Capital Factory - Austin-based YC Style Incubator | Hacker News Reader

Capital Factory - Austin-based YC Style Incubator

capitalfactory.com

41 pointsjonmc1247 comments

I love Austin as a town and people have that southern hospitality charm. The university and talent pool is great too. However, Austin suffers from the big fish, small pond syndrome. Things are changing slowly but surely, hopefully Capital Factory does well and empowers young entrepreneurs. Josh Baer's OtherInbox is a kick ass product too. But idk, ycom is difficult to reproduce if your intentions are fiscal bound.

In other big cities, finding mentors is a dime a dozen. In Austin, it's a lot more difficult to find that type of leadership which is why so many talented people leave and gravitate toward the coasts I think. The new Mayor seems to be a lot more progressive, he's got a twitter account even. yay!

http://twitter.com/bmccracken

I'd also say that with the economic squeeze taken into account, TX is still relatively shielded. It's a great place to be doing business, and a relaxed low cost lifestyle. I've been seeing a lot of out-of-town plates lately, but we don't spit on you. ;)

Agreed 100%. I've been here for 9 years and while I love this place, I'm considering to move. "Small pond" indeed: 3 out of 4 recruiters who called me within last half year were all looking for RoR coders for Baer's startup (1st mentor in their list), the other Rails shop in town being FiveRuns. This applies pretty much to everything software: the city's tech scene is divided between about 4 well-known "gangs" of execs and entrepreneurs with essentially the same people running the show.

It's true about there being a ton of talent in Austin. The problem is that most of it works for the really big hitters like Intel, Motorola, Qualcomm, AMD, Dell, etc. Most of the entrepreneurial focus seems to be centered around well-paid consulting work.

When Google opened their soon to be closed downtown office, they had a mixer and invited alot the Austin tech community. I went expecting to find a serious startup crowd, but it was largely the same big names you see everywhere in Austin. It was rather disappointing.

I hope that Capital Factory is successful if for no other reason than to give some of us the opportunity to escape our corporate jobs and do something really interesting for a change.

Our intentions are not financial (see the philosophy page). All of the mentors in Capital Factory are doing it because we love working with young entrepreneurs. We've all built and sold companies and even getting a 100x return on $5k won't change our lives.

Putting up some money and getting some equity is analogous to playing poker with dollar bills instead of chips. It increases our emotional attachment and shows that every mentor is really committed.

That's an awfully crass analogy to make.

Huh? How so? I think the poker analogy is healthy because it's a refreshing way for angels to look at deals. An angel telling you that 25k or whatever is risky, but then turns around and drops that much on a Vegas weekend is bullshit and represents a much more lucky than smart investor.

Sorry, I should say that he's not the new mayor... yet :)

Kudos! I love Austin.

The more these YC style company exist the better chances are good startup will get exposure. Who knows the ones PG missed can actually become tomorrow’s big idea.

Nice. Austin is a really nice place to run a company too.

Good weather, not too expensive, educated population.

This is cool, are there any other programs like this out there except Y Combinator and Capital Factory? I would have thought that the success of Y Combinator would launch a lot of copycats

Shotput Ventures is a new one launching in Atlanta this summer. It will follow the YC model to the letter.

http://www.shotputventures.com/

Man, there are getting to be so many of these things. I hadn't even heard about this one myself yet.

We're just getting Shotput off the ground. We're going to do our first class this summer. Hope we do you proud!

From an article about Shotput some time ago:

http://www.bizjournals.com/atlanta/stories/2009/01/05/daily9...

"If we don’t understand the idea or the space, Cummings said, we’re not going to [invest in it.]"

Look forward to a lot of mediocre ideas, then. I'm glad early investors didn't say this about things like the gasoline engine. But of course that effort was probably bootstrapped.

Why is it called Shotput?

Imitation is the sincerest form of something. Maybe you should have gotten a patent.

There are a couple, Techstars [http://www.techstars.com] in Seattle is one that comes to mind. Another is iVentures10 in Chicago [http://www.iventures10.com]

However, YC still has the brand and the experience with this format.

It's actually http://techstars.org/, and they operate out of Boulder, CO. Were you thinking of Founders Co-op?

What do you mean by "YC still has the brand"?

YC has always had the brand image of turning out good, well trained, companies. I remember a post about it a while back, on how YC was like the "Harvard or Stanford" of the seed stage incubators.

I agree that YC being the first to try out this format may give them more experience credit than anyone else. But YC do not control the brand, It does not guarantee success more than it does with let’s say TechStars, if that was the case Google would not be ahead of Yahoo.

You're missing the point.

Brand in this case means that YC:

A) Attracts the best startups. If you're going to gun for one of these, YC is at the top of your list. B) Attracts the best investors. It's in the Valley and historically has actually made some investors a pile of money already. C) Attracts acquisitions.

Past performance doesn't not guarantee future returns, however. It'll be a slow change in brand perception, much like an elite school slowly falling out of favor in favor of a newer school.

I disagree. I don't know how you can say that YC attracts the best startups. All these micro-funding companies are so new to the game that none of them have enough of a track record to make any difference in the real world.

Not only that, but these companies are becoming regionally specific, which means you'll go to the one in your city first before you apply somewhere else, or that's what I would do anyways.

