Latest ATI Graduates Show Incubator Has A Pulse On What’s Hot

ati-logoIncubators are usually pretty adept at gauging which companies have upside. And while business moves fast, the coaching, mentoring and preparation that aids young startups has to  move faster. That’s where the network comes into play for Austin Technology Incubator (ATI).

“We want to bring the genetics of ATI into the fold,” said ATI Director Isaac Barchas. “It’s really about activating the alumni network.” The network Barchas refers to spans more than 200 companies, $1 billion in raised capital, and almost 25 years of mentoring startups. It’s those kind of credentials that helped ATI graduate 21 more companies at last week’s ceremony on the UT campus.

The companies represented a diverse mix of businesses, from IT-driven technology and mobile infrastructure, to clean energy and biosciences. ATI’s focus on its alumni comes at a time when incubators and venture capital firms are being disrupted themselves. Lean methodologies and data-driven investing are being used by investors and incubators alike to shorten runways and surface new opportunities. Essentially, there’s more pressure to take companies further down the growth cycle.

A recent HBR piece explains part of the trend:

“..accelerators are capitalizing on the decreasing costs of starting a business, new thinking on how to run startups, and the increasing importance of mentorship to take companies further down the path towards success — even with smaller check sizes. To disrupt the larger ecosystem, accelerators will need to evolve their models to push companies through later stages of the business lifecycle. Accelerators might be able to accomplish this task by raising internal funds (which can be tricky) or establishing non-traditional funding partnerships.”

To me, that passage screams two things: network and experience. ATI’s affiliation with the University of Texas provides a unique on-ramp for young talent and innovation. And the strength of the local economy, propelled by the Texas Triangle, also provides some lift as more companies look to transplant or expand in a tech and creative hub like Central Texas.

So with that teed up, how do the companies from ATI’s graduating class compare to what’s being funding in the venture capital markets? Pretty well, according to PWC’s MoneyTree report for Q3. Looking at the sectors represented by ATI’s startups, we see information technology, wireless, clean energy, and biosciences technology. You could easily fit all 21 companies in the top funded industry segments. That tells us a few things.

Diversification is actually better than I would have guessed. The pipeline isn’t just dotcoms and consumer web companies, showing Austin’s tech cluster is evolving.

Deals_By_Industry_MoneyTree

It’s similar to what’s happening in some Rustbelt cities. Ann Arbor might be the best example, with its proximity to a large University and Michigan’s ties to a broader legacy industry: automotive. Because of its own creative class (access to higher education) and manufacturing roots, it’s now becoming a hub for innovative battery technology.

In Austin’s case, ATI is proving the model for that type of progression. Of its 21 companies, almost a third of them represented clean energy or clean technology, with all of them certainly influenced by Austin’s strong lineage in semiconductors and energy.

Laura Kilcrease at Triton Ventures says the groundwork was established in the early part of the last decade for cleantech and biomass, and both are ripe for innovation and growth.

“It’s (Austin) a natural environment for cleantech, said Kilcrease. “The infrastructure for it has been growing since the late 80’s, and now we’re starting to see a real nucleus of consistent activity.”

The other notable piece from PWC’s data is the regional breakdown. (below) While the West was the best in Q3, two deals in cleantech and biotech moved Texas into the third spot.


“Texas investment jumped 113 percent in the third quarter, propelled by two large deals in the Biotechnology and Clean Technology spaces.”

 

It’s that kind of momentum that puts ATI and its future crop of startups in a very favorable position.

“I’ve got the best job in Austin,” said Barchas.

Deals_By_Region_MoneyTree

 

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About George Dearing

George Dearing is a communication and technology professional and Founder of the Dearing Group. He advises organizations on communications and sustainability. Though he still owns a house in Austin, he now resides in Winter Park, FL. Follow him on Twitter here