Featured Network Partners: Microsoft BizSpark

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Featured Network Partner

Company: Houston Technology Center
Interviewee: Marc Nathan, Development Director, Information Technology

The Houston Technology Center (HTC) is a non-profit organization that enables and accelerates the growth of emerging technology companies in the greater Houston area. As a business accelerator and the largest technology incubator in Texas, HTC works with entrepreneurs in sectors including energy, information technology, life sciences, and nanotechnology and NASA/aerospace technologies.

Q: Tell us a little about the Houston Technology Center and its mission?

Our mission is to help build a community of technology-based Startups in the region in and around Houston, Texas. We are essentially consultants and have created a system that we call the Catalyst Program, Cat Five. The Catalyst Cat Five program is the five Cs, coaching, capital, connections, customers and community. And those five Cs are the framework of how we treat and deal with our Startup clients. Our organization just celebrated its 10-year anniversary.

Q: What’s your criterion for Startups that join your program?

We have four criteria. The first is that they're headquartered or have their main business operations in the Gulf Coast Area, which is the 10-county region surrounding Houston, Texas. The second is that they have to be dealing with, either in sales or development, one of our five main industry sectors, including energy, and under energy there's alternative energy, and clean tech; life science which includes therapeutics, drugs, and medical devices; IT, which is my group, enterprise software, hardware, and Web-based businesses, which is why this fits in so beautifully. We didn't have Web-based business as a sector until I got here. And two other sectors are NASA Space Transfer, mostly coming out of our Johnson Space Center here in Houston. And the fifth industry sector, and I like to always call it the smallest, is nanotechnology. This comes out of the Smalley Institute of Rice University. Dr. Smalley won the Nobel Prize in 1996 for research into what are now known as Buckyballs. We've helped commercialize a lot of the technology and research that they've created. “The third criterion is you have to be attractive to growth capital investors. Lifestyle businesses, or services are not something we normally assist on more than a tactical level. Further, we’re really focused on technology development, not a technology deployment. And fourth, the principals themselves have to be coachable and willing to build a team around their deal. So, that's the subjective one.

Q: Is there an application process?

Yes. There's an online application process. There is a meeting process. You meet with the individual sector heads. In our case they're called development managers, DMs, and we meet with that company to determine if they meet the criteria, and if they could benefit from our help. Then we go through a process of making them presentation worthy, and helping them make a presentation that looks a lot like a VC pitch in front of a handpicked group of VIP investors, advisors, entrepreneurs, business development heads and CEOs of local companies that amount to an advisory board.

Q: Do you take any equity?

No. Although, the only reason we do not take equity is because of our nonprofit status. But we do, however, accept donations of equity — that just started right when I got here as well, two years ago. So, the amount of equity we normally ask for, as a donation is roughly what you would give to an individual advisor, anywhere from 1/2 percent to 1 percent at the current value of the company. We take that in once at the beginning of our relationship. In this scenario, we walk with the client from the beginning to the end, and we only make money if they make money.

Q: How was the Houston Technology Center recruited into the BizSpark program?

One of the Microsoft Evangelists whom I already knew, Chris Bernard, got me involved at the very beginning. My contact has become Christian Thilmany who has not only become a close business associate, but a good friend. He is really engaged with the Startup community and collectively we have embraced him as a champion of the early stage technology world.

Q: What does your portfolio think about the program? Is it helpful?

My portfolio is very pleased with the program so far. There have been a few minor hiccups, but over all I believe that it has been gratefully accepted. It has been helpful in the sense that it helps kick start the development of the ideas that entrepreneurs have in their heads. They can get to coding a prototype very quickly which helps them iterate and launch in a relatively short period of time.

Q: What in particular is interesting and valuable to them?

Interesting is the ability to use some of the frameworks and languages that are not quite plain vanilla like the embedded framework and XNA - .NET is still the gold standard. I’ll admit it though, there is a general wariness [about the program], and most of the Startups we’re focused on are very concerned with the ‘catch.’ What’s the catch? What does Microsoft really want from me? Microsoft, traditionally, had not been able to talk to Startups because of your business model. And this program is designed strictly to do that, and there’s still some wariness there. But I think it’s being overcome by the fact that Microsoft is doing its best to be open about doing a lot of stuff that we’re talking about.

Q: So how do you answer that skepticism?

I say, look, you can be as religious about whatever you're using today, whether it's open source, or Mac, or whatever, but Microsoft still has, what, 83 percent of the entire business market, or higher than that, because I'm not talking about just PCs. I mean, you guys are the guts that run the Internet, and run business. So, you'd better be able to deal with it. And I think in this town in particular, in Houston in particular, and I'm not hearing this from my friends in other cities, that .NET developers are in white-hot demand because we are such a business-oriented town. That's a fact. I heard that this morning. There's a huge amount of folks that desperately need people that know the .NET platform. That certainly helps. And that’s employers, not just employees.

Q: Absolutely, and from a corporate standpoint, we’re very interested in growing the ecosystem as well. So, tell us what have you been doing to successfully sign up Startups?

I make it a point to qualify Startups during my initial meetings with them. I usually send them an access code in a template email along with other relevant information.

Q: Is there a particularly interesting or successful Startup that you’re currently working with that you’d like to highlight?

There are quite a few since I have just over 20 clients under management right now, but for the record the three that I think have the most potential are NutShell Mail, YouData, and GlobalPitch — they are all BizSpark Startups. NutShell Mail, www.nutshellmail.com, just closed an angel round alongside being selected for the fbFund – Facebook’s seed fund and incubator. Nutshell Mail is an email service that essentially acts as an email digest for all of your various email accounts and social networking sites. So it allows you to schedule a regular digest e-mail that aggregates all of those messages, and puts it into a separate e-mail that allows it to go to any e-mail address that you specify, including corporate e-mail addresses that have to be corporate compliant, whether it's through SEC Sarbanes-Oxley, or HIPAA compliance. So, basically it is a fundamentally easy way for both individual workers, and CIOs to get along very well inside of the corporate e-mail space. YouData, www.youdata.com is working on a very interesting advertising model for the personalization and monetization of blogs and other social media. And GlobalPitch, www.globalpitch.com, is a user-centric resume builder that helps workers leverage the internet as a platform for their own rich-media resumes – think of it as LinkedIn-type profile on steroids. They have about 40,000 users now and it’s growing at an exponential rate.

Q: What is the ‘one’ most effective thing that you’ve done to attract Startups to BizSpark?

The first rule of BizSpark is that you talk about BizSpark. Building awareness through word-of-mouth is the single most effective thing you can do as a Network Partner. Know the qualifications and be ready to answer the three basic questions: One, how much? (Nothing until the end of the third year, then $100); two, no really, how much? (Microsoft wants to ‘normalize’ the relationship – meaning you pay regular price for what you use); and three, why would they do this? Two reasons, I believe, they want to create more Microsoft-oriented developers and two, they want to hedge against other development platforms that have a zero-cost buy-in

For more information, contact mnathan@houstontech.org or call 832-476-9311.