For a handful of promising, cloud-based startup companies, today is D-Day. Demo Day, that is. The grand finale of the TechStars Cloud program in San Antonio began this morning at 9:30 in the Empire Theater. For twelve teams hoping to make their big break after participating in TechStars, Demo Day signifies the culmination of months or years of work.
TechStars, an international and highly selective startup accelerator, provides startup companies with three months of intensive mentorship and guidance, $18,000 in seed funding, an optional $100,000 convertible debt note, and the opportunity to pitch their idea to angel investors and venture capitalists at Demo Day. Most of the new ventures have raised a significant percentage of their capital needs.
Jason Seats is the managing director of the TechStars Cloud. Home to the only cloud-themed TechStars program, San Antonio was added to the list of TechStars cities last year, joining Boston, Boulder, Chicago, New York City, Seattle, and London.
Seats cofounded Slicehost, a hosting and cloud computing company, with Matt Tanase in 2006. Two years later, Rackspace bought the fledgling company for millions. No stranger to the stresses, demands, and gambles that come along with building a tech company from ground up, Seats mentors classes of TechStars Cloud teams, along with other familiar tech-world names like Pat Condon of Rackspace, Twilio founder and CEO Jeff Lawson, Brad Feld of the Foundry Group, SoftLayer CSO George Karidis, StillSecure Founder and CEO Rajat Bhargava, and dozens more.
“We take our mentor relationships pretty seriously,” Seats said.
Serving as a TechStars mentor is a volunteer position, but one that requires a significant commitment of time and energy during the three months of the program. As life returns to a more regular and less frenetic pace post-Demo Day, many mentors and companies remain in contact.
“The best case scenario, and this happens often, is that there are deep relationships formed between companies and mentors, companies and investors,” he said. “It’s not unusual for there to be lifelong relationships between mentors and teams.”
John Mosher manages the Cloud Power Fund, which raised $2.5 million last year from 25 mostly local investors. The Fund invested in 10 of the 11 TechStars teams last year and this year has raised $4 million, a part of which served to underwrite the teams at the outset.
Mosher explained an advantage to the TechStars program from his perspective as an investor. “These guys (the TechStars companies) arrived in January they’re here through the middle of April, with many staying on past that to the end of the month. “During that time period, it’s an opportunity [for investors] to see them, hear them, and have long discussions about what they’re doing. That is unusual.”Most angel investors and venture capitalists, he went on to say, hear a five to 10 minute pitch, engage in a bit of Q&A, and are then asked to make a decision.
“A program where they’re coming in and you’re acting as a mentor, helping to advise them in their approach to business, participating in discussions with other mentors, getting to hear and think about them over an extended period of time is pretty unique,” he said. “I really find that a compelling proposition.”
When it comes down to the dollars and cents, strong and informed relationships between investors and companies benefit both parties.
“My partner Pete Selig and I try to spend time with each of the teams, understanding their business model and their approach,” Mosher said.
The decision to invest, informed by this “getting to know you” period, is also somewhat driven by the preferences of other investors. “The fund makes an initial commitment to the companies that we’re interested in, but because there are lots of other angel investors out here, we don’t always get what we want.” Mosher explained that being the sole investor in any company is not in the best interest of the Fund. “So we actively try to get the companies to go raise from others as well.”
Cloud Power invested $550,000 in Vidmaker, one of the companies from the first TechStars class in San Antonio.
“When we came into TechStars last year we were in a very, very early stage. We knew the technology that we wanted to build, and we spent about a year building it, but we didn’t know very much about how to run a tech company.” Dale Emmons of Vidmaker, a collaborative, online, video creation tool, is back in San Antonio today, just over one year after he and cofounders Ryan Bolyard and Yuri Zapuchlak pitched Vidmaker at the city’s first TechStars Cloud Demo Day.
The Vidmaker team’s time at TechStars prepared with them valuable skills, tools, and connections, not to mention a significant infusion of capital. “Our team is completely technical; we’re all engineers,” explained Emmons. “TechStars was incredibly helpful in … giving us exposure to a lot of really experienced people who have run or been involved with large tech companies.” As he put it, their time in San Antonio gave the Vidmaker cofounders “the type of experience you couldn’t get in business school.”
Today, Vidmaker is adding names to the waitlist for beta invitations. The company, which has grown from three to six full-time employees, expects the beta site to launch at a near but yet undisclosed date.
Seats pointed out a few differences between the first TechStars class in 2012. Noting the neutrality of his observations, he elaborated: “The teams this year on the whole are further along in terms of having product developed last year.… A lot more of the teams came in with built products, versus teams last year that came in more in the idea phase.”
Diversity also increased in the second class, with female representation among the teams and three international companies hailing from Mexico, Great Britain, and Russia/Israel.
“This year we have women founders and pretty much every ethnicity represented. Something about that, from a cultural standpoint, makes the group feel really rounded,” said Seats, “not to say that it was negative last year. It’s great to see people from even more diverse backgrounds in TechStars.”
UPDATED: Meet the Newest Companies in the TechStar Cloud
Cloud Options allows you to pre-book future cloud usage, securing lower prices on payment terms that suit you. We remove common irritations like forced use of credit cards and advanced payment for usage discounts. Cloud customers can now accurately budget for planned usage. (Description from TechStars.)
