For the past 20 years Silverton Partners' Kip McClanahan has worked in IT security, networking, media communications and software industries. He served as both CEO and board member to both public and private companies. He has founded or held leadership roles in companies including BroadJump (acquired by Motive), TippingPoint (IPO, acquired by 3Com) and NetSpeed (acquired by Cisco).
As an operator, Kip has raised over $100M in capital and his companies have returned nearly $800M in realized gains. He graduated from the University of Texas with a BS in Electrical Engineering. Kip sits on the boards of CopperEgg, Socialware, Sparefoot, WPEngine, and www.reoverthinking.com.
[Photo by René Lego Photography]
WHAT ARE YOUR STRENGTHS?
When I get involved with entrepreneurs and startups in Austin, I'd like to imagine that what I'm bringing to the table is some experience starting and running companies. There's been a number of companies that I've done exactly that at, some private, some public, so I think I've got a breadth of experience.
That said, every start-up is different, so sometimes that applies really well, sometimes it doesn't. But I'd have to say, operationally, that's sort of where my strength is. Now, on the other side of the table as a venture capitalist, I can apply that to a whole bunch of companies simultaneously.
WHAT IS SILVERTON'S FOCUS?
First and foremost, we are Texas-oriented and in particular, we are Austin-oriented. We say that we go to the edges of Texas, but all of our deals, we have 14 right now, are in Austin.
We like to be the first money in. We like to be the first professional investor in a deal, so we're very early stage. We'll do seed stage-type of investments, all the way up to larger Series A. If somebody bootstraps a company and is looking for liquidity later on, we can be that first investor by helping provide that liquidity to an entrepreneur, we do that as well. So, high-tech, Austin, first money in, someplace where we can roll up our sleeves and contribute, that's what we look for.
WHEN IS IT BEST TO APPROACH SILVERTON AS A STARTUP?
There's an ideal model and then there's always variations that sort of asymptotically approach that ideal. We'd love to see experienced entrepreneurs that we know chasing a market that is clearly valuable and growing, with a product versus a service, that's well-defined and out there enough to have some traction, some fit that we can talk to, and proof points on the go-to-market motion, the distribution of that product.
If companies have a variation of that, then I'd say that they're ready to use other people's money, and begin to scale and grow some of those aspects of the business.
I think if they're ahead of having a product, that's a little bit harder because we don't know how much more it's going to take to build that. If they're ahead of distribution, we don't know what the cost to serve that market is so it's a little bit ahead of scaling up distribution and sales.
So a little bit of signal in the various components of the business model is probably the right time to come talk to somebody like Silverton. If you're a little early, but something is compelling about it, we would never not listen and there's always exceptions to the ideal case.
WHAT'S HOT IN AUSTIN RIGHT NOW?
Some of the cooler startups we have in town right now, and I think we are super-lucky to have a bunch of them. I'm really excited about the company called Socialware. I think they are setting their market, which is financial services, on fire, by really allowing those kinds of businesses to use social media; very relevant, given what's happened with Facebook and whatnot.
There's a company called SpareFoot, which is a bunch of young guys that are innovating in a market that is everyday surprising, by the acceleration that they have in a space that's otherwise pretty sleepy.
There's some younger companies, like Black Locust, Copper Egg, and Famigo. And yes, I'm talking mostly about Silverton portfolio companies, but they're the companies I know the best.
One thing I would say is that we're starting to see a cycle of older companies begin to generate some of the younger companies in town. And what I get especially excited about is this next wave of entrepreneurial activity that's going to be accelerated by some of the liquidity, some infrastructure, like Capital Factory, bringing folks together, and some experience that people have gone through the cycle once or twice, as well. Those are companies I don't know what they are yet, but I'm just generically excited about that.
WHAT'S THE DRAW OF AUSTIN FOR A STARTUP?
I think Austin's attractive for startups. Moving here, thinking about moving here, getting excited about that for a number of reasons. One, I think it's really easy to appreciate Austin outside of the entrepreneurial ecosystem.
Whether that's music or whether that's the lifestyle, it's a great city, completely independent of high-tech. Given that we have a high-tech ecosystem here, it kind of makes it a no-brainer. That said, it's a fantastic city, compared to a lot of other ones, to start a family in. Entrepreneurs, they've probably got their own startup baby now, they'll probably have other babies later. I think the cost of living, in general, while we'll see how that goes, it's still probably cheaper than elsewhere.
And I think if you add all that stuff together, especially with some of the first experience that a lot of folks have, which is things like South by and ACL, it's kind of an easy decision.
I think our birthright, in terms of a community, is sort of to dominate the next gen enterprise 2.0 agenda. Much like the west coast has dominated some of the consumer-focused agenda. But that said, I still see consumer companies springing up, and really great talent that wasn't here even a year ago, starting companies. It's a good mix, but I'd say we're strongest in traditional enterprise and next gen enterprise.
HOW DO YOU FEEL ABOUT THE COMPETITION?
I think if you are a confident, high-quality investor, more capital and more investors don't make you nervous. I think what they do is propel an ecosystem that you participate in, better, faster, stronger, into the future.
And I think that's so much better than any risk of competition or over-subscription of particular deals that, I'd welcome that. I think less confident investors in other places in the country might fear that sort of competition. I just think the greater good is a lot easier to concentrate on.
WHY WE ARE_AUSTIN TECH?
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