Well, if you're going to argue the case of proximity... then you should consider the relative strengths and weakness of those geographic areas too.

pg has an active role in the local universities (which are world class btw), and is more philanthropical in his approach with nurturing talent and intelligence. lots of people admire him because of he's genuine. and imo, a lot of these other incubators popping up have alternative intentions. i'm not saying that it's wrong for there to be capital motives, but I think pg's approach is what separates him from a lot of the others.

my suggestion is if you're considering any of these programs, then study their boards, compare the application process, and pick the one that fits you best.

Really? Come on.

I'm certainly guessing here, but it seems pretty common sense. Ask 100 embryonic startups who are considering this path which investment entity would be their first choice and what do you think you'd learn? I think you'd learn that (if they'd done their homework) they'd pick the one with the longest track record, the best PR, the biggest demo day, the most competitive program (as measured by application-to-acceptance) and the most founders who got rich. YC wins on all of those fronts.

Even if your regional theory holds (it probably does for a meaningful percentage of startup, but plenty are willing to relocate), wouldn't you assume that the bay area has WAY more qualifying software startups who'd be interest in such things and thus (mathematically) would attract more good ones?

One data point is not enough to dismiss the idea that YC has a better brand name. I would have to agree. Having a better brand name does not mean no other company will ever out do you, it simply means you tend to have a head start out of the gates. Personally, if I had a choice, I'd ally with YC. And I think my perception of them is 90% about the Brand image they present and their track record. That is branding is it not?

Press relations.

One of the big advantages of YC is the notoriety associated with being a YC company. Easier introductions to press, investors, and partners. Notice how much coverage YC companies got on TechCrunch this last round? There's a reason, it's because YC does a great job pre-selecting good companies to showcase to press/investors and they've built up a good reputation on that.

Which in-turn, is now an idea magnet that pulls the best deal flow from around the world. I don't think they are the only ones that are capable of doing this tho.

ycom also seems to be more consumer focused, which is what most of the techblogs cover because it brings eyeballs. consumer exits are often big pay days, but more importantly to me at least — the most fun to work on. B2B is often a drab. lol

i think some of these incubators should not forget the enterprise play either. Austin Ventures had A/V Labs awhile back, but I don't recall much about its success.

Do you think YC get good coverage from TechCrunch because YC companies are better than anyone else?

I'd wager that YC companies are statistically more fund-able or exit-able than other similar stage startups out there. They've been through a round of screening, chosen and mentored by successful entrepreneurs who do it for a living--it's certainly a leg up.

"They've been through a round of screening, chosen and mentored by successful entrepreneurs who do it for a living", so do TechStars companies and others.

Correct. I think we're comparing two different things. I was talking about YC-style seed-stage funding vs other startups. You were talking about YC vs TechStars. Apples and oranges. No disrespect to TechStars, that's just not what I was talking about.

“You were talking about YC vs TechStars. Apples and oranges.” Ah, That is disrespectful to TechStars they are in the same business and it is exactly what we have been talking about, read the thread again.

I’m one founder who has great admiration for YC, but I just don’t think they have the key to startup success. I think this should be clear in all HN readers mind despite the hype around here. Ultimately it will serve the startup world very well that YC get competitors, because no matter their commitment they will not spot all future success.

> I just don’t think they have the key to startup success.

Nobody said that YC had "the key".

They said that YC involvement (1) correlates with startup success and (2) recognized as such.

YC is too small a factor in the market to say that lack of YC involvement has any meaning and no one has said that it does.

You must have misread the comment. He said the two different comparisons were apples and oranges, not YC and TechStars.

May be a great group and a terrific location, but what an awful name.

I like the name. It's in Austin, so lots of stuff around there is called Capital something or other. This takes that trend and makes it punny.

It's better than most of the YC clones' names.

Actually this could be a take off from "Nightmare Factory", a haunted house here in Austin that was around for a few years (Not here anymore - House of Torment and the Horror Haunted House are the two big ones now.) When I saw the name, "Capital Factory", I immediately thought of "Nightmare Factory" anyway, but maybe that's just me! :-)

It seems like a well-designed program, but why are they targeting only 3 selections? Seems like a lot of work for just 3.

We're just doing 3 companies this year because it's the first year and we want to start simple and make sure each company gets lots of attention. We'd like to see it grow to 10 companies in future years.

This is much better than third-rate wannabe programs like iVentures10 and whatnot - all the free services are explicit and from top-tier firms. This is a serious option for people considering YC and TechStars. I'd venture to say that this is superior to LaunchBox, as well.

This is obviously trivial, but why have a "* - required" thing on the application form when every element is required?

The fields are not all required, but the web page itself is certainly bad -- it's black with gray text that has so little contract to the background that I have to "Select All" just to be able to read it. They may be capable of doing great things but I am so turned off by their failure to provide a comfortably readable web page that I question whether or not they can handle the bigger issues.

Thanks for the feedback Owkaye - the current website is just a Typepad blog that we threw up for the launch, but we have a designer doing a custom template for us that should be up there soon. We'll focus on making the text more readable.

It's a Google form that pipes into a spreadsheet. We can't really control the display of the * but its important that they are all marked as required so it won't let you submit the form with a field that's missing.

yea, Austin has quite a tech scene going, affordable city to live in and it's actually quite nice city to live in too. Don't forget Texas BBQ all year round!

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