“The cloud ecosystem has evolved,” said Cloud Options CEO Sarah Cochrane, “and its now possible to meter and compare cloud providers.” Comparing the cloud to more familiar commodities like oil or wheat, Cochrane explained that it is already larger than UK power and world sugar, and rapidly approaching the size of US power and global wheat.
Conspire analyzes email data to understand the strength of your connections. Then, when you share networks with your close contacts, Conspire finds the strongest path in your extended network to reach anyone you need to talk to. (Description from TechStars.)
Two Stanford computer science graduates created Conspire to leverage the power of email and social networks, and already have seen impressive results. “With just 300 users, we have (more than) 1.7 million people reachable in our network.”
DataRobot is an app for building the most accurate predictive models. A “model search engine” that finds the best possible modeling algorithm for a given modeling problem. (Description from TechStars.)
Drifty makes cloud-based HTML5 development tools that let anyone easily create cross-platform mobile apps and websites. Current products: Codiqa and Jetstrap. (Description from TechStars.)
Nick Longo, of Geekdom and Rackspace, served as lead mentor for Drifty. He conveyed his pride in the Drifty team for making two complementary products (one for web and one for mobile) that allow their customers to create high quality websites. “We aren’t building tools for hardcore developers,” Cofounder Ben Sperry said. “We are creating more developers by building tools for everyone.”
Good.Co helps people who aspire for greater meaning in their careers. We help users discover their unique personality mix, see how they fit with teams/peers, thrive in their current job or find a better fit. (Description from TechStars.)
“Almost half of all new hires won’t last more than 18 months specifically due to bad cultural fit,” said Good.Co cofounder Samar Birwadker. The company seeks to address that problem in the simplest and most effective manner possible. Their 15-question quiz provides meaningful, actionable data. “We’re using all the scientific research and building something that’s a lot more relevant and appropriate for the modern workplace.”
ParLevel provides intelligent solutions for the vending industry. With our universal devices and powerful web-based management system, we give vending machine operators full control of their business to maximize their profits. (Description from TechStars.)
ParLevel cofounder Lusi Pabalo Gonzalez described his company as offering “an integrated hardware and software solution that will set the standard in the vending industry.” ParLevel reduces inventory waste, cuts service time in half, and dramatically increases profits. With only 5% of 5.5 million vending machines in the US connected to a remote management system, the market is huge.
Postmaster is a SaaS API for shipping that makes integration with UPS, FEDEX, and USPS easy. We make it simple for e-commerce businesses to integrate a robust logistical pipeline that saves them time and money on shipping. (Description from TechStars.)
Working with regional carriers around the country to streamline shipping and maximize cost efficiency, Postmaster cofounder Jesse Lovelace stated, “A business could go from spending $30 on a package to $18 on a package.”
With the Skit! app, anyone can use their latest photos, Facebook friends, or quick drawings to share an impressive animated story. (Description from TechStars.)
An interactive, intuitive, video creation program, Skit! integrates existing social media outlets like Facebook to facilitate collaboration. Users’ finished creations are added to the “story cloud,” which the team describes as “an ever growing library of user-generated, constantly evolving stories.” Options for monetizing the service include product placement and paid premium content.
Threat Stack is a security platform that provides a simple and affordable way for businesses to monitor their computers and networks for threats and respond to incidents. (Description from TechStars.)
Threat Stack boasts an incredibly comprehensive yet user-friendly interface for monitoring internet security threats. “When you view an alert from our console you can play this information back so you can see what the attacker did to the system before and after the compromise was detected,” explained cofounder Jason Meller.
TrueAbility is a technical assessment tool that allows IT professionals to demonstrate their skills in a simulated environment. (Description from TechStars.)
TrueAbility, a local company, facilitates the assessment and hiring of IT professionals, and, as cofounder Luke Owen explained, “can also help companies find candidates that are not even on the job market … through competitive skills based contests on our platform that are fun, engaging, and compelling.” One such contest was Linux Showdown, launched at SXSW last month. True Ability sourced 540 high value Linux admin leads from the event.
ZeroVM is the world’s first cloud hypervisor. ZeroVM advances virtualization with three game-changing concepts: process level virtualization, converged cloud storage plus compute, and hyper-elasticity. (Description from TechStars.)
ZeroVM cofounder Camuel Gilyadov began by defining a terms that might be unfamiliar to the untrained ear: Hypervisor. “A hypervisor is software that allows one computer to act like many, while a cloud allows many computers to act like one.” Providing the world’s first technology of this kind, ZeroVM is a company self-described as five geeks with Russian accents.
Outsourcing is broken. It’s risky, painful, and most projects fail. Ziptask is designed from the ground up as a virtual project manager for reliable outsourced work. (Description from TechStars.)
Mentor Michael Girdley introduced Ziptask, saying, “These were guys who I saw taking something in the world today that we all accept as broken and having the insight to really say, ‘Here’s how we can address that.’” Ziptask separates the customer from the messiness of outsourcing.
Miriam Sitz works for Accion Texas Inc., the nation’s largest non-profit microlender. A graduate of Trinity University, she blogs on Miriam210.com and sells handmade goods on TinderboxGoods.com. Follow her on Twitter at @miriamsitz. [Click here for more stories from Miriam Sitz on the Rivard Report.]