Why Successful Area Founders Don’t Reinvest After an Exit

Today’s startup community is like a freight train rolling through just about every business sector—and many of them, despite our visibility, aren’t prepared for it. Dallas Startup Week 2016 is in planning, and if you’ll recall we had close to 3,000 participants from across the region. I expect that to double for 2016.

We have accelerators, incubators, coworking space coverage like few other cities, eight Startup Weekends, our media is paying attention, and the story is permeating the everyday culture. Dallas-Fort Worth is the place to be if you’re building a tech startup of any kind or scale. Not just for area founders, but people are moving here too. Lots of them.

Sure, I could go on and on about the progress we’ve made in just the past two years, but I’m going to share a hypothesis instead. Last week, while listening to Lance Crosby, the former CEO of SoftLayer (full disclosure, SoftLayer, an IBM Company, is a sponsor of Launch DFW), a company he’d go on to sell for just over $2 Billion, it occurred to me why many successful Dallas area founders (those with nice healthy exists) may not reinvest their money into the Dallas ecosystem.

This hypothesis is so logical once you hear it, you’ll smack your forehead. Remember that our ecosystem is very, very young compared to others. Austin has half a decade on us, Boulder is just under a decade total, Chicago, New York, and arguably the oldest “startup community” is Silicon Valley with 50ish years. We’re at two years, in earnest.

These other cities have had a real community—they’ve had the things that are still relatively new to us for what amounts to an eternity in startup years. When Lance and team were building SoftLayer, they spent every waking hour building SoftLayer. The team had very little interaction with anything like what we’d call “community” today. They were talking to customers.

Look at all of the exists and acquisitions over the past few years in the cities mentioned above. Nearly all of them were led by founders that were intimately involved in their startup ecosystems. They started their companies surrounded by peers from within the community—they had a pulse on what everyone else was doing.

Think about it for a minute. Most of the successful exits in the Dallas-Fort Worth area were led by founders (and teams for that matter) that had no attachment to what we’d consider today’s startup community. It wasn’t out of malice or with any negative purview, in fact, the reason is incredibly simple: our community didn’t exist when these companies were founded.

To summarize in case you were lost along the way… the reason successful Dallas area founders don’t reinvest their capital into our community after an exit is because they have no attachment to us. This will get better with time. Way better.

So, how do we jumpstart this process? Patience. Invite them to our community events. Show them what we’re up to. Get them involved and show them how much better the next generation (in startup years, of course) of founders will be if they’ll simply get involved.

Over time, with more successes (and exits) from within our community, we’ll see more smart capital than we can imagine. Be patient.

  • Michael Sitarzewski is the Publisher of Launch DFW, co-founder and CEO of Epic Playground, Inc., makers of inboundgeo. He is a veteran entrepreneur (and a TechStars Cloud alum) with a specific focus on Web-based software and services. Sitarzewski has been a part of the internet startup culture since 1994 and has had two exits along the way. After a seven years in the Boulder, Colorado startup community, Michael returned to Dallas, Texas, in 2013 where he’s focused on growing and increasing the visibility of the burgeoning Dallas startup community. He is the EIR at The DEC, a mentor in the RevTech accelerator, and leads several events in the Dallas area. Sitarzewski considers helping people understand and leverage technology his life's work.

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