Scott Ball / Rivard Report
A new startup accelerator has set up office space for its management team and portfolio companies at the Geekdom co-working space. RealCo Accelerator provides early-stage funding, mentorship, and networking resources for up and coming business-to-business (B2B) technology companies.
Partners Michael Girdley, Teresa Evans, and Chris Saum founded RealCo’s accelerator program to provide startups up to $125,000 in early operating capital in return for a small equity stake. They also seek to fill the gap created by the closing of Techstars Cloud accelerator in San Antonio a few months ago.
“We think San Antonio is the best, if not one of the best, places to do a B2B tech startup. With the Rackspace talent base of direct sales people and proximity to customers, San Antonio offers some really cool advantages here," Girdley told the Rivard Report. “Techstars is awesome, and we were very sad to see them go. They do have a very different model from what we're doing. Hopefully they come back someday soon as there's room for multiple accelerators here.”
Girdley has been working with other startup entrepreneurs as the co-founder and managing director for the Geekdom Fund, an actively managed venture capital fund that invests in early-stage tech startups in San Antonio, South Texas, and beyond. Evans has a Ph.D. in neuroscience and went on to found the Office of Workforce and Career Development at UT Health San Antonio before joining RealCo Accelerator. Saum used to analyze rocks, creating high-resolution geochemical data sets for the oil and gas industry at Mud Geochemical, the startup he had co-founded. The Austin native moved to San Antonio to join RealCo Accelerator after selling Mud Geochemical in November.
“San Antonio is great," Saum said. "It’s an emerging market with a burgeoning tech scene that is transforming Houston Street before our eyes."
RealCo Accelerator currently has three companies in their first cohort – Zenus, Invisible Cloud, and Dauber – with room for up to 10 companies total. Zenus, founded in Houston, has face recognition software that automates manual tasks for businesses. Invisible Cloud, founded in Portugal, has developed software for handling and collecting invoices. Dauber, founded in San Antonio, has an app for the trucking industry.
The founders of RealCo Accelerator’s cohort companies have to move to San Antonio, at least for the first few levels of the program. Companies interested in applying for one of the available open spots can apply here. The cohort officially starts April 1.
Girdley, Evans, and Saum run RealCo Accelerator full time, supported by a network of mentors active in the San Antonio tech ecosystem. The mentors are listed on the RealCo Accelerator website to work with each company in the cohort.
“[The mentors] will engage in ongoing conversation and have an active voice in the program as we seek to build our community," Evans said.
Unique Accelerator for B2B Companies
RealCo Accelerator offers a tiered approach and a longer program for B2B companies participating in each cohort. The extended program lasts up to 15 months and is customized for each individual company's needs in order to help startups get ready for Series A funding.
“We saw lots of companies struggling after completing a typical accelerator program of three months, which is often not long enough to get companies ready for Series A funding,” Saum said. “The idea behind RealCo was to add a specialized accelerator program to the San Antonio tech ecosystem that could be true to our name by helping to create real companies.
“That’s why we created a program that is not necessarily confined by any set timeline, but instead is guided by the objective of ensuring companies reach certain readiness levels in the program, where the final level is being investor ready for Series A funding.”
The tiered approach (see above, featured image) places startups in one of five different course levels, depending on how far along they are. Each tier has certain requirements and offers varying levels of funding. For the earliest stage companies — ones with a complete founding team, developed business proposition and model, and identified target market — RealCo Accelerator offers $25,000 for a 6% equity stake, according to Saum.
To progress to the next level, a company would need a beta product and pilot customers in order to qualify for a $50,000 convertible note in exchange. The third level offers another $50,000 convertible note for similar advances, such as reaching specific revenue goals. The accelerator continues mentorship to help get startups to the final stage, raising a Series A round of investment.
Not all of the startups will move at the same pace, but the RealCo Accelerator partners expect that most will progress every few months. That's why new businesses are accepted into the program every quarter. RealCo Accelerator expects to have no more than nine or 10 startups in its program at any given time.
“The idea behind [RealCo's self-paced program] is because each company comes in at different levels and not every company proceeds and grows at the same speed," Evans said. “We’re nimble so we can respond to those changing needs, since different products may grow at different rates.”
The only other comparably structured longer-term program is by Tech Wildcatters in the Dallas-Fort Worth area. Called the Gauntlet, Tech Wildcatters' tiered progression gives companies access to more capital. There are dozens of other accelerators across the United States and worldwide, offering a variety of benefits spanning only a few months to a year or more.
Geekdom Fund is supporting RealCo Accelerator’s program, and would have an opportunity to fund some of these companies as they progress, along with the San Antonio Angel Network and former Rackspace president and startup investor Lew Moorman’s venture fund Scaleworks, to name a few.
“We expect that these companies will continue to help [incoming] companies after they reach their Series A funding goals,” Saum said.
“Our expectation is that we will continue to be an extension of their support system as these companies move forward,” Evans added. “As companies continue to access RealCo, the Geekdom fund, and the network of mentors, the participants from the previous cohort can then act as mentors for companies starting out in our program.”
Girdley takes a long-term view on RealCo Accelerator and its role in the growing San Antonio tech ecosystem. The accelerator's goal is simple.
“[We plan to] back the best entrepreneurs working on some pretty cool stuff,” Girdley said. “If we can help them build great businesses, the rest will take care of itself.”