If Heivly had any doubt over that statistic then, he doesn't now. He and partner Dave Neal are wrapping up their own year three after last night's showcase of five startups in class six, and they have more to celebrate than ever before.
A string of good news—an exit and three fresh fundings—positions the accelerator to recruit ever more impressive classes of startups and to raise more money from investors for a second fund in 2016.
"We've been through six selection processes and I think we're getting better at it," Heivly says. "We know what to look for. We know what works best for us."
Late last week, the accelerator also got to revel in its first exit
, a Raleigh-based advertising technology company that completed the program in 2012, was sold for an undisclosed sum to a division of a New York-based MediaMath called Adroit Digital, which lets advertisers and publishers change display ads in real time based on data from geotargeting, behavioral targeting and demographic variables.
TSF is responsible for pairing now CEO Paolo DiVincenzo
with Arcametrics founders Brad Davis
and John Turner
. The three men are now executives at Adroit (whose parent company could file an IPO
) and will build and lead a team in the Triangle.
"What it means to me is the first validation that we can take a company from something pretty small to an exit," Heivly says.
In October, the hostel booking and management site Hostel Rocket closed the $725,000 oversubscribed round that co-founder and CEO Michelle McBryde
hinted to ExitEvent
in September. It's lead investor Great Oaks Venture Capital's (of New York City) second investment in the Triangle (Adzerk was the first).
And last night at the TSF Fall Showcase, Washington D.C.-founded Orate
announced in front of 100 investors and entrepreneurs that it closed a $400,000 round during the three-month accelerator. The online marketplace matching public speakers with event organizers is targeting a $13 billion industry in the U.S. alone, and has 100 healthcare and tech speakers and 20 organizers testing the platform.
TSF's momentum is anecdotal too. McClure, who travels the world visiting accelerators and incubators searching for investments, told the TSF founders after May's pitch day that they're "the real deal."
And last night, Washington D.C. venture capitalist (and Orate investor) Jonathon Perrelli
told me TSF's was "the best demo day I've ever been to" and the "best kept secret in accelerators anywhere." He recently traveled around the world for a documentary about accelerator programs called Startupland,
in which Heivly was featured.
After three years and 31 investments, Heivly admits there’s a bit of a formula to success at the Startup
Factory. Stage of company doesn't matter so much. In the recent class, SnapYeti, the photo contest platform for brands, is furthest along with 53,000 users and 160 customers and IMNEXT just launched an early prototype of its platform.
More important, Heivly says, are the personalities of founders in the program. They must be eager to learn, open to criticism and skepticism and able to take massive amounts of information and feedback and take action.
"Michelle (McBryde of Hostel Rocket) is the perfect poster child. She gathers information from so many people, argues with them, pushes back, gets pushed, but out of it, she seems to make great decisions," Heivly says.
His team of mentors are also very good at helping companies building niche marketplaces for business and consumer—for example, CareLuLu, HostelRocket, Orate and new graduate IMNEXT, which matches contractors with customers online in real-time—and targeting specific industries, like Tuee and TabSprint for restaurants/bars. TSF's startups might have smaller markets than the large consumer plays that other accelerators mine for, but Heivly believes the niche fits the Triangle's talent pool and funding environment.
"Some people might say we aren't swinging big enough," Heivly says. "But it's really hard to swing big here when you can't raise $10 million at a time."
Despite the funding challenge, the recent wins speak for themselves. TSF companies are attracting national-in-scope investors—the 10 TSF startups with the most prospects average $630K in funding, many from sources outside the region. The men say they frequently get drop-ins from potential investors—Comcast Ventures recently met with the teams while visiting portfolio company Windsor Circle in Durham. And the showcase happened in timing with the Internet Summit—several investors attended both events yesterday.
TSF's newest hire Lizzy Hazeltine
will continue to cultivate those relationships and ensure funding doesn't stop TSF companies from growth.
Raising a second fund will be key too. The initial $6.64 million will be tapped by this time next year, so 2015 will be a fundraising year for the company. The recent wins are well-timed in that regard, Heivly says.
"At this level, you'll expect to see companies take 7-9 years to see returns, so our investors have those expectations," Heivly says. What matters after three years of investment are the number of TSF companies still operational (28 of 31) and getting follow-on funds ($7.5 million total) and the stature of the investors.
Heivly is feeling confident these days. "Our current investors are very, very happy."