates, a low cost of living, direct flights at an affordable cost to almost anywhere in the world, and a huge population of ambitious young professionals, if your startup can’t afford to pay market-rate salaries, you’re going to have a hard time taking the idea stage startup to early stage startup.

What else? Do you think Atlanta is great for early stage startups but not idea stage ones?

Today I had the opportunity to talk with David Moeller, the CEO of CodeGuard – a backup service for websites. CodeGuard launched at TechCrunch Disrupt in NYC a few months ago, won the audience choice award at the event, and announced a $500k seed round the following month.

Here are some details on the startup:

• Idea: Websites, like a laptop, need to be regularly backed up, but many are not. CodeGuard is a SaaS product to backup and restore website files.
• Business Model: Freemium with a free plan up to a certain amount of space and then a premium plan for more sites and storage
• Technology: Git for the behind-the-scenes version control and FTP/SFTP to interface with the websites
• Market: Small-to-mid-sized businesses that don’t have version control software in place
• Distribution: Direct through PR and indirect through web hosting provider resellers

CodeGuard is off to a quick start and I hope to see the Atlanta startup succeed. Building critical mass with SMB companies will be extremely challenging and strong web hosting company partnerships will be key.

What else? What do you think of the CodeGuard startup idea?

Sig Mosley is the god father of angel investing in Atlanta. At a GA Tech football dinner I attended last fall, John Imlay, for whom Sig manages Imlay Investments, stood up and said they they’ve invested in over 120 technology companies over the course of nearly 20 years. Investing in 120 companies in Atlanta and the Southeast is like Ron Conway investing in 10,000 companies in Silicon Valley — it really is that magnitude for the community.

Back in 2003, after having moved my company to Atlanta from Durham, NC one year prior, things were starting to take off. We were generating low six figures in revenue and I felt I needed to raise money for the business. For several months I talked to as many angel investors and VCs as I could in the community. The ATA was kind enough to select me to present to the group. After my presentation I was invited by Melanie Leath, Sig’s amazing investment colleague, to meet with them at their office in Resurgens Plaza, right near Lenox Mall.

The meeting was very cordial and polite. Sig asked a number of direct questions about the market, the team, progress-to-date, financial metrics, and how I would use the money ($300k). When Sig asked about revenue, I excitedly told him we had $200,000+ in revenue year to date. He then asked for me to break it down into license revenue, maintenance/support revenue, and services revenue. Upon doing that he taught me a lesson I’ll never forget: what I had described to him was bookings and not revenue. Only a portion of the bookings was recognized revenue and the rest was deferred until the obligation had been completed. I didn’t know anything about bookings, deferred revenue, and revenue recognition, but I was taught on the spot by the best.

At the end of the meeting I was kindly told my business didn’t have enough traction but that I should keep in touch as things progressed. I took the news in stride, decided not to raise money, and focused my time and energy on sales and marketing. Sig Mosley is the godfather of angel investing in Atlanta and I want to thank him for his contribution to the community and teaching me about software accounting.

What else? Have you had the chance to work with Sig?