The darkened confines of the superbly funkadelic Aztec Theater were the scene of Techstars Cloud's much-anticipated “Demo Day 2015” on Thursday. The audience of participants, mentors and investors, plus colleagues, friends and family and community members, milled around at the bar or sat at tables near the stage to hear the individual presentations by the founders of 10 startups that had made it through the three-month program of intense product and pitch development.
Although the Meso-American-themed Aztec was built almost a century ago, the companies presented via on-stage pitches are futuristic and forward-looking. Even the problems and challenges the startups were founded to address are newly born, the result of lightning speed changes in evolving technologies.
This Techstars Cloud Demo Day is the third one locally, and the program’s 10 startups are Appbase, Bitfusion, Card Isle, Callinize, Elasticode, Fantasmo Studios, Knowtify, Nebulab, Stabilitas, and Virtkick. The Techstars Cloud technology business accelerator program is focused on the cloud “vertical” – so all the businesses presented had that in common. Either they are deployed in the cloud, or they serve customers who are there already and need new solutions to new challenges.
Jason Seats led off the program with a touchstone introduction that places this Techstars Demo Day in context. Seats is the managing director of the Techstars program in Austin, and one of five partners in the new, $150 million Techstars Venture fund. Seats provided the context for Thursday’s event, by harkening back to the early days of Techstars, not that long ago, in 2012. Seats led the program in San Antonio, and ran its first two events. At the time, there were fewer than 100 companies in Techstars’ portfolio worldwide, according to Seats, whereas today there are 550. In three years, Techstars has also grown to running 18 accelerator programs in more than a dozen cities globally. Most significantly, in the aggregate these companies have raised over $1 billion in capital.
(Read more about Seats in this April 2012 Rivard Report story, Pitching the Next SliceHost: Techstars Companies Mentored by Jason Seats.)
“That platform and that foundation is very impressive,” said Seats, “and we’re very proud of where we are.
“The stats we get most excited about are the success rates for the (accelerator) program we have,” said Seats, “and the fact that across those 550 companies, we still have 80% of them alive and kicking and growing.”
We wrote about the Techstars model the other day. The program provides a $118,000 investment in seed funding and a three-month intensive program of focused mentoring and concept-refining – all for a 6% equity stake in the startup. This is not a particularly carnivorous model, and San Antonio’s Techstars Cloud Managing Director Blake Yeager said Techstars goes out of its way to be transparent with the funding and support mechanism.
“Accelerators that either take an unreasonable amount of equity in the company and that don’t provide a reasonable amount of capital in exchange for that – that’s a trap that some accelerators get into,” says Yeager. “Or they can just have really low-value program; not have the right people involved in the network, or coming in and working with the companies (as mentors). Those can be the two biggest traps: taking advantage of companies in terms of how much money they’re offering (versus) the equity stake they’re asking for; or just not providing the value they’re claiming to provide.”
While the ultimate goal of Thursday’s presentation was connecting the 10 polished startups with investors, it also was a chance to showcase the nascent technology sector in San Antonio itself. Rackspace, whose core business is managed cloud computing, was never far from view. As Yeager’s predecessor, Seats said in his opening remarks, Rackspace brought both him and Techstars to San Antonio.
The 10 startup companies had widely differing businesses, with no two alike, though all shared some connection to the cloud. You can learn more about them here.
In their own words:
Appbase: “Appbase is a database service for streaming search and analytics queries.”
Bitfusion: “Bitfusion fusion bring supercomputing performance to applications without source code changes.”
Callinize: “Callinize connects your phone system and CRM so you can build better relationships with customers and make sales easier.”
Card Isle: “Card Isle makes it convenient to send meaningful greeting cards.”
Elasticode: “Elasticode allows you to deploy personalized mobile user experiences in real time.”
Fantasmo Studios: “At Fantasmo, we are building technology to bring dreams into the real world using only a smartphone.”
Knowtify: “The engagement marketing platform that helps software businesses easily and effectively market to their existing customer base.”
Nebulab: “Nebulab simplifies how scientists organize, validate and share their data, increasing efficiency and accelerating scientific discovery.”
Stabilitas: “Stabilitas secures travelers with location specific safety information and a lifeline to help, all through their smartphones.”
Virtkick: “Virtkick gives independent hosting companies the tools they need to compete with big cloud providers.”
