#StartupsEverywhere: Austin, TX

#StartupsEverywhere Profile: Joshua Baer, Founder and CEO of Capital Factory


This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity

Austin has rapidly transformed Central Texas into one of the world’s foremost technology and innovation regions. This week, we talked to Joshua Baer of Capital Factory, who cites the city’s community-minded entrepreneurs and the active involvement of the University of Texas as inputs to the ecosystem’s growth.

Can you tell us more about what your company does?

Capital Factory is the center of gravity for entrepreneurs in Texas, the number one startup state in the U.S. We meet the best entrepreneurs in Texas and introduce them to their first investors, employees, mentors, and customers. We’ve also been the most active investor in Texas since 2013.

What’s the most exciting thing that has happened for Austin's startup scene in the past year

Although 2018 has just begun, I have a feeling this will be the best year yet. We’ve already seen multiple exits and 9 figure funding initiatives throughout our city. WPEngine, one of Capital Factory’s earliest investments, received a $250 million investment from Silver Lake. Main Street Hub, another prominent late-stage startup born in Austin, was also acquired by GoDaddy for $125 million this year. These are just two examples of the incredible startups and companies that Austin entrepreneurs produce.

What makes Austin an ideal place to start a company? What is the biggest challenge you face in Austin?

Austin is a thriving ecosystem founded on the simple idea of collaboration. Austin is home to countless investors, entrepreneurs, and digital talent that is always looking to innovate and create. We consistently hold a top spot on any list of the “Top Cities in America” or “Top Cities to Start a Business in.” We are a progressive city with a relaxed lifestyle and a hustle that allows anyone to quit their job and become an entrepreneur.

Like any thriving city, Austin's most significant challenge for entrepreneurs is our need to invest in sustainable infrastructure. With more than 100 people moving here every day, we need to make sure that everyone has an affordable place to live, a tolerable commute, and a way to get to work on time.

I’m encouraged by Austin’s tech leaders coming together to solve these problems with innovation and community first ideas such as autonomous vehicles, CodeNEXT housing code, and affordable housing initiatives.


What industries have historically thrived in Austin? How has this shaped the startup ecosystem there?

As both the state capitol and the home to Texas’ largest university, Austin has historically been home to leaders and free thinkers. As Texas’ leading innovation hub, we have now become an example of how innovation can impact policy and drive positive change.

Austin started off as a semiconductor town but has recently transitioned into a SaaS city. We’re ever evolving, and I’m excited to see what happens next.

What are some of the inputs that have helped your ecosystem grow?

Every great startup ecosystem needs a great stream of talent, and Austin is no exception. We’re home to many large corporate tech companies like Dell, IBM, and 3M, which have all attracted awesome talent to our city. We’ve also seen that this talent often creates their own companies. If you talk to a few of our entrepreneurs, you’ll find that most of them come from larger corporations like these.

We’re also a very collaborative community. One of the reasons I wanted to create Capital Factory is to make those connections and build collaboration.

Are there specific public policies or government initiatives that have enabled startup growth in Austin?

Austin’s investment in the University of Texas at Austin has spurred the creation of many tech startups. Take the class I teach at UT for example, called Longhorn Startup. This program was created to foster startup innovation by helping students build scalable tech companies – and it’s open to any student from any college. UT’s motto is “what starts here changes the world,” and one of the most effective ways of changing the world is innovation through startups.

Austin also has a number of innovative public sector initiatives going on right now. In the mobility space, there's a big focus on our city's shared, electric, autonomous mobility future. We're already known as the Kitty Hawk of self-driving cars, and I think the city's efforts have the potential to position us as a leader in this space.

I also helped found Austin Tech Alliance, a nonpartisan nonprofit founded to promote civic engagement in Austin’s tech sector. Our focus is on educating the tech grassroots on policies that impact them, advocating for tech-forward solutions to community challenges, and activating the tech sector to speak up, participate, and vote. Company members of ATA include a number of leaders in Austin’s tech sector – and a lot of startups. This effort helps to bridge divides between our community's public sector and our innovation economy.


How involved are your government representatives in the Austin startup space?

Our local elected officials know that the Austin startup scene is a massive asset to the community. We are continually hosting the Mayor, council members, and legislatures in our space, as they seek out authentic interactions with startup founders.

This even extends to the defense department. Back in 2016, we hosted the 25th United States Secretary of Defense, Ash Carter for the announcement of a DIUx outpost at Capital Factory. We also hosted Eric Fanning, the 22nd Secretary of the Army, in 2016 for the announcement of “Hack the Army” – a challenge that invited hackers to put their skills to the test and try to hack the Army.

One of my most memorable events was back in 2013 when we hosted Barack Obama. I love how interested all these government officials were in Austin’s startup scene. We welcome all government officials to Capital Factory and love to get them plugged into what Austin has to offer.

From a policy perspective, do you have any wishlist items for your startup ecosystem?

Three things – STEM, diversity and inclusion, and infrastructure.

STEM. We need to continue our education system’s focus on building up additional STEM talent across Texas, allowing us to fill open positions in in growing tech ecosystem.

Diversity and inclusion. Lawmakers need to end the pointless use of time and energy debating issues which bathrooms transgender Texans can use. Their high-profile focus on concepts like the "bathroom bill" paints the entire state with a broad brush of discrimination, making it harder to recruit talented individuals who value diversity and inclusion.

Infrastructure. Austin has more than 50,000 residents who don't use the internet, and numbers like this are true across the the state and nation. There needs to be additional emphasis on closing this digital divide to ensure that everyone has access to the benefits of internet access – especially broadband.

Are there some startups to watch coming out of the Austin-area?

Definitely! There are so many awesome startups coming out of Austin. Below are just a few.

  • Aceable - drivers ed and defensive driving online

  • SpareFoot - provides listings for self-storage units.

  • BigCommerce - a privately held technology company that develops e-commerce software for businesses.

  • CrateJoy - a subscription box marketplace with 100s of curated of the month clubs for all interests.

  • WPEngine - provides managed WordPress hosting for mission critical sites around the world.

  • Trendkite - quantifies PR's impact in a way both PR professionals and executives understand, so they can optimize their PR strategy.