Monthly Archives: December 2012

The Birth of the Dallas Startup Eco-System

Have you ever wondered what it would take to build a startup ecosystem in your community? You might be surprised at how easy it is to build a robust community of entrepreneurs in a relatively short period of time. My story covers the years between 2005 and 2012:

Several months ago I met Derek Holt, Managing Director of Startup America and Trey Bowles, Texas Chair for Startup America for lunch. We spent the next hour talking about the history of the Dallas startup scene and by the time he finished his salad Derek asked me if I would be willing to retell the story at the Startup America board meeting in December. I agreed and put together the following presentation:

Direct link HERE. Without narration the presentation won’t mean much to most of you, but so many of you have asked me to share my ‘slides’ I decided I better post something sooner than later. In the coming weeks I will narrate the presentation and create a video. Through the presentation I attempt to give a brief and incomplete history of the Dallas Startup Scene from my perspective.

My story begins in 2005 with the creation of the Texas Startup Blog. Over several years I wrote more than 4,000 posts sharing my startup experience and the experience of other entrepreneurs. I think I began writing about startups because I didn’t really know anyone in Dallas who I could talk to about startups. Interestingly hundreds of entrepreneurs or would be entrepreneurs reached out to me causing me to realize there wasn’t a dearth of startup of folks – but a dearth of venues to facilitate the creation of a startup ecosystem. Dallas needed a way to interconnect these entrepreneurs – knowing me wasn’t going to help them very much – but knowing each other might be huge.

In early 2006 I convinced a bunch of the people I met through the blog to help me coordinate an un-conference called Barcamp. The idea was to bring the entrepreneurs who reached out to me via the blog into a single room so they could connect to one another. Many of the connections made in 2006 resulted in the creation of other events, venues and organizations that became vital pieces of the startup eco-system we enjoy today. Over the next couple of years Dallas hosted several other Barcamps, PitchCamps and DemoCamps, but I was still frustrated with the lack of regular interaction with local entrepreneurs.

By the summer of 2008 my business partner, Scott Ryan, and I decided to begin hosting a monthly startup happy hour for entrepreneurs. We decided to provide the venue and the beer (224 kegs to date) to see if anyone would show up. Since then we have hosted 54 events for more than 5,000 local entrepreneurs (BTW we still host them). These regular events helped strengthen the connections we all made at the bigger events like Barcamp and SXSW. Many of us met business partners at the events. In the presentation I tell a few of these stories.

By 2009 we were all sick of Barcamps, but through David Cohen of TechStars I met Andrew Hyde who came up with the idea of a Startup Weekend. By October we had hosted the first Startup Weekend in Dallas and over the years six more have been held all over town.

The next part of the presentation covers the creation of CoHabitat and Tech Wildcatters and the part they have played in the creation of LOTS of local startups. If you have any stories you’d like for me to include in the presentation or corrections – please get them to me before January 1st (I am planning to start working on the video shortly after the new year).

Is there a Series A Crunch?

There is a LOT of discussion about a so-called “Series A crunch“: startups who receive seed or angel investment not being able to raise their first institutional round of financing. I would argue there really ISN’T a Series A Crunch, but instead a proliferation of seed and angel deals and this is a GOOD thing. First lets look at the numbers (via CNN, CB Insights):

No. of Deals   2009   2010   2011   2012 ytd
Seed/Angel      472     770     1064  1747
Series A             418     515       703    688

From 2009 to present there has been a small increase in Series A deals, but a HUGE increase in seed/angel deals. The advent of the cloud and agile software development techniques mean that a lot of startups can get to their MVP (minimum viable product) without raising a Series A. With a small amount of angel or seed funding a company can build and launch their product AND get user feedback very quickly.

So is the increase in seed and angel investments relative to Series A investments a bad thing? First, I would argue it is great news for entrepreneurs because it gives them the ability fail faster, more frequently with less risk. If you are lucky enough to get a Series A investment it can take you three to four years to fail – this means an entrepreneur is lucky if she gets three or four times at ‘bat’ in her career. The proliferation of seed and angel rounds opens up the possibility of several more times at bat. Second, I would also argue that it is great news for investors because it creates a much larger pool of entrepreneurs with experience – eventually the pool the increased angel and seed rounds are creating will lead to an increase in Series A deals – its just going to take some time.

Don’t worry about the Series A crunch, instead celebrate the explosion in early stage deals.