Startup 101: Texas Venture Labs Pairs UT Students With Entrepreneurs
Dig a little deeper into the entrepreneurial gestation of a few of Austin, TX, startup successes and you’ll find they have something in common: the Texas Venture Labs.
Part of the University of Texas at Austin’s McCombs School of Business, TVL is a relative newcomer to the Austin startup scene. It was founded five years years ago and already the program can lay claim to some notable successes: RideScout, which was bought in September by a Daimler AG subsidiary, and Gazzang, which was bought in June by Cloudera, a California big-data analytics company.
“Market validation is the most common project that we work on,” says Doug Yeager, who has a Ph.D. in biomedical engineering from UT and is venture partner with the program this year. “That tends to be something that gets ignored by entrepreneurs, especially by those in tech companies. They’re focused on the cool idea, but is there a market?”
Startups apply for Texas Venture Labs and those that get in must pitch to the students who then bid on the entrepreneurs they would like to work with. Typically, a dozen are chosen and put into cross-functional teams consisting of graduate students in business, natural sciences, engineering, pharmacy, law, or natural sciences. TVL doesn’t take an equity stake in the startups.
“The companies that we work with are all over the map,” Yeager says. “A few life sciences companies, medical devices. Just because it’s Austin, a lot of tech, software companies.”
It’s not just the startups that get an education in entrepreneurship. Yeager says he is able to get a foundation in thinking like an entrepreneur after spending his academic career focused on science and engineering.
“TVL was a way of differentiating myself from other graduate students,” he says. “I didn’t want to stay in academia and do a traditional post-doc. This is a unique experience that lets me work with startups and get more business sense.”
So far, the program has worked with 102 companies and about 235 students, he says. The startups have raised a total of about $250 million in funding following the venture labs program, Yeager added.
Texas Venture Labs begins its 10th semester in a couple of weeks when classes resume at UT. Its most recent pitch day last month drew about 350 attendants, about a third of which were investors. While TVL started out as a university-funded program, a gift of more than $6 million three years ago from Fort Worth entrepreneur Jon Brumley has allowed the program to set up an endowment. Brumley, a UT alum, founded six oil and gas companies that each went public.
TVL also coordinates entrepreneurship efforts within the McCombs School of Business, such as investment contests and its marquee competition each May called Moot Corp, UT’s office of technology commercialization, and the Austin Technology Incubator, which is housed on campus.
“We have a pretty good relationship with most of the accelerators locally in Austin,” Yeager says. “We’re not competitors to them. We’re both feeders to each other. If it’s too early for them to justify working with at this point, they send them to us. And they look at companies that we’ve been working with and bring them in.”