As a production, Thursday’s presentations went especially smoothly, despite some initial problems with a bad microphone for the first presenter. Each startup was introduced by a mentor, investor or customer, and then a designated founder told the concise, abbreviated story of the market problem or need his group seeks to solve or meet, with brief profiles of each team's development talent, and to close the sale with watching investors, why they predicted certain success.
The introductions to the teams were almost as compelling as the founders’ presentations. In one case, Luis Martinez, the director of Trinity University’s Center for Innovation and Entrepreneurship, introduced Nebulab, and started making the case for the value of its software before its founder even got on stage. In another case, Craig Murphy, training and consistency manager for Intercontinental Hotel Group flew in from Atlanta to introduce Callinize, and express his satisfaction at being one of their main customers.
Probably the biggest visual impact for the day was Fantasmo Studio’s next-generation gaming virtual reality projection of the mid-'80s Rampage video game characters on to the face of a building in Austin. Gaming is big business, generating $110 billion in revenue in 2015 alone, according to Fantasmo Studio’s founders.
From the fantasy realm to the realm of hard science, Nebulab’s focus is streamlining access to scientific data, from all the silos where it currently resides into a very accessible cloud-based platform.
Card Isle was the other most obvious “real-world” application, striving to present an alternative to the legacy concept of the greeting card, and adapting it to the present-day world. According to their presentation, the $6 billion greeting card industry hasn’t changed much since the Hall brothers first designed the greeting card display for the first Hallmark displays in 1932. Card Isle shares revenue with retailers, and installs kiosks where users can print or pick up cards they’ve customized to the occasion.
Callinize meshes phone and CRM technology to optimize sales performance, taking the guesswork out of how to be a more effective salesperson with a machine learning algorithm that quantifies organization and persistence. The Girl Scouts of America are an early customer, along with the Intercontinental Hotels Group.
The rest of the companies addressed obstacles within the online world: Either customers who download software and never use it, or use it poorly; get overly inundated with emails they never open; can’t figure out which additional applications to offer; or need vastly more computing power that they ordinarily would have access to on a budget, or want the tools of much larger-scaled enterprises at a smaller entry point.
In truth, all 10 of the companies generated positive buzz from Demo Day’s attendees. Attention seemed rapt for the 90 minutes of continuous presentations, and applause for each presenter was strong.
One company, Stabilitas, offered a sophisticated take on traveler security in hotspots worldwide, combining real-time open source data from NGOs with the ability to re-route personnel via early warning systems. All three co-founders were former military, and seemed to be converting their military-specific risk management experience to the business world. At a time when veteran unemployment outpaces civilian, it’s nice to see three talented veterans modeling a post-military business venture.
The “Polish Cowboys” of Virtkick, software developers who moved from Poland to San Antonio after being accepted into the program, wore their trademark cowboy hats and boots that they adopted days after their arrival here. Mirek Wozniak, speaking for the team, said they love bluegrass and Sergio Leone movies, and moved here in early January to take advantage of the Techstars experience. Their favorite part?
“Probably the huge network of mentors who are more than willing to advise fledgling companies like Virtkick, and the amount of support from Techstars Cloud 2015 staff. The team feels as if they did several years’ worth of work during the program, with the whole 90 days packed with mentor meetings and training sessions. It’s an experience every single team member wholeheartedly recommends,” Wozniak said.
The true test of these 10 Techstars companies, though, will be the investment they attract now and whether they transition from startup to business over the next year or two.
“Anyone can have an awesome idea, but it’s about the execution and the team,” says B.J. Dierkes, a senior Linux engineer with TrueAbility, a Techstars Cloud alumnus program from the 2013 session.
Patrick Hogan, co-founder of Callinize, had something similar to say. “I’m impressed with all the companies here,” he said, “It’s an extremely impressive group.
"You can have a really great idea,” he said, “but it still comes down to the cost of customer acquisition and market share. If it costs you $10 to acquire a customer, and you make $5 from them, you’re still robbing Peter to pay Paul.”
Demo Day is an emotional high, said Hogan, “but if you look back on this a year from now, the companies that will have done well are the ones who have been able to figure out the customer acquisition cost.”
*Featured/top image: Marquee at the Aztec Theatre for Techstars Cloud Demo Day. Photo by Lily Casura.