Capital Factory
Today we go downtown to Capital Factory, a veritable Shangrila for any entrepreneur that comes to Texas. Built to help entrepreneurs find information and funds to help with their business endeavours, it acts as a great social space to meet like-minded people too.
They also have an extensive list of mentors that can help guide you and they’re situated smack in the middle of downtown Austin.
After talking to Ali, one of the coordinators there, it’s obvious why so many people choose to join their programmes, and it leaves me wanting to join a program too! - Ali Syed
Time Stamps:
2:15 - How long Capital Factory has been in existence and what they offer.
4:27 - The investment side of Capital Factory and how they accelerate companies.
7:22 - The average investments that Capital Factory makes and how they help companies find other investors as well.
8:04 - The different types of memberships and how helpful mentors can be.
9:42 - The extent of Capital Factories international presence.
10:38 - How welcoming Texas is to international entrepreneurs.
14:47 - How Capital Factory helps people with the lifestyle change that comes with moving abroad.
16:42 - The differences in business culture and language in America compared to Europe.
17:56 - How failure is accepted and even embraced in American culture.
19:57 - The types of people that are likely to succeed, or not, in America.
21:13 - The number of people that work at Capital Factory.
Resources:
Connect with Kevin Turley: Website
Connect with Sebastian Sauerborn: LinkedIn
Connect with Ali Syed: LinkedIn
Episode Transcript
Episode 9: Capital Factory
I don’t really believe too much in a work-life balance, I think that is, your business is your life and your life is your business and you need to be happy in that.
One of the things that I really love about America, particularly working in America is a sort of eternal optimism. Here, like people don’t see failures as failures they are seeing them as successes because you actually gave something a go.
You’re listening to Move Your Business to the United States with me, your host, Kevin Turley.
Ali: So my name is Ali Syed, I am the international partnerships coordinator here at Capital Factory, and Capital Factory, if I had to go with one, one phrase, we are the center of gravity for entrepreneurship for the state of Texas.
Kevin: Sebastian is taking me downtown to meet the folks at Capital Factory. This is a veritable Shangri-La for any entrepreneur coming to Texas. Because it’s here you find information and funds to help your business endeavor, but more importantly still, you find like minded people, entrepreneurs, just like you.
Ali: Yes, we are smack in the middle of downtown Austin.
Kevin: And I must say, it’s a very impressive building you have here.
Ali: Yes it is. So, our building is very unique, we have three floors on the office side of this building and we’re also attached to a hotel. And we have been trying to convince them for years now, to have us make them the most tech forward hotel in the world, and one day we will succeed. [smiling]
Kevin: Just for people listening, because when we arrived here, we’ve met a number of entrepreneurs and I think you were right Sebastian, that everybody kept saying-
Sebastian: How great Austin is, yeah.
Kevin: Yeah, and there was the other thing that they kept saying-
Sebastian: Oh you got to go to Capital Factory, yeah.
Kevin: Everybody kept talking about this Capital Factory and we didn’t know what and we had visions of some sort of rather grungy and post industrial complex like you have in Hackney or in London and instead we found this absolutely, sort of amazing, sort of high tech building. So, Ali, how many years is the Capital Factory being in existence?
Ali: Yes, so, this physical location that we have, now has existed for seven years and there are four primary things that we host out here. So we are in general open co-working space for any tech company that can apply to, that can apply for that. So we have anywhere from large multinational corporations that work out of our space to the single entrepreneur that’s kind of trying to work. And the goal is to actually have those people in this space so they can intermingle and frankly, create those random occurrences that wouldn’t have normally occurred on the street so-
Kevin: This sounds like music to most entrepreneurs ears, because the whole structure of this enterprise is to create entrepreneurialism between entrepreneurs almost.
Ali: Yes, that is our goal, so we are, you know, the way that we started actually was to focus on making a community hub for check in Austin and as I was mentioning to you earlier, wrapping that, expanding that to the entire state of Texas, to make one connected ecosystem, and we do that in many different ways, so we have a co-working space, but we also do events here. So we host about 1500 tech focus events here in our space every year, and we have about 125 000 people that walk through our space.
Kevin: Let me just get my head around that, how many again?
Ali: About 1500 events and 125 000 people.
Sebastian: Wow, that’s like three events a day, right?
Ali: Yes, at least three events a day.
Kevin: Wow, because one of the things that we did check out on your website and it is- I mean, there is an event after an event after- I mean, and also the things that struck me very much, the variety of the events it’s not just people talking to each other.
