Austin’s Capital Factory Commitments From Silverton And Floodgate
Capital Manufacturing unit, the startup incubator primarily based in Austin, Texas, is saying a new initiative during which firms can obtain $25,000 every from enterprise corporations Silverton Companions and Floodgate, bringing their initial funding to $one hundred fifty,000 total.
In some ways, the program sounds like it was inspired by YC VC fund (which replaced the earlier Start Fund) offering investment to all graduating Y Combinator startups. But although Capital Factory co-founder Joshua Baer acknowledged that in its early days, the Austin incubator looked at YC as a model, he said it has evolved in a different direction, and that includes differences in how its startups get funded.
On a broad level, Capital Factory is no longer a three-month program. Instead, startups participate for an extended period of time, perhaps years.
“The goal is not to get them funded, it’s to get them to a sustainable business,” Baer said.
More specifically, when it comes to funding, startups are supposed to convince at least two mentors to invest $25,000 each. Once they’ve crossed that threshold, Capital Factory’s partners will invest another $50,000 — and with the new program, Silverton and Floodgate will each put in $25,000 as well, bringing that initial funding, as I mentioned, to a total of $150,000. (These investments usually take the form of a convertible note.)
Baer acknowledged that many startups will need to raise more money than that to get to a “sustainable” point, but he noted that “almost inevitably,” companies that can get two mentors to invest will be able raise money from other mentors too. He also said that beyond the money, the main reason to get the VC firms involved is to give the startups a connection to Silicon Valley.
The program will be available to all of Capital Factory’s startups this year — it’s targeting about 20 to 30 companies. It doesn’t apply retroactively to companies that have already raised money from Capital Factory’s mentors and partners, though of course they can still pitch Silverton and Floodgate for backing.
One thing that Baer mentioned hasn’t changed is Capital Manufacturing facility’s focus on Austin startups specifically. No one’s contractually dedicated to remain in Austin, after all, but he added, “We only spend cash on Austin companies - we’re not a three-month program that individuals transfer for. … We now have this unique benefit that Austin is on fire.”
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