Ever since the announcement last year that Capital Factory was launching a Dallas location, the local tech and startup scene has been buzzing about what the expansion would look like and why the move to North Texas. The org has created a strong brand over five years of work in the Austin market. Dallas, however, is a unique market, with investors driven by different interests and founders with varying needs, from community to funding to networking and mentorship. Adding to the mix, Capital Factory has partnered with The Dallas Entrepreneur Center, an organization whose culture has permeated the Dallas startup scene for the last five years as well. With all of these influencing factors, what kind of impact would all of this have on the local tech community and Capital Factory as they entered North Texas?
Through conversations with Joshua Baer, Capital Factory CEO, Georgia Thomsen, COO, and Mellie Price, Director, Diversity and Inclusion, a clearer picture begins to emerge of an organization on a mission to not only provide a space for entrepreneurs here in the metroplex, but to truly actualize its vision of serving as the center of gravity for entrepreneurship and innovation in Texas.
Mid-May was a busy time for the Capital Factory team: the Dallas space, located in the Centrum building in Uptown, got final touches added ahead of community tours. Uptown is not known as a hotbed for startup communities, but Baer recognized its potential as a central point of activity in the metroplex.
“Capital Factory is opportunistic; that’s how we got our space in Austin,” he said. “Chad Cook [a Dallas real estate developer] reached out about the building, and I had 10 minutes to view as I traveled from Love Field to a downtown appointment. I saw the vision, and the caliber of businesses already in the building. Plus, it’s close to our potential investors near Old Parkland and easy to access from the north without the headache of downtown parking.”
Capital Factory won’t be alone in the new space; the DEC offices, programs, and members will be moving as well. Of the relationship, Baer said “We need local partners like the DEC to help us be part of the hometown team and integrate with the local community.” Not only will the DEC bring their Dallas-based cache, they have combined their mentor network with the Capital Factory’s and are expected to bring their programming to the new space as well. With 26,000 square feet of space over two floors, including a 150-seat event space with stage, two classrooms (40-seat and 22-seat), and 10 conference rooms, Baer is optimistic that there will be enough space for both DEC and Capital Factory’s signature events.
The “how” of the DEC and Capital Factory relationship is what excites COO Georgia Thomsen about the expansion. Thomsen was employee number six, when Capital Factory occupied just one floor in their current Austin digs. The Dallas addition will bring the total number of floors to three, and employees to 68, with more headcount planned.
In one sentence, Thomsen clarifies Capital Factory’s difference: “Coworking is the least important thing we offer.” She lists education, community, and the organization’s fund as central to the Capital Factory culture.
Thomsen wants to tap into DFW’s “vibrant” university system for programming, citing SMU’s upcoming incubator system for startups, set to launch this summer, and hire students from UTD and other local schools for internships.
“Building community is what Capital Factory does best,” Thomsen said, citing the growth of programming and mentorship around VR and AR in Austin. “The DEC brings value to that, because they’ve already built such a strong community and a great reputation.” The 50/50 relationship with DEC brings an additional value to existing DEC members, who will receive six months of free membership at the Capital Factory offices.
With 160 mentors in Austin and close to 80 in Dallas (the combined number between Capital Factory and DEC), the brain trust of founders, CEOs, and other experts continues to grow and provide value to members. When asked what makes a good Capital Factory mentor, Thomsen said without hesitation “Someone who has built a real business. We really want someone who has done it, been an entrepreneur, even someone who has failed. They all have a lot of wisdom to impart.”
“One of the things that Capital Factory can offer that others can’t is that we do have a fund behind us that actually invests in these startups,” Thomsen said. “What do startups need more than anything? They need money.”
Baer described the Dallas funder scene as “emerging,” with more VC firms than ever working to overcome the bad behavior that the VC culture has been called out for across the country. Seeing the opportunity, Thomsen and team plan to bring on a partnership manager in Dallas to meet with family offices and other potential investors.
Beyond Words to Action: Diversity and Inclusion
As Baer laid out in his 2017 “Texas Startup Manifesto,” the state is diverse, in many ways. One of the ongoing and deeply rooted issues in the startup and tech community is the lack of adequate hiring, partnering with, and funding of companies led by diverse founders.
“There is a big gap in who gets opportunities to be an entrepreneur and who gets funded,” Baer said. “We need to change who gets funded, because diverse teams, studies continue to show, are more successful.”
Baer listed several ongoing efforts to address the gap, from Epic Office Hours, where half of appointments are focused on underrepresented groups, to the three $100,000 Diversity & Inclusion Challenges this year (Frisco-based ShearShare won the Dallas Challenge). Additionally, Capital Factory is expanding its Summit programming to focus on five groups – women, veterans, African-American, Latinx, and LGBT – with each audience receiving its own event in both Dallas and Austin.
“In hosting the competitions, we end up meeting dozens of founders,” Baer said, adding that many of the companies who don’t win end up becoming part of their local Capital Factory community.
Capital Factory co-founder and Diversity Director Mellie Price calls diversity “the flour that holds the cake together”, with funding, mentorship, and other activities building around it. Price refers to relationships like the one between the Austin location and Huston-Tillotson University, a private historically black university, as an example of community building and preparing the next generation of tech workers.
“Dallas is new, and we are working to build the right relationships,” said Price. “Diversity and inclusion isn’t cookie-cutter; every city has its own challenges and opportunities.”
Thomsen agrees, citing Austin’s shrinking Latinx and African-American community as a unique problem the city is facing and noting that Dallas has been more welcoming of the diversity conversation.
Ultimately, the biggest question the North Texas community has had for Capital Factory is “Why Dallas?” To this question, Thomsen said “We want success stories, that’s how we measure success. The Capital Factory goal is to be bigger than any one city. We want to be in collaboration with startups. Why not expand, and why not Dallas?”
Mark your calendar for the Capital Factory Dallas + The DEC grand opening party on June 15, 5 – 9 p.m. at The Centrum (3102 Oak Lawn). RSVP here.