Ali: Yes, so we do a wide variety of events, we host hackathons here, we also, actually provide our space for free for a lot of the tech meet-ups here. So, if you are a Javascript developer or, you’re into the Cassandra database or you’re in a digital marketing, we’re actually provide our space to those meet-ups that are regular schedule every month for free so they can come and use our space. And that’s our way to give back to the community.
Kevin: And you’re interested in entrepreneurship, you’re interested in startup, you’re interested in existing companies but you’re also involved in investing in companies that are in Austin or coming to Austin?
Ali: Yeah, so we actually run a world class accelerator program here out in Capital Factory here in Austin and now in Dallas, Houston and San Antonio. That had actually been in existence in, for about ten years, across those ten years we have actually accelerated over 500 companies and currently we have over 250 active investments and some of our success stories are one that I would like to point out is WP Engine so they are a managed WordPress hosting platform they were part of one of our first accelerator classes and now they have grown to over a hundred million dollar company and they just announced at the beginning of this year that they raised over a 250 million dollar round, one of our other successes is a company called Spare Foot which they actually help people find self-storage. So self-storage is a big thing here in the United States because people are moving around and need to put stuff in the places to store it and they actually just recently got bought up by a private equity company for a 150 million dollars, so these were two founders that were in California to call as soon as they just graduated ten years ago they put all their stuff in their car and move down to Austin to be part of our accelerator program and they’re still the CEO and the CTO of the company after this acquisition, so they grew their company from just their car, all the way to a 150 million dollar buy out in 10 years.
Kevin: Sebastian you’re shaking your head and kind of are bemused in disbelief at this -?
Sebastian: No, not disbelief, it’s amazing, it’s a great success story.
Of all things Americans are, we are makers, with our strength and our minds and spirit, we gather, we form and we fashion, makers and shapers and put it togetherers, we start young, finding out early in life what it’s like to feel something grow and take shape beneath our hands. We start young and we stay young, modeling with careful pride the things we expect to endure for ourselves and for others. We build for youth and we build in fun, joining eyes and hands, and brains into knowing teams that bring great dreams to life. [music]
Ali: We run a world class accelerator program here in the same class as Y combinatory or a tech startups that you heard of, we are the most active angel investor in the state of Texas, we wrote about 52 checks last year, we’re on pay stroll right over a hundred investment checks this year, but yes, so we do that and then we help our companies raise an investment for other investors.
Sebastian: So what is the kind of average investment that you’re making?
Ali: Capital Factory, we’re coming into the early to lead stage seed round and our investments are anywhere from a hundred to two hundred fifty thousand dollars, but normally for our companies, we help them go through series A so that means is that we’re never the lead investor and we don’t want to be, we want to find new lead investor and then normally we help our companies raise anywhere from a million to ten million dollar fund.
Kevin: Now, Ali, you talked about accelerator membership, can you just give us some of the practical, I mean, because this is, you have to join Capital Factory, you have to be aligned to join Capital Factory, it’s not for everybody. And I believe that there are probably more people trying to join now and they are being aligned in.
Ali: Yes, so, every year we, through our accelerator program, because we do have a couple of different types of memberships here. So our regular co-working membership actually is also vetted, we do ask that normally that you have to have two members that are already part of Capital Factory have to vouch for you and the goal is, because even with you join here as just a member that you’re paying to just co-work out here, we’re actually give you access to our mentor network.
So there’s about 150 mentors available to you if you are a member and these are people that made WP Engine that made Spare Foot but also were part of companies like Trilogy, were part of companies like Google, Facebook, Amazon, Microsoft, worked with all these individuals and they are mentors over here. So we have them all on our calendar and you can sign up for a half an hour to go talk to them about what they- have them help you. And all of our mentors actually, almost all of them are also investors, and they’re also looking for the next thing. So that’s your way if you’re really looking for that CTO, you are “maybe I should talk to this guy he’s already done this”, maybe he might be able to poach a world class executive and that’s just for our members.
Our accelerator companies who we actually take an equity stake and get access to over 250 mentors, because some of our mentors have said that they only would like to meet accelerator companies we leave that to them, but they get to engage with them and then we have an entire venture associates staff that work with our accelerator companies, not only embracing investment but on pitching, on customer acquisition, on corporate partnerships, on other dynamics, you know expanding abroad which is my forte and then we have investor relations team that works with you that actually raise investment.
