San Antonio Express-News (Sunday)
Plugging into Texas-size innovation
Capital Factory aims to be center of gravity for startups
In the Tech Port Center + Arena on the South Side, Joshua Baer, founder and CEO of Austin-based startup accelerator Capital Factory, was talking Tuesday with enthusiastic supporters about his organization’s new office space in the
$70 million, 130,000-square-foot facility that opened in April.
Baer, 46, carried Stormey, a Maltese mini poodle, in a backpack draped over his chest as Capital Factory hosted its most recent San Antonio Open Coffee event that morning, joined by millennials in T-shirts and pink jeans and gray-haired techies with ponytails and sunglasses.
“Tech Port is a draw,” Baer said. “It’s the reason people are coming down to San Antonio. It’s why I’m here.”
Since Baer launched Capital Factory in 2009, it has provided finance and mentorship to startups and entrepreneurs in Texas. In 2017, he wrote “The Texas Manifesto,” a tech insider manual in which he called on Austin, Dallas, Houston and San Antonio “to connect together entrepreneurs, investors, customers, talent and press in meaningful ways.”
Since then, Capital Factory’s 85 employees have stretched out into offices across the state, expanding into Houston in November and more recently pushing into Dallas. And in mid-April, Capital Factory installed
three full-time employees in San Antonio to work in a 5,000-square-foot office at the Tech Port Center + Arena — across the hall from what will become a showroom operated by the San Antonio Museum of Science and Technology, along with the 3,200-seat arena for esports competitions
Capital Factory plans to bring its Center for Defense Innovation program, created in 2019, here to further its mission to build partnerships between the private sector and the Defense Department. It is also interested in working with businesses in gaming and the world of esports — the Tech Port Center + Arena has drawn thousands of gaming fans and investors to live events this year.
Q: What is Capital Factory?
Baer: Capital Factory is the center of gravity for entrepreneurs in Texas. We started in Austin, but we’re now working across the state. We have “The Texas Manifesto,” which speaks to the entrepreneurs and tells them to treat all of Texas like one big city. And if they do that, Texas can compete with any other city, any other state, really any other country in the world. Texas is kind of like a country, and it’s one of the best places for startups. That’s why everyone is moving here, for the talent and the quality of life, and that’s where San Antonio brings a lot to the table.
Q: Where do you sit financially?
Baer: To me, what’s most interesting is that we’re the most active early-stage tech investor in Texas since 2010, according to Pitchbook. In the past 12 months, we made 53 investments, which means we invest in a company pretty much every week across Texas.
Right now, most of those aren’t in San Antonio. Some of them are: Easy Expunsions (a legal service that helps clients remove criminal offenses from their records), and Allosense (a computer hardware manufacturer that makes sensors). But certainly, part of us being here and having a presence here is that we expect that to grow.
The courting
Since becoming president and CEO of Port San Antonio
in 2018, Jim Perschbach has led its charge to become a hub for tech companies, with an eye toward fostering their collaboration with other industries, such as aviation.
“To do that, you got to find people who are creative, who have new ideas, who aren’t stuck looking at things in the same box,” said Perschbach, who used to work as a lawyer for Bracewell LLP representing defense contractors, specifically in military aviation, in San Antonio, Houston and Washington, D.C. “But you also have to have people who understand the underlying industry and technology.”
Perschbach knew about Capital Factory’s CDI program. “But nobody was ever thinking about coming down here,” he said Tuesday while visiting the coffee event.
For Baer’s part, he “didn’t know much about what was happening here at Port San Antonio.”
So Perschbach tapped Will Garrett — the Port’s 37-year-old vice president of talent and technology development and integration, who had previously led CyberSecurity San Antonio at the San Antonio Chamber of Commerce — to change that.
Garrett had help getting Capital Factory’s attention.
Baer recalled that in early 2021, Lew Moorman — cofounder and chairman of TechBloc and co-founder of Scaleworks, a local venture equity firm — reached out to him and asked: “What’s it take to get Capital Factory more plugged into San Antonio? We want to get more plugged into what’s happening across the state.’ ”
Also, Illeana Gonzalez, who had just moved from TechBloc to Capital Factory at the time, was among those in San Antonio who helped Baer understand the local tech scene. Gonzalez, who now works from San Antonio for Colorado-based accelerator Techstars, told him that the Port was the “up and coming” site for tech companies and that Perschbach was focused on building out Tech
Port.
So Baer came to San Antonio in the early summer for “a fact-finding trip.”
“I give credit to Joshua himself for coming to San Antonio and meeting with all the right people to try to decide where to place Capital Factory,” Garrett said.
Baer looked at properties downtown, talked with commercial real estate development company Weston Urban and fell in love with the Pearl District.
He also toured the Tech Port Center, which had only some concrete walls built at the time.
“It was hard to see the vision,” Baer said, laughing. “The rest of it was kind of an old base, you know. But fortunately, Jim helped sell us. He was so passionate on what this is for and how it’s going to be great for the community. And Will is a great partner.”
Perschbach recalled the day that Baer and Capital Factory staffers — including Jorge Manresa, vice president of industrial capacity expansion and federal programs — came to the Port one day “in a big party bus” and sat with him and Garrett for about two hours.
“It became really apparent,” Perschbach said, “that if you bring these two groups of people together — the innovative, kind of hip crowd that they represent and the kind of boring old short-sleeved shirts with ties that I represent — that you start to make magic happen.”
Q: Why did you open an office in San Antonio?
Baer: San Antonio has a lot to offer. It’s not the place that has the most startups yet. If you measure who gets the most funding out of the four largest cities, San Antonio is fourth. But we are working with lots of great companies here, and we’re bringing companies from Dallas, Houston and Austin here to plug into the things going on here. And we’re also bringing in corporate partners,