Startup Houston

I got the horse right here
The name is Paul Revere
And here’s a guy that says that the weather’s clear
Can do, can do, this guy says the horse can do
If he says the horse can do, can do, can do.

“Fugue for Tinhorns” from Guys And Dolls

I like analogies (and music lyrics also if you can’t tell by now). People often ask me what investors look for when evaluating an investment in a startup company. Marc Andreesen identified three core elements of a startup: team, product and market. One could argue which is the most important of the three and Mr. Andreesen makes the case for market…which I somewhat agree with and will explain how momentarily.

But many would-be starter uppers seem to have a difficult time comprehending the issues with ensuring that all three core elements are focused on. So here is another way of looking at this: horse racing.

• Product - the horse is the product and is developed from a young age to compete through natural (organic growth) and artificial means (mergers and acquisitions). The owner (founder) is usually the one with the vision and keen eye (not always) who identifies the horse at a young age or acquires stud rights to a proven race horse (commercialization or technology transfer) from a quality breeder (university or research and development arm within a company).
• Team - In a race, the team is comprised of a jockey, trainers and owners (think of investors as the people in the stands placing bets on the race and not as owners…investors own to sell.) We’ve already identified the owner and the trainer is usually the second hire or partner (technologist or engineer) brought into the team. The trainer develops the horse by means mentioned above and as the horse shows promise, adds to the team to compete on a grander scale. The jockey (CEO or team leader) is either an up-and-coming talent or an experienced racer whose sole purpose is to get the most out of the horse on race day.
• Market - This is the race or season in which the horse and jockey compete. Horse racing occurs on a dirt track. Track conditions play an important part in the race as well as position, field, stakes and multiple other factors.

Here is why I agree that the market is the most important element: the best horse trained and run by the best team will lose if they run the wrong race, at the wrong time, under the wrong conditions, etc.

Skill, preparation, experience, funding are all of tantamount importance in getting up to the day of the race. You will not even be able to compete without them. That being said, once the gun sounds, luck has more to do with winning than any other factor. Investors know this (and so do the bettors…venture capitalists are the ones in the fancy hats and blazers) and can only evaluate what is known. That being said, investors like to bet where the odds allow for a big fat return.

So back to the original question: what are investors looking for?

Investors are looking to make a bet on a good horse managed by a good team to run a race with a purse big enough for him/her to make it worth there time and effort. They will evaluate the jockey’s history, trainer’s experience, strength and conditioning of the horse, conditions of the race, the odds of a win, place or show and how large the payoff will be.

If you don’t get it now…let me know and I will try another analogy.

How to Launch a Successful Start-up Technology Company: “The Basics of Starting, Growing, and Funding a New Business”
Wednesday - Thursday, July 23-24, 2007, 8:30 a.m. to 5:00 p.m.
McNair Hall, Jesse H. Jones Graduate School of Management at Rice University.

Early registration deadline: July 11!

This 2-day entrepreneurship course describes, in depth, the key steps required to commercialize technology and successfully launch a new company.  The workshop will be taught through a series of lectures and presentations from venture capitalists, investors, entrepreneurs, and other leaders in the technology entrepreneurship community.

The instructors for the course include active venture capitalists and angel investors in the Houston region.  The course provides a unique opportunity to learn first hand what is required to get funding for your emerging company and to meet the individuals who make these investment decisions on a daily basis.

The course has sold out every year, so we recommend early registration.

Cost: $95 for Rice Alliance 2007-2008 members, HTC client companies, and members of an academic institution. $165 for the general public (registration by July 11).

Perhaps you were driving around the downtown Houston area recently and came across a white and green electric vehicle transporting some environmentally conscious passengers to their next business meeting. If you see it again, waive hello to the guys from REV Houston, Houston’s newest FREE and GREEN transportation service.

REV (or Ride Electric Vehicles) currently operates one vehicle in the downtown-midtown area of Houston with plans to add a second vehicle in the next few weeks (the second vehicle will be a 6 seater versus the 4 seater they currently have). The vehicles are GEM Vehicles from Chrysler and are 100% electric powered:

“GEM battery-electric vehicles are classified as low-speed vehicles, or neighborhood electric vehicles, and are street legal in nearly all 50 states on public roads posted at 35 mph or less. With a top speed of 25 mph, GEM cars have a range of up to 30 miles on a charge and are great for traveling around neighborhoods, city centers or job sites. GEM vehicles are battery-electric, operate on a 72-volt battery system and plug into a standard 110-volt outlet. What makes GEM vehicles so unique is that they can be recharged anytime, anywhere a 110-volt outlet is available and recharge in approximately six to eight hours.”

To request a ride simply call 1.877.Go.REV.Go or visit one of the company’s “REV Stops” for a code you can text to Qtags (another great Houston startup we profiled last year). The stops are as follows:

• The Coffee Groundz (REV1)
• The Rice Lofts (REV2)
• El Patio (REV3)

The only cost for the ride is a gratuity. The company plans to subsidize their costs initially by selling advertising space on the vehicles.

“It was Opening Day 2007 for the Houston Astros,” states Erik Ibarra, co-founder of REV Houston. “I went for a ride on a pedi-cab and thought, ‘This guy would have it so much easier if he had a golf cart.’ I started looking into street legal electric vehicles for about a year and the concept blossomed from there.”

Ibarra also mentioned that the company plans to test additional markets within Houston for expansion, such as Rice Village, Washington Avenue and Westheimer in the future.

P.S. Erik, you need to talk with Matt and Ned at the Caroline Collective and add that as a stop as well.