Start-ups are more art than science at the Longhorn Startup Studio.
Longhorn Startup Studio is a yearlong program at UT that allows UT faculty-led start-ups to be mentored by industry professionals and subject-matter experts in the Austin technology and start-up communities through a series of intimate mentoring and Q-and-A sessions.
Founded in Oct. 2012 by Bob Metcalfe, professor of innovation and a Murchison Fellow of Free Enterprise in UT’s Cockrell School of Engineering, the Longhorn Startup Studio allows faculty who are already actively pursuing start-ups in their fields of research to improve their business plans and gauge their technology commercialization potential.
The first group of 24 start-ups completed the program last December, and many of them are now looking at raising more funds and working on expansion plans and new releases for their technologies. Planning for the second season of the Studio program is underway by Metcalfe, in collaboration with UT’s Office of Technology Commercialization and the Austin Chamber of Commerce.
“For many of them who are novice or first-time entrepreneurs, if they are coming from a research or teaching background, they have never really had any experience running a company,” said Dan Sharp, associate vice president of research and director at OTC. “Many of them have not raised money yet; they need to learn how to raise money — what investors are looking for. Oftentimes, they come into the studio, they get feedback and it helps them refine their funding pitch.”
The mentoring sessions span a number of months. The start-ups make presentations to an audience and then engage in a Q-and-A with industry professionals, people from the OTC and professionals from the Chamber.
“Bob conceptualized the program, and we are collaborators,” Sharp said. “Our role is to help Bob identify good technologies that would be good technology startups. We would help him identify faculty members and the chamber’s role was to do some matchmaking and assist us with finding potential mentors and the other experts.”
Evan Grim started Toopher, one of the start-ups, in early 2011 when he realized the need for an online security solution and authenticating system to prevent fraud and identity theft. Toopher uses multifactor authentication and the location-awareness feature of mobile phones.
“When a user logs into Toopher for the very first time, say when the user is at home, because you’ve never logged in from that location, Toopher alerts the user by sending an alert or message to you mobile phone stating, ‘You were trying to log in from your home computer. Do you want to accept or deny this request?’” said Josh Alexander, CEO and co-founder.
If the user logs into his Dropbox account, for example, from home on a regular basis, then having to constantly accept the request on his phone becomes a mundane task. It eventually can become a security vulnerability after a certain period of time, because the user may just accept a request without even verifying who is trying to log into the system other than him.
Toopher allows the user to draw on the context of his or her location, so that the next time he or she logs into the account from the home computer and his or her phone is in the same place, the last time he or she pressed the ‘Yes’ option, the phone automatically accepts the request to access. “So just based on where the phone is, where it should be, the authentication requests will get pushed to your phone and it can answer that one without having to call you or to annoy you,” Alexander said.
For Alexander, an adjunct professor of finance at McCombs School of Business, Toopher is his first major start-up. The company filed for its first patents in late 2011, and Alexander and Grim managed to raise $2 million in their Series A round of funding; “Series A” is the name assigned to a company’s first major round of venture funding.
It was during the Studio program in Oct. 2012 that Alexander and Grim began focusing on their company full-time.
“There was this great opportunity to practice and explore our ideas before we went out to raise money,” Alexander said. “We essentially asked people during the studio to rip down our business plan and really look at it from a completely different angle and tell us why it won’t work. We don’t have ego and we wanted to find the best way to do something regardless of whether it was our idea or not.”
The Studio allowed them to pitch ideas and challenge the assumptions, which were the underlying reasons for their decisions.
The key suggestions Alexander said they received during the program were about improving their marketing and messaging to make it clear to investors who the buyer of the technology was and who the user was.
“Our industry is unique; the issues that we face on a day-to-day basis are relatively common startup issues,” Alexander said. “How do you find the right type of sales staff, how do you implement strategic campaigns and how do you optimize your marketing budget? When you can immerse yourself in a community of others who are facing the same issues, you get to learn the best practices from these individuals along the way, and you get to share and grow.”
Some of the other start-ups that participated in the program were M87, a software technology allowing efficient and easy-to-use wireless networks; Ultimate EOR, a technology providing services covering reservoir modeling, enhanced oil recovery-process design and improved recovery of crude oil reserves; and People Pattern, a technology relying on social media data to deliver the most relevant content at the right time.
“Professors have the teaching and research, but they need to be encouraged and helped in putting their innovations into startups,” Metcalfe said. “To create startups, we don't need our professors to become salespeople and accountants, which they are not likely good at anyway. We need them to form teams, to take their innovations out into the market where they can do some good.”