Austin’s international reputation as a tech and startup hub did not happen overnight. International Accelerator’s Angelos Angelou was a key part of Austin’s strategy for building a high-tech hub. In this interview with French Tech Austin’s legal mentor Liz Wiley, Angelos takes us back to Austin in the 1980s and shares why he’s still betting on Austin’s continued success.
Q & A with local business attorney and French Tech Austin mentor Liz Wiley and Angelos Angelou: Angelos has a long history in helping to build Austin’s entrepreneurial infrastructure and was part of the effort to establish the Austin Technology Incubator and the Austin Software Council (now known as the Austin Technology Council). Angelos is an active angel investor in several technology startups and was also an affiliated investor in fund IV of Austin Ventures. He is the Principal Executive Officer of AngelouEconomics (AE), bringing nearly 30 years of experience in economic development and corporate site selection. AE has completed over 600 strategic plans for economic development clients throughout the world and sited over $18 billion of corporate projects.
LW: How long have you been in Austin, and what brought you here?
AA: I’ve been here since 1984 – 34 years now. Before I came to Austin, I was in Dallas working for Republic Bank, which was the largest bank in Texas at the time. I was recruited by the Austin Chamber of Commerce to be a Chief Economist – which was a first for any chamber of commerce in the United States. The post spawned from (then) Austin Chamber President (and future Mayor) Lee Cook’s idea. I later went on to become Vice President for Economic Development at the Chamber.
LW: Take us back to what Austin was like back in the mid-1980s.
AA: When I first arrived, Austin was booming. We had a lot of momentum from the recruitment of MCC [Microelectronics and Computer Technology Corp.], 3M’s and R&D labs. However, all that momentum would dry up because of the S&L [savings and loan] crisis, when the overbuilt real estate markets in Austin (and Texas as a whole) finally burst. We had a 40 percent vacancy rate for about two+ years, but slowly and steadily Austin bounced back. It quickly became the job creation machine for Texas—and the nation. That trend has continued through today.
LW: What was it about the Austin economy that allowed Austin to bounce back quickly and remain strong?
AA: The economy began to bounce back after the 2001 “dot com” bust. Austin’s success has a lot to do with the fact that it has an unbelievable ability to attract talent. If you draw a 100-mile radius around Austin, you will find the largest number of colleges and universities in the United States. So human capital is one of Austin’s strongest assets, and one that continues to provide impetus for economic development. However, like other parts of the country, we are finally starting to see some talent shortages.
LW: You are well-known (at least for those of us working with startups who treasure the unique ecosystem that is Austin) for your work at the Chamber, attracting some of the big companies that kick-started Austin’s tech economy that we know today. Can you describe that process and what companies the Chamber was able to attract back then?
AA: We brought in major expansions for the foundationally strong semiconductor sector, such as Motorola and AMD. Then, the MCC and Sematech projects came along. These moves really caused everyone in the entire world to sit up and begin to take note of Austin. [The MCC (Microelectronics and Computer Technology Corp.) and Sematech stories are critical pieces to the Austin “origin” story. Read about MCC here.]
Dr. James Truchard only had 20 or so people working with him when National Instruments moved to town. Michael Dell, who was on the Board of Directors for the Austin Chamber, had only just started PCs Limited, which would later become Dell. At his young age he was about one-third the age of the average Board member! Applied Materials then came along, with some 50 or so suppliers that we were able to recruit. Apple followed. I remember Apple thinking at best they would hire just 700-800 employees over the next 10 years: now they are at around 6,500 and one of Austin’s largest employers.
But, eventually, we started seeing a change. IBM was here already, so they moved their software division here as well. Then we got the Bell Labs R&D team to relocate from St. Louis to Austin. So, we saw Austin changing, building on its semiconductor expertise with chip design. You could say that Austin started as an engineering powerhouse, and then shifted to an engineering and software development mecca. This would allow for the strong development of e-commerce and retail expertise here as well. Semiconductor expertise has remained strong, with some 100 firms here working on semiconductor chip design.
