austin technology incubatorNew Strategies

for the 21st Century Incubator

Presented by:

Erin DefosseFormer Director

Austin Technology Incubator

REV XXXX

Texas: a US Economic Powerhouse

• Texas recently named #1 state to do business in the US– Emerging Technology Fund to drive high tech startups

• Texas is the #1 exporting state with $129 billion in exports

• Texas is the 8th largest economy in the world• Texas is the #2 state in high tech

– High tech sector employs over half a million workers– Generates near 1/3 of all export revenue

• Texas has 32% lower tax burden than the US national average– No state income tax

Austin: “Silicon Hills”

Austin is one of the Major Technology Hubs in North America

• Austin is the #1 “wired” city in the US (Forrester Research - 2005)• Austin is the #3 wireless city in the US (Intel - 2005)• “Silicon Hills”: home to many headquarters* and design centers of

excellence for all major global semiconductor companies– AMD**, Applied Materials, Arm, Cirrus Logic*, Freescale*, IBM, Intel,

Marvel, QUALCOMM, Samsung, SigmaTel*, Silicon Labs*, Texas Instruments, etc.

• Home to a multitude of major software and hardware companies– Dell Computer*, IBM/Tivoli, Apple, Cisco, Vignette*, BMC, Nokia,

Oracle, Sun, Trilogy*, National Instruments*, Motive*, Motorola, etc.

• Home to The University of Texas at Austin – one of the largest universities in the United States

Austin Technology Incubator

• Founded in 1989 as a program of the IC2 Institute at The University of Texas at Austin

• Non-Profit Business Model• 2800 square meter facility• ~ 20 Companies

ATI’s Results to Date

• >160 graduate companies

• >$750 million in investment capital raised

• 4 Initial Public Offerings on NASDAQ

• ~25 acquisitions

• ~35 independent, profitable companies

• >$1.5 billion in annual revenues

• >10,000 jobs created by ATI companies

Austin’s Evolution Since 1989

• University and State Government Town

• Few technology based startups

• Few venture capital sources

• Immature support ecosystem

• No developed technology clusters

• Regionally focused economy

• Diversified economy with large tech presence

• Technology startups are commonplace

• At times received >50% of all venture capital invested in Texas

• Well developed support ecosystem

• Several developed technology clusters

• Increasingly globally focused economy

1989 2009

Austin is now the incubator!

The 21st century incubator model must reflect this new reality!

Value to today’s entrepreneur

Incubator

Start-up infrastructure support

Market Making

Sector Specific Acceleration (clean energy, wireless)

Example services offered to entrepreneurs

Office space

Professional services facilitation

General capital networks

Business advice

High-touch coaching & mentoring

“Virtual Board”

Target capital matchmaking

University resources

Access to “chokepoint” technologies, key customers

Time1989

From Incubator to Accelerator and Beyond

Sector Specific Acceleration: the New Model for ATI

• Sector focused accelerators led by industry experts• “High touch” coaching and mentoring• Establish corporate partnerships with global reach• Factor global customer strategy into business plan

Wireless

CleanTech

IT

Life SciencesATI

Sector Specific Coaching and Mentoring

• Structured, not informal

• Focused on business strategy, not tactical fundamentals

• Industry experienced incubator staff

• Advisory Board of industry experts

• Board level accountability with companies

Structured Coaching and Mentoring Process

Screen

VetInternally

VetExternally

Set Milestones

ReviewAdmit into ATIGraduate or Leave ATI

Industry Sector Focused Advisory Board

ATI representative on Company Board

Up to 3 years

Quarterly Reviews

The Sector FocusedAdvisory Board

• Current or retired executives with significant experience in the sector– Business leaders, venture capitalists, technologists

• No compensation from incubator• Screen applicants and review company

performance• Appoint representative to the Company’s Board

Market Making, the Next Phase of Value from ATI

Entrepreneurs

Significant need for test resources, customer pull

Access to test facilities, key early adopter customer

Novel, targeted technologies/solutions

Looking for new clean technologies to further its mandate to offer green choices to customers

Conclusion: the Incubator must Evolve to Provide more Value

• Incubators in innovation centers like Austin must redefine their value proposition if they are to stay relevant in the marketplace– Develop industry sectors practices

– Implement high touch coaching and mentoring

– Engage in market making activities to accelerate the success of startups

Contact Information

Erin Defosse

erin@defosse.org

+1 (512) 799-8797

austin technology incubator