Startups see rapid growth in hiring, funding

For startups and early-stage businesses, entrepreneurs in Austin have a variety of opportunities to network, receive mentorship, raise capital investments and move into office space.

In Northwest Austin, startups associated with the Austin Technology Incubator, which is located in the West Pickle Research Building on Braker Lane, Austin Technology Council on Executive Center Drive and Tech Ranch on Jollyville Road are on a hiring spree and planning to expand their businesses in the coming year, indicating an increased interest in startups.

"In Austin overall, and at ATI in particular, there has been a real boom in startup activity," ATI Director Isaac Barchas said.

Startup resources

ATC president Julie Huls said the nonprofit is seeing more successful businesses in the social media, enterprise software and data-centric sectors. ATC works with businesses and startups in many different stages of development, particularly in the life sciences, focusing on technology.

Huls said many startups affiliated with ATC are growing their workforce. For example, Austin-based MapMyFitness, which allows users to track their fitness workouts through the Web and mobile applications, went from about 50 to 90 employees between 2011 and 2012, according to its website.

The nonprofit also seeks to provide as much information as possible about the different local resources available to startups and to promote growth of technology in Central Texas, Huls said. One of the most valuable resources is connecting early-stage entrepreneurs with those at the executive level, she said.

"Making sure Austin is prepared to meet the growing demands of our tech companies is pretty important to our mission," she said.

She said next year, ATC plans to continue growing its efforts to help startups with venture capital, which is funding provided to early-stage companies.

"You'll see ATC continue to focus on increasing access to our technical talent," Huls said. "We'll continue to develop relationships with investors on both [East and West] coasts."

Startup success

As startups begin securing capital and finding success, many graduate from their incubators or accelerators and move into their own office space. Tech Ranch, which is an accelerator offers its Venture Forth program, an intensive eight-week bootcamp for startups. Incubators such as ATI provide sustained support and often office space for startups over longer periods of time.

One company that went through ATI is gaming company GameSalad, which grew into its own office space and launched its product with the Windows 8 platform at the end of October.

GameSalad allows users to create their own games without having to use code and gives them the opportunity to publish and sell their games for any of the iOS, Android, HTML5 or Windows 8 platforms, CEO Steve Felter said. He said the company has 100,000 games, more than 17,000 of which are sold in the Apple app store. Last year, GameSalad's Escape 3D game was named the No. 1 game in the United States app store, he said.

When GameSalad started, it was primarily an Apple-centric company, but as it continued to grow, Felter said it made sense to expand its market to Windows because of the release of Windows 8.

Startup SwimTopia, which went through Tech Ranch, also has experienced vast growth, said Mason Hale, founder and chief technology officer for the online swim team management system that assists with online registration and payments. SwimTopia now has four employees and hired a customer happiness specialist in October. Hale said he would like to hire software developers.

Roughly half of the swim teams in Austin use Hale's product, and he has customers throughout Texas, North Carolina, Ohio, Virginia and California.

"2011 was our first season, and we've grown almost 10 times since then and will probably try to do another 10 times or more this year," Hale said. "This could be the year we break out and become not a startup anymore."

Getting in the game

Carey Martel had a successful online show called "The RPG Fanatic" before forming his startup Martel Brothers Studios and partnering with YouTube. Martel Brothers Studios specializes in helping people create marketable brands for a stronger YouTube presence and to help them profit from their online content. Martel said his customers range from musicians to those hosting their own YouTube shows. His startup is funded solely on its YouTube earnings.

Martel's friend Monty Goulet runs startup Maestro Interactive and has office space at Tech Ranch. After attending a Tech Ranch event, Martel said he was impressed with the knowledge of the ranch's founder and CEO Kevin Koym and felt his startup would benefit from getting involved.

"The team at Austin Tech Ranch understands what my company is doing and are excited about having us here, and that is very important to me," Martel said.

To grow his company, Martel said he has goals that he feels Tech Ranch can help him achieve, such as improving existing marketing techniques and finding other businesses who may benefit from his startup.

"Because the Tech Ranch has offered to help me with all these things, I realized working with the Tech Ranch would be the right decision to make for Martel Brothers Studios to reach its full potential," he said.

Martel's plan is to hire social media marketing interns and move into Tech Ranch office space soon. In the next year, he said he would like to add an Internet radio station to promote the startups' music partners and a daily news show for Weekly Texas Jump, a website that provides news to South and Central Texas about gaming news, tournaments and anime conventions.

Growing financial support

Financial support for startups is constantly growing in Central Texas. In October, venture capital investment was $132.2 million, according to the Austin Chamber of Commerce, compared with $21.5 million from October 2011. So far this year, venture capital investment has reached $954.8 million, which has already exceeded last year's total of $854.5 million.

Bioscience is one of the fields receiving the most funding, along with health care and information technology, according to the Startup Funding Report compiled by the Texas Entrepreneur Networks. Businesses in health care received $159.8 million, biotechnology received $128.2 million and information technology received $73.1 million, according to the report.

The report also includes registered investments, business entity filings and trends of startup businesses in Texas for the third quarter of 2012.

Aiding the biotechnology sector is a $247,000 federal grant that ATI will contribute to building a new wet lab, which is a working space with access to water. Cindy WalkerPeach, director of biosciences at ATI, said the wet lab will allow startups to make prototypes and product development in-house instead of outsourcing to other companies.

WalkerPeach said the grant will benefit startups and businesses related to pharmaceutical development, diagnostic development and instrumentation development for imaging in detecting early stages of cancer, she said. The new space would accommodate between 20–60 companies, she said.

The grant will be used for coming up with a strategy for how ATI will raise the funds to build the lab during the next year, she said.

"During the next year, ATI will evaluate a public-private partnership model as a potential vehicle to cover the wet lab's expected initial cost of $80 million," WalkerPeach said. "Major funding sources may include the university, the City of Austin, the State of Texas, the [Economic Development Administration] and corporate sponsors. We're creating the road map for how we're going to support this incubator."