Kevin: It sounds too good to be true, almost, now you mentioned about expanding abroad have you got any particular cities in mind?
Ali: Yes, so we’re doing a lot of stuff with Europe right now, so London would be our next venture, so we’re trying to do a major initiative there and unfortunately I can’t talk about it publicly just yet, but after we have that kind of squared away, look forward to big Texas thing happening in London next year, at the beginning of next year.
Kevin: So business in Austin and the Capital Factory in Austin is a very outward looking international entity?
Ali: Yes, so, you know, it’s Texas right? So Texas, I don’t know if I mentioned just yet, but we are the tenth largest economy in the world and part of that is international trade right, so we, our companies don’t just do business in the United States they do business all over the world and they are international companies that are set up here. So, as we’re setting up across the state and making a Texas wide platform that includes all of the historic partnerships that Texas has had.
Kevin: A more general question Ali, but I mean, how welcoming do you find Austin to international companies, but more, particularly international entrepreneurs who want to come to the United States, who want to come to Austin in particular, to set up, to live their dreams of making successful things in the United States?
Ali: I think there’s a logistical and financial aspect of it, and I think there is also a life style aspect of it. So, if you look at any metrics, you know, for the past three years, Austin, Texas has been rated the Number 1 city to live in and move to in the United States, we have about 150 people, last year I checked moved here every day, there is a reason why they are doing that, because it is a great place to live.
So, quality of life, Austin has world class universities here so obviously we have the University of Texas in Austin which is one of the best universities in the world, but we also have twenty other higher education institutions in the city. And, also we have one of the best public school systems in the United States as well. And some of the most forward looking public school systems, one of our public school systems, is actually switched to a completely electronic platform, so when you go in you don’t get a textbook, all students get issued an iPad and that’s where they do their assignments that’s where they get their textbooks, so there’s a lot of interesting things happening but from a company standpoint is also a great place to be, because the costs are so much cheaper.
So, normally when you’re setting up here, you know, you’re going to pay a third to half the cost that you would be in California or New York or Massachusetts, it’s because real estate is cheaper here, labor is cheaper here, not that you’re paying people, I guess you might be paying people less, but the quality of life for your employees is a lot better, because for the same amount of money that they might be making in New York, you know, they’re living in an apartment, over here they can afford their own house, they can be a single parent income family, they can have a better quality of life, their kids can have access to more resources.
Kevin: Just as you saying is, Ali, I sort of envisioned it, by five to ten years time, half of America will move here and there will be a just as overheated as San Francisco, Los Angeles or New York.
Ali: Oh, we have a lot of space here in Texas so- [smiling] so those other places are pretty saturated and they don’t have a place to grow. I think 80 percent of Texas is still undeveloped, we’re all land, we still have a lot of space.
Kevin: So we don’t need to get worried but we do need to get in quick before things are-
Ali: Yes. You should come here quickly. I don’t think Texas will ever be more expensive than the Silicon Valley or New York, but the sheer amount of, you know, just real estate and land that we have, and yes, prices will go up and accordingly incomes will go up, but the quality of life and what you’ll be able to get over here, will always be more, it’s just because we have more space to grow and we have more share land.
Sebastian: Let me ask you something, has the recent discussion about Amazon having a second headquarter here, increased demand, have you seen something, more demand, more request?
Ali: Austin has kind of been “meh” on Amazon, it’s because we already have a ton of other people moving here, [smiling] so we’re just like, here if you come, I think even our actual package the Chamber will have to talk about it, actually not included a lot of incentives as other cities were stating it, because we are growing quite rapidly, so if they come here we’d love to have them, to be part of our community, we’d like to integrate them, and we would like to integrate them into Austin, not have them shape what Austin is.
Kevin: Hi, you’re listening to Move Your Business to the United States, just a quick word from our sponsors, Mount Bonnell Advisors. The people have been advising clients in moving states for years. For all your needs, both business and practical, head over to mtbonnell.com to find out more. Thanks for listening. [music]
Kevin: We’ve been speaking to some experts who have come and lived here and both people from within the United States and from Europe and universally they talk very well of the city and the lifestyle it offers. Is that something that Capital Factory also sort of explores with people, because one of the big issues that we have with entrepreneurs coming from Europe is not just moving business to business, in fact that might be the easy but, it’s moving families, it’s moving continents, it’s moving cultures, sometimes linguistics, you know, is that something Capital Factory is aware of to help people with?
