The Emerging Startup Scene in the “Lone Star State”

When I signed up for a startup bus tour of three Texan cities, I did so primarily to gain an insight into the culture and geography of Texas, as well as its innovation scene. My firm Sunrise Ventures aspires to connect Silicon Valley with Southern parts of the US. What I didn’t expect was the excitement, determination and cowboy-like commitment of all those involved.

After just three days in the “Lone Star State”, I’m already planning my next trip back. Texas has a lot of opportunities for startups to find customers, as well as for investors to find startups. It’s time to get serious!

Our hosts were the Capital Factory and sponsor JPMorgan, both of whom aspire to build startup ecosystems throughout Texas. The Capital Factory is located in three cities — Austin, Dallas, and Houston — with modern co-working facilities and a culture of togetherness. They also have strong public-private partnerships, with sponsorship and regular visitors from the military, local governments, and universities. JPMorgan is the banker for startups in this region and inviting entrepreneurs to work together.

A testament to the Capital Factory’s culture of working together is their Texas manifesto, which unites the startup ecosystems as a central point of innovation and contact for the entire region. This is so important, as successful ecosystems need density (not individuality) and inclusion (rather than elitism).

Our three-day bus tour had 100 people on board, mostly investors who’d come from Chicago, Arkansas, NYC, California, and even Japan. We started in Dallas, stopped over in Houston and then ended in Austin. Not only did we get a snapshot of the startup environment but also an insight into these three very different Texan cities.

In Dallas, we began at the Old Parkland, a former hospital that’s been transformed into a historic landmark. Here we heard about the aspirations of UT Dallas to build an innovation powerhouse and I was surprised to learn that they have the 4th largest CS/Engineering program in the USA.

Dallas is the home of three Fortune 10 companies and several Fortune 100 companies (Mckesson, Exxon, Pepsico, JCPenny, Southwest, AT&T, American Air, and the Energy Transfer Initiative), as well as several hundred thousand tech workers. Dallas has the trifecta for a new startup hub — a university, corporate influence, and city investment.

We then visited Frisco, a rapidly-growing town that’s home to the Dallas Star, a facility that includes the Cowboys training center, a new e-sports (video games) training center known as Complexity, and a variety of other institutions that support the Cowboys.

All of us were captivated by the e-sports training center and to learn that top e-sports athletes command over $1M salaries for games like “League of Legends” and “Fortnight”. Apparently, players average only 3–5 years at this top level due to hand injuries, many of which result in greater long-term damage than those experienced by MMA fighters. There’s so much potential in e-sports that they’ve created this facility for players to train, strengthen and mentally prepare for high-level matches.

But all of these activities are not just for profit. The training center is the manifestation of a public-private partnership between the city and the Dallas Cowboys, and that it also caters to high school athletes playing a variety of sports. It’s not only designed as a sporting facility but also somewhere that high school students can learn about all types of careers, including theatre, sound training, engineering, sports medicine, and construction.

After a day in Dallas, we drove four hours to Houston in our luxury bus. A few beers later, the ideas really started to rattle off. There’s nothing like exhaustion plus alcohol to drive creativity!

We began the following day in Houston chatting to startups, then went to explore the NASA facilities where we learned about some of the new initiatives being developed in preparation for the 2024 moon landing. It was then on to the Texas Medical Center, a massive complex of 17 medical facilities that collaborate with one another, including a large innovation center for new startups.

After an evening listening to their pitches over dinner, we continued driving to Austin, stopping at Buc-ee’s along the way. This mega gas station is the largest in the United States, with over 180 fueling stations and an equally big shopping center and food court.

You might already know that Austin is the creative and innovative center of Texas, so it was exciting to get a taste of this first hand. We spent the day at the Capital Factory meeting various companies and listening to their pitches. We were also introduced to the initiatives of the Army Labs www.aal.army and their need to bring in technology from the outside. After an inspiring day in Austin, we celebrated that evening at the Capital Factory’s 10th-anniversary party in like-minded company.

Aside from being impressed by the emerging tech scene in Texas, I was amazed at how these three great cities could be located so close together but be so different in terms of culture and personality. While Dallas was deeply rooted in large corporations and big oil money, Houston was more of a government and medical enclave and Austin a creative center.

But what made the biggest impact on me was how all three wanted to work together to grow, innovative and create a better society in Texas. The Capital Factory is clearly at the heart and soul of all this and I think that ‘riding on the bus with them’ would be wise for all.

Feel free to contact Josh at the Capital Factory [email protected] and Frank at JPMorgan [email protected]

If you have any questions or would like me to write a piece on your startup scene, please email me at [email protected]

Thanks, Kurt