Hindsight : MERRICK FURST

Wednesday, June 04, 2014

Tech startup accelerator Flashpoint raises second $1M fund

Georgia Tech professor Merrick Furst runs the Flashpoint accelerator program. The tech company building venture has raised a second $1 million fund.

Urvaksh Karkaria: Staff Writer-Atlanta Business Chronicle; Email | Twitter | Google+ | LinkedIn

An Atlanta venture aimed at launching the next generation of tech startups has raised its second $1 million fund.

In the past three years, Flashpoint at Georgia Tech has helped seed three dozen startups who have collectively raised more than $65 million from blue-chip venture firms such as Google Ventures,Kleiner Perkins Caufield & Byers and Andreessen Horowitz.

The four to six-month “accelerator” program, held twice a year, helps entrepreneurs develop scalable businesses. Accepted startups are offered work space at Tech Square and go through a “startup course.” The program is managed by GT’s Merrick Furst, Distinguished Fellow in GT’s new Center for Startup Engineering, and others.

The Flashpoint program takes people who have some technical expertise and knowledge of a market and help them form a sustainable business.

“We have a set of things that we can teach people that can make them better founders,” said Furst, a Georgia Tech professor.

The second fund, like the first, will be managed by super angel Sig Mosley, who is separately raising a $30 million venture fund. The new fund will be invested in up to 50 startups over the next two years.

With its fund, Flashpoint invests about $20,000 in each of the startups in exchange for equity. The program’s imprimatur opens doors of established venture firms and provides access to a network of alumni entrepreneurs.

In that, Flashpoint — which began as an experiment by Georgia Tech — is not dissimilar to Silicon Valley’s Y Combinator, Boston’s TechStars, or Austin’s Capital Factory.

Flashpoint uses a process called ”startup engineering” developed by Furst.

“We’ve identified the factors that cause startups to fail,” Furst said. “Startup engineering is about finding ways to manage around it.”

The Flashpoint model emphasizes the customer discovery process — identifying demand before building a product.

“It’s about being able to learn to see the market the way it is, not the way you think it is,” Furst said.

Flashpoint is a quick way for entrepreneurs to get to a valid idea, said Rob Kischuk, a Flashpoint alum and CEO of e-commerce tech company PerfectPost.

“The program forces (entrepreneurs) to get out of the building and talk to customers, being careful not to ask the questions that just reinforce your own beliefs,” Kischuk said.

The program however, can be a bit “academic,” with a lot of going back to the drawing board, said Kischuk “Sometimes there’s a case to just go out and execute even if you don’t have all the right answers,” he said.

Even so, Kischuk says the program’s rigorous focus helped PerfectPost score financial backing from tech billionaire Mark Cuban. “We had a lot more of the questions answered than we would have just rattling around some eight week, once a week course,” Kischuk said.

The notion of “startup engineering” might have legs. Flashpoint has launched business across a broad swath of industries, including e-commerce, information security and marketing automation.

Flashpoint’s biggest success story is Ionic Security, an infosec startup that raised $38 million from Google Ventures, Kleiner Perkins and Jafco Ventures. Pindrop Security, which is developing phone fraud-busting technology, has raised $11 million from Citigroup Inc.’s corporate venture arm, Andreessen Horowitz, Redpoint Ventures and Felicis Ventures.

“I think you’d have a hard time finding a three-year-old startup accelerator with a better funding record,” Kischuk said.

As an independent company, Flashpoint is financed by startup equity and fees paid by corporations who send their more entrepreneurial employees through the program, hoping to retain talent and foster innovation. About a third of the last Flashpoint class were made up of corporate teams.