Ali: Yes, as I like to call, we actually have our own international program, called Touch Down Austin where we help international entrepreneurs and companies, international being outside the United States, you know, not international to the people, I mean me sitting here in America, as it is international to someone in the UK. I was like to point that out. But we like to say we’re your first friend here in the United States, so like I have actually talked to people about school districts I’ve helped them find their first house, I’ve helped them figure out how to buy a car, you know, where are the dry cleaners, you know, where do you get laundered where are the best breakfast tacos in town [smiling]
Kevin: But these things are important for them to know.
Ali: Yes, they are definitely important because that’s part of becoming integrated into a new system and, and we actually also legitimately have conversations with these entrepreneurs about the fact that, do they actually want to move here, because you know, you still have a company to run back home, it might be more beneficial to find someone here that can run it, obviously, that’s a shrine on your family.
Do you really want to move them over here? Some people have legitimate ideas, for some people it’s just like, because they are the attached CEO and it’s like “I have to do it”, and it’s- you know, we want to have those conversations with you, to help you make sure that you- not only will you make the best decision for your business but you’ll make the best decision for your family, because inevitably that will affect your business. So if your family is not happy, your business is probably not going to be happy either.
Kevin: I think that’s a statement, you’ve said a few times, Sebastian.
Sebastian: Oh yeah, definitely, I mean, I have myself, you know, moved my family over here, and it’s incredibly important to think about these things actually in advance, before you do it and prepare properly, because you can have a great idea about moving here, but if your wife is against it, or your partner, you know, you’ll have a lot of problems so that’s not worth it probably then-
Kevin: Can I just ask Ali this as well, in terms of business culture, because one of the things that we’ve picked up on is that, we the English and the Americans speak a common language but sometimes we mean different things. And one of the concepts that people we’ve been talking to people about, is the American ideal of excellence, maybe different from the European idea of excellence. I mean, do you know what I’m talking about?
Ali: Yeah, we definitely do that, so we do a lot of translation on that front as well, so I think the main thing that comes down to, is how you present your company and how do you pitch here, there are different criteria and different things that you look for. You know as I said, I travel abroad a lot, I’ve met with a lot of international companies and in Europe, I’m going to generalize a little bit, does not hold true for everywhere, but you have to do that when you’re making these types of statements but there is much more bigger emphasis on your education, on your team, on maybe the core technology of what you’re doing.
Over here in America, there is a lot less focus on that and more, it’s like, what is the problem, and what you’re solving. They don’t care about who is making it, they don’t care if it’s high school student, actually, I’ll tell you, we gave a hundred thousand dollars, to an eighteen year old kid who was a high school dropout, and now it’s three years since then, now his clients are the Department of Defense for the United States, Lufthansa, he goes and talks to Four Star Generals, he’s talking to Mercedes Benz, he goes up there and they are his clients, and he has hired four PHDs that work under him.
Kevin: That’s an incredible story. It’s one of the things that we come up is the concept of business failure in America being very differently perceived than in Europe. Do you know what I’m talking about?
Ali: Yeah, so actually the way I would say is, our director have said that multiple times, sometimes is accept our company and our accelerator, even though, pardon my language, the idea is shit, is because they love the team, and they’re like, we want them to fail here, so then, because they will eventually get to something that will become vague.
Sebastian: That’s amazing-
Ali: We want them to fail here so then we can help them through that failure and help them find the thing that’s going to be super successful. And that’s very much part of American culture. Failure is much more acceptable here, it can sometimes be a badge of honor.
Kevin: I’ve heard that, which is very encouraging for most entrepreneurs, because you probably know that in Britain when you fail, then you quietly retire from the public life for the rest of your life and probably assume a different name.
Ali: Well, and the thing with that is, as failure, is not always your issue either, right? So there are a bunch of social networks before our Facebook. There’s many things that are included in failure, and failure doesn’t mean the world ends, failure means you start doing something else, you learn from it, and you know, we tell our kids that all the time, you know. That’s why we tell them to practice over and over again, why, because, if someone could just do it one time and learn it, then you wouldn’t-
Sebastian: Then it’s not worth doing-
Ali: Failure is part of human life and that’s how you know if you look at a very early stage, you know, a kid how does it learn to walk. It’s not like he just stands up and starts walking, you know, he falls down, and then, what is everybody doing, they’re not like, “bad child you cannot learn to walk”, like, “get up”, you know, what is- you just wobbling around, you’re actually encouraging that child. You actually, they take their first step and fall down, it’s not a bad thing you’re like “yeah, that’s great, keep on doing”, you know and do that, and we’ve kind of moved away, so we still have that type of attitude later on, in terms of failure, it’s like, I don’t think it’s all rosy here, obviously, you can have massive failures.