LW: What about investment in Austin these days in this now much diversified tech sector? We hear a lot that Austin needs more VCs. What are your thoughts on that criticism?
AA: We have seen a lot of growth in the tech industry, and that will continue to flourish in Austin. $10 billion worth of venture capital money has come into Austin in the last 10 years, averaging $1 billion per year. Austin has one of the most innovative environments in the country, consistently ranking among the top three or four in the United States, as far as capital for startups.
LW: We’ve brought some French delegations through Austin—which includes stops at International Accelerator—and we get questions about the transportation system. How does Austin’s future look with this explosive growth that we’ve seen in Austin?
AA: It is true that we have not kept up with infrastructure, but we are not alone; no city in the U.S. has been able to keep up. This has been especially difficult for Austin as it has consistently ranked as one of the fastest growing cities for the last 40 years. Think about these numbers: In the 1970s, the metropolitan area was 325,000; in the mid-1980s, there were 560,000; today, there are 2.1 million in the metropolitan area; by 2040, we will exceed 4 million people.
But still, I’ve worked in 600 cities in the United States, and globally, for economic development projects. I still put Austin in the top five most comfortable cities to call home.
LW: A lot of this growth is international: you’ve been at the forefront of supporting international. What in your view has accounted for this change?
AA: For one, we have a President at the University of Texas at Austin with a keen vision on international, and a Mayor who is dedicated to diversity and international connections. I think we’re witnessing a time when Austin is really emerging as a leader in international tech development.
LW: You started the International Accelerator (IA) to focus exclusively on non-U.S. born entrepreneurs, and you’ve had some big success stories here recently in terms of your global reach. Can you tell us about those efforts?
IA just signed a strategic relationship with INC Monterrey to introduce the most promising startups in that area to capital markets in the United States. We have received over 200 applications and will select 70-80 startups to pitch at our SXSW events. During SXSW, we will be over at the Mexican American Cultural Center, working with the office of the Consul General of Mexico, for non-stop pitch sessions for these startups on Friday March 9th. Additionally, the Government of India selected IA as its strategic partner in the U.S., and we should receive our first batch of applications (more than 100) by April. We hope to recruit up to 10 qualified startups from India annually.
LW: What about the current portfolio companies that made it in to IA. Can you tell us about some of the success stories coming out of IA?
AA: I am more than happy to have a moment to brag about our portfolio companies—and our track record after just three years. At the end of last year, we had 8 portfolio companies. I’m proud to say we finished last year with a cumulative $115 million valuation in our portfolio; we raised $16.5 million for them; and all combined had achieved $11 million in combined revenue at the end of last year. Restream, a portfolio company, just received funding from Silverton and angels of $4.5 million. Schoox, our very first portfolio company, has an estimated valuation of over $40 million. Our first recruit in 2018 is our first Chinese company, and we are looking forward to recruiting up to 12 new startups this year that meet our requirements. We have a hands-on, customized approach for each of our companies that I think really sets us apart.
There is plenty of money and plenty of attention in Austin to attract venture capital money. Austin is playing at a national level, and the national VCs are investing here. Nearly 100 VCs have funded Austin companies. Of course, we could always do better for seed capital, but that’s a problem that affects cities all over – Austin is not unique in that regard.
LW: Any French companies on the horizon?
AA: We welcome French startups to apply! I love what’s happening in France as there is significant innovation in the medical sector, medical devices, and pharma. Health tech is there too, along with quite a bit of data security and cyber security expertise. So, we welcome French entrepreneurs to come here. They will certainly be successful in the U.S. if they do come.
LW: We will finish up with a serious question. What are some of your favorite places in Austin?
AA: I have a lot of favorites: for steak, I like Perry’s. I’m a fan of the brunch at Trio, and at the Four Seasons, as well as the 1886 Café over at the Driskill. I love the plethora of great Japanese and Chinese food here in Austin.