The two-floor office in downtown Dallas was eerily quiet. A place where startups, mentors, and investors usually are buzzing with fervor looked emptier that Wednesday—a day when fledgling companies often are prepping for their evening “pitch” practice. But on this day there were only a few people inside the brightly decorated space. Gabriella Draney Zielke and her partner John Reed were deep in discussion, strategizing about the future of Dallas’ pioneering startup accelerator program called Tech Wildcatters.
The seven-year-old limited liability company has fueled a new generation of entrepreneurs, built a local investment source, and generated buzz for Dallas’ budding startup community. Its ultimate goal: help Dallas-Fort Worth ventures score big exits to put the region on the map as a hub for business innovation.
And, at the beginning of last year, the program reached new heights. It launched a model called the Gauntlet, a year-round program that offered its startups investment based on specific milestones, and attracted its largest classes. It also was coming off a strong 2015, during which it was stocked with a healthy supply of mentors and had raised its largest fund up to that point.
Today, however, the accelerator has slowed, halting the launch of new classes and the raising of a new fund and laying off most of its leadership. “I’ve had such a long year,” CEO and managing partner Draney Zielke laughs as she slumps back in her chair. “I’m so whipped.”
Though the year has been rough, Draney Zielke isn’t ready to call it quits. With help from Reed and advisors, she is working to mold Tech Wildcatters—which was still in operation at presstime—into something it’s never been before. What that will look like has yet to be determined, but Draney Zielke says the “new” Tech Wildcatters will go back to its founding purpose: to serve as a resource built for entrepreneurs by entrepreneurs. “It’s priming for its real growth, and what it’s capable of,” she said, adding that education and mentorship will be key. “Just watch.”
It won’t be easy. Draney Zielke is still dealing with the effects of running with a smaller team, community rumors, and a viciously accusatory, widely circulated email that raised questions about how the program was being run. While she fine-tunes the new plan over the next several months, the questions remain:
Can Tech Wildcatters bounce back as a thriving program? Or is the city’s first accelerator nearing its end?
‘Burning the Boats’
For Draney Zielke, survival isn’t a question. It’s a must.
She’s following an entrepreneurial concept called “burning the boats,” she says, meaning torching any chance for retreat in uncharted territory. It’s survive or die trying.
The new Tech Wildcatters will respond to the current needs of the startup community, keeping the pieces of the program that worked and leveraging the lessons learned from its seven-year ride, she says. Meantime, she’s focused on strengthening the portfolio companies, aiming to strike more exits and complete investments from the latest fund. The new model is going to take some time and effort to develop, she says, and it likely won’t arrive tied up in a bow. “It’s unfortunate when people look at something that’s just being newly created and focus on the mess around it,” Draney Zielke says about the critics of the organization’s ups and downs. “I’m sorry, creation is messy. Haven’t you ever seen a baby being born?”
Development of the new program will come after a tumultuous year. For the first six years of its life, Tech Wildcatters accepted startups for its 12-week program and offered them $25,000 for a six (and in recent years, an eight) percent equity stake. The program also provided its companies with mentors from large corporations and successful startups, and offered workshops and events to beef up the founders’ business knowledge. But in 2016, the model shifted to the Gauntlet, which awarded startups up to $30,000 and gave them the chance to receive a $100,000 follow-on-investment. Management also reorganized, after Draney Zielke hired Molly Cain, who took over as executive director in late 2014, and Robert Brevelle, who was appointed managing director and chief operating officer in February of 2016. Clarisa Lindenmeyer, who’d served as vice president of public relations and corporate affairs since 2013, was named chief revenue officer.
“They … needed an ecosystem that is intended to support them and work with them. In some cases, that didn’t happen.”Dawson Barksdale, Cyphr
The changes aimed to add more corporate-like processes and clearly defined roles. But as the organization took its new shape, frictions started to show. “Within a couple of months of bringing on a COO, things felt different in the office, and it wasn’t in the most positive manner. I was not a fan of what the culture had become,” says Lindenmeyer, who’d understood the need for the original changes.
The startups felt the change, too. “They needed a COO badly,” says Dawson Barksdale, CEO of startup Cyphr, which was in the first class of the Gauntlet. “They also needed an ecosystem that is intended to support them and work with them. In some cases, that didn’t happen.”
Neither the management nor the startups had much time to settle into the new mold before the next change rattled the group. About five months after Brevelle’s arrival, Cain and Lindenmeyer were called in and handed their pink slips. Their positions were dissolved as the organization aimed supposedly to increase efficiency. The news came as a shock, not just to Cain and Lindenmeyer, but to the startup community itself.
Tech Wildcatters had spent the previous several months branding itself as a women-led accelerator, with Draney Zielke, Cain, and Lindenmeyer serving as the poster girls on local and national levels. In 2015, it also had raised its largest fund up to that point, with Cain nurturing relationships and recruiting new blood, and Lindenmeyer creating a unified message and pulling in sponsors. Besides managing Tech Wildcatters, the team had launched Emerge, an accelerator for first-responder technology created in partnership with the U.S. Department of Homeland Security. It also announced the Corporate Innovation Network, which aimed to connect startups with Fortune 500 companies. Both programs have since wound down. “Twenty-fifteen was hands-down the best year that organization has seen,” says Cain, now the director of Venture Technology Relationships at the U.S. Department of Homeland Security. “We absolutely accomplished our mission.”
“There were so many new investors, so much new money, and the [public relations were] so good,” recalls Dennis Dayman, a mentor and an investor in Tech Wildcatters at the time. “Why would you fire the winning team? That really raised a lot of eyebrows.”
There was some noise around the two departures, as anonymous internet trolls took to social media, news reports, and iratemyboss.com, tearing down Cain, Lindenmeyer, and Draney Zielke. Cain received threats via text message as well. Startups were treated more “aggressively” as they were held to new standards and asked to chase moving targets after Cain and Lindenmeyer were laid off, says Dayman, who was ousted as a mentor last August.
But Tech Wildcatters’ downsizing wasn’t over yet. About five months later, in December, Draney Zielke told Brevelle and Steven Gehfeld, who’d joined the group as project manager in July, that they would be cut down to one-day work weeks. Within a couple of days they were laid off, too.
Brevelle declined to comment, and Gehfeld could not be reached. “We were staffed up to handle what we expected to be continuation and growth of contracts,” Draney Zielke said a few weeks after the departures, declining to comment on the pair’s performance. “It’s the end of the year now, and none of those contracts continued, and we didn’t get any exits this year. We can’t support that large of a staff for only one program.”
Two weeks later, yet another blow hit. On a Sunday afternoon, an anonymous email addressed to Draney Zielke arrived in the boxes of investors, mentors, partners, and press. The message alleged numerous questionable financial activities and poor stewardship of the accelerator and its investments from 2014 through September 2016. It called for the quick replacement of Draney Zielke and incited the expectation that investors should receive the gift of their returned investment dollars over the holidays. It was signed “Santa E. Claus.”
To date, no one is believed to have uncovered the author or authors of the harsh email