High-tech help for fledgling entrepreneurs

D Magazine, Nov 01, 1998

SCOTT KINGSLEY WAS AN ENGINEER WITH an idea and the confidence that he could save telecommunications companies millions of dollars a year.

After six years of working in his spare time, he was ready to start knocking on the doors of venture capital firms, which could provide him the money to start a company, and corporate decision-makers, who could buy his software.

But like many of us, he had bills to pay and couldn't just quit his job to make those calls. Besides, he really didn't know whose doors to knock on or how to get anyone to open them.

"We had a finished product, and we had potential customers," Kingsley says. "But the level I operate at is the senior engineering level. I needed to get to the level of the people who sign the checks."

The software Kingsley developed helps route the increasing volumes of voice and data signals along existing telephone networks, avoiding the need to build even more networks to handle the extra traffic.

Think of the phone networks serving Dallas as stacks of circular highways piled atop each other around the city, like a multi-level 635 Loop. Traffic moves across these multiple highways, exiting onto local roads just as telephone signals exit the network to reach their destinations. During peak hours, traffic on LBJ backs up by sheer volume, just as signals can get stacked up on telephone company networks during times of high use.

Like an omnipotent traffic cop, Kingsley's software automatically routes the electronic traffic to the least traveled highways whenever it detects a backup or a breakdown. It saves phone companies money by using existing networks more efficiently so expensive new networks don't have to be built.

The problem was that Kingsley could not connect his idea with the money that could make it a reality--and in turn make more money.

In May, however, Kingsley's fledgling Telsoft Technologies was flush with $350,000 that allowed him to work full-time on his invention and hire engineers to enhance his product for commercial use. By summer's end, the venture capital companies whose doors Kingsley couldn't even find--much less crack open--were contacting him almost daily, so convinced that he was onto something that they were willing to offer him millions of dollars in additional funding.

What made the difference?

Richardson-based Startech, itself a start-up company that is now entering its second year of helping entrepreneurs like Kingsley start high-tech companies.

STARTECH WAS THE BRAINCHILD OF TOM Aschenbrenner, an entrepreneur turned venture capitalist who started wondering 15 years ago why so few new companies were being born in Richardson, populated as it is with all those high-tech managers and brilliant minds.

Over time, Aschenbrenner came up with lots of answers, but he found no solutions until a late-summer evening in 1996 when he took his dog, Buffy, for a walk. Two doors down, he bumped into his neighbor and longtime friend, Frank Kozel, who recently had retired from MCI and was casting about for new opportunities. Aschenbrenner tarried with Kozel as Buffy did her business, long enough for him to share his thoughts and to ignite a spark of inspiration.

What the city of Richardson owes to Buffy's brimming bladder is Startech, because, after all those years of wondering, Aschenbrenner's friend of 20 years was in a position to do something about his idea.

"I guess had it not been for Buffy having to take a leak, we might never have gotten this far," cracks Kozel.

That streetside conversation begins the story of how an idea combined with coincidence, connections, hard work, timing, and "pure dumb luck," as Aschenbrenner describes it, came together to spawn a successful venture.

And now that venture is slowly beginning to spawn others such as Kingsley's.

"We're not here to start doughnut shops and janitorial firms," says Kozel. "We're not hung up that they have to be telecommunications--they can be software or medical instrumentation--but they have to be high technology. They have to come in with a high profit desire, [and] they have to come in with the desire that they're going to be a successful venture going forward."

Finally, fledgling entrepreneurs with ideas or start-up companies in the early stages of development have somewhere in Dallas to turn for information, support, and funding. It can mean the difference between working for someone else or starting a company that creates jobs and wealth.

For companies along Richardson's Telecom Corridor, support and funding mean having smaller, more nimble companies that can quickly bring them breakthrough products that enhance existing technology and increase their bottom lines.

The basic idea behind Startech isn't new: Find entrepreneurs who have a concept and help them take it to market by giving them access to funding and management expertise in exchange for a piece of the company. Venture capital firms have been doing that for decades, particularly in Silicon Valley.

But for early-stage companies in Dallas that haven't developed to the point where they can attract the interest of a venture capital firm, there was no place to go for funding, management expertise, or industry contacts.