A Look at Capital and Community in the Dallas Tech Ecosystem

April 14, 2016

5:59 pm

In the past year, the Dallas startup community has blossomed like crazy. New incubators, co-working spaces, and capital have emerged, seemly out of nowhere. When you add corporate innovation growth and an increase in population, then you’ve got the cool-aid for a great startup community – a strong community that can be seen throughout Dallas Startup Week. 

But it wasn’t always this way. Since I’ve only been personally involved in the Dallas tech community for the past year and half, I wanted to learn and share a bit more about what it was like before this materialization and, secondly, talk with a startup who’s successful raised all their funds through Dallas capital.

I sat down with two Dallas-based startups to ask them a few questions about capital and community – the two things that are so crucial to any successful startup ecosystem. Read what they had to say below:

Jon Alsup – CTO of OpenKey

You’ve been involved in how many startups and since when? Can you tell me a little bit about your startup journey?

Since early 2011, I have been involved  in at least five or six at this point – advised and invested in at least three. 

I was 19 years old when the first idea I had came to realization, but it wasn’t long till that faded away. Money was a huge issue – this was before I knew anything about bootstrapping, coding, or a product launch formula.

By age 20, I thought I had it all figured out. That was my second venture. I built a nice-sized team of college kids with like-minded dreams, worked two jobs and was a full-time student. Not many people can say they had an office of 8 people at age 20. However, this time, growth was the issue; we couldn’t gain enough traction to maintain. Thankfully, I was able to exit and sold my equity stake to a business partner.

At that point, I jumped into a business trifecta with two individuals building two different software companies. The three of us brought a great mix of talents to the table; these guys were like my big brothers. They taught me so much and I’ll always be grateful. It wasn’t long till we sold one of the SAAS companies for a seven-figure pay day. Now that we had the capital, we built three more startups all having a mixture of failure and success; but, regardless, for a 23-year-old I had learned more [than I could have] in three lifetimes.

When did you realize who were emerging players in the community?

In 2010-2011, the Dallas community was tiny. Just small pockets of startup evangelists all trying to accomplish their own agendas. When I was accepted to the Collide Center (no longer) in its first accelerator/incubator class, I was thrilled. And with the group of mentors coming in and out the door, you learn who the “players” or “fakers” are. One of my bad memories from this time, I remember trying to have a conversation with a so-called “mentor” and yet, within hours, he had an invoice in my inbox for his “mentoring”.

As the community grows now, you begin to see some people doing great things for us all. Now, the leadership at The DEC, Common Desk, and the City of Dallas have a huge hand in getting DFW to be an actual community. The truth is, though, our community is still growing, so I’m excited to see what the future holds.

How does the Dallas Startup Community function today vs. in the past, in your opinion?

 There was no community a few years back. It was just a bunch of misfits, trust-fund babies, and idea guys trying to make something happen to further their own financial benefits. Now, we have a mature entrepreneur base – meaning most individuals in the community are over 30. I think this is a blessing and a curse. It allows us to have a strong idea generator and a group of people with a ton of real-world experience but lacks in commitment and humility. I hope as my age group gets into larger leadership roles we will see a shift in that growing pain.

Above: The Dallas Entrepreneurship Center (The DEC) cofounder and CEO Trey Bowles talks about the Dallas’s rapidly growing entrepreneurial ecosystem.

Jon O’Sullivan – CEO of PediaQ

You’ve been able to secure your company’s capital raise right here in Dallas. How have you done this and why do you think it’s been successful for PediaQ? Or, in other words, what are the investors buying into? 

Investing in technology-based innovation is very different from traditional investments such as oil & gas, real estate, or other tangible products, and that is what characterizes the Dallas investment culture. In addition, Dallas isn’t exactly a hub for healthcare innovation.  As a result, raising capital for an innovative mobile application technology for healthcare was never going to be easy.  However, PediaQ offers something that is very easy to understand, an after-hours house call for a child at a low cost, which makes infinite sense. In addition, 25 years of building healthcare businesses in Dallas offers a degree of experience and credibility that investors will always look for.

Dallas has a great amount of wealth and a strong presence of family investment funds. We were able to secure introduction and capital through some of Dallas’s family funds largely through relationships developed over many years. Beyond that, the business model and the team had to speak for itself. 

Do you think it’s possible for other people to raise right here like you did or is the market looking for very specific things? 

We live in a tough investment market at the present and investors in Dallas are more conservative by design. As a result, someone raising capital in Dallas has to clearly demonstrate the potential of the company within its market, define a sensible growth strategy, explain the sustainability of the business model in the face of various challenges, and present a rationale for value growth and investment return.  

Professional investors see hundreds of opportunities each month and the are surgical in their ability to cut to the fundamental questions that will define their level of interest. However, even with a tough investment environment, conservative investment culture, and tough professional investors, a great idea coupled with a good team will attract smart money in Dallas. 

Why do you think Dallas took to your concept so well? 

Dallas is both a very family-centric market and a very entrepreneurial market. I’ve built companies in Dallas for 25 years, and it’s well known that it’s a friendly market that embraces new companies and new ideas. The areas in which we launched PediaQ are characterized by families who have come to Dallas and embraced a more fluid, but busy, family lifestyle where we have very great networked communities through school, churches, sports and other family oriented outlets. The convenience and quality of PediaQ fit right into these types of communities. 

This article is part of a Startup Week content series brought to you by Chase for Business. Startup Week is celebration of entrepreneurs in cities around the globe. Chase for Business is everything a business needs in one place, from expert advice to valuable products and services. The Startup Week tour is almost over, but stay tuned as it winds down with news from Columbus and Detroit.

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For the past 10 years, Lauren's worked with startups and technology businesses propelling them to success through innovative strategies. Lauren is a fast paced thinker who's quick-witted personality translate to her lifestyle, technology, and business - Project Halcyon, all over the country.

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