Kevin: You’ve dealt with a number of entrepreneurs coming from Europe over the years, and you almost see a certain commonality of those that succeed and those that don’t make it at all, those that never make it as far as Austin, and they’re talking about it and- are you able to sort of say, I mean we’re talking generalizations but are there certain types of people who succeed better in Austin or in other states from Europe and others that don’t?
Ali: I think, and this is something for you as entrepreneurs as well, is the ability to change. A lot of people are very attached to their companies, because, obviously, it’s their baby and they’ve been working on it for a while, but, willing to take input from outside sources, sharing your ideas with many people as possible and being able to change your idea, which is the whole point of a startup, right, you’re supposed to pivot really fast. You know, you don’t want to be so committed to an idea that you have, you want to come in and I think that’s for any new market, you want to come in with a blank slate. Yes, you have some ideas and how you want to go about it, but be open, because what happens is that, when we’re helping entrepreneurs, they are coming with a specific idea, but one month later, all of that has changed, which is great, and then, so we start with a really big funnel and we start narrowing it down, so by the end of three months you really know how you need to be in the United States, because you’re going to come with a lot of misconceptions, a lot of ideas that you have, because frankly, that’s part of, for example, if I try to go to Europe, that would be the same thing. But the great thing about us, is you know, if I was going to Europe I would probably be like, let me call my friend who lives in London and ask him how do I go about doing things, we are going to be that friend on this side, where we can properly- give you the proper guidance.
Kevin: Okay, just help me out then, how many people actually work in this Capital Factory?
Ali: Yes, so, we have about 2400 members that work at our facility here in Austin, Texas, and we have, I think about 500 members now that work at our facility in Dallas, Texas, and that’s scheduled to keep on going, hopefully we are going to be adding a new floor soon, so we’ll be having a lot more people.
Kevin: Just remind me how many floors have you got at the moment?
Ali: So we have three floors that equates to about 80 000 square feet here which I believe is around four or five thousand square meters. We have about 20 000 square feet up in the Dallas area, so about 100k.
Kevin: And how many staff do you have?
Ali: So we are over 60 staff now.
Kevin: Sixty staff, and then, and the other thing which I think you’re hinting on is that people come and are very glad to make Capital Factory their first port of call, but even when they’ve made it in Austin and gone on to great things, there is still part of this extended family.
Ali: Yes, so we don’t ever- so we say our community, so when you come to our community you’re kind of stuck with us for life. So we’ll find a way to intertwine with you when you’re make it big we want you to come back as a mentor we want you to have you come back as an investor. We want you to teach the other entrepreneurs and help them avoid the mistakes that you made during your journey and then maybe find your next thing as well. So we are a holistic ecosystem, so you know, our ideal goal is, that you come here for an event, and you get really excited about startups and you start working on an idea, and you’re like “hey, I need a space to work out where other people are doing similar things”, so you start co-working here and then we can help you find your cofounder and then you have a company and then you apply to an accelerator, and then we help you through that journey and that eventually becomes a big company that you get exit of it, and now you are a successful entrepreneur. And then we rope you back into the ecosystem and say, “okay now it’s your time to give back”.
Kevin: Wow, when can I join? [smiling]
Ali: Do you have a checkbook ready? [smiling]
Kevin: Ali, we’re really, really grateful for your time, and it’s a very impressive venture you got here and we’re looking forward to many entrepreneurial discussions with you and your team, and with entrepreneurs coming over from Europe and meeting you and your team here. Thanks very much.
Ali: Amazing, thank you.
[music] Next time on Move Your Business to the United States.
Andy Jones: It’s a city, but it’s a small city, very artistic, music, but you know, there’s entrepreneurs there as well, not that many people have a bad word to say about it, and it’s just seen a bit “yeah, okay, good play” you know, so that’s how I look Austin.
Kevin: You’ve been listening to Move Your Business to the United States with me Kevin Turley. A huge thanks to my producer Emmett Glynn who produces this podcast for Mount Bonnell Media. To find out more, go to mtbonnell.com and remember, ‘Dream big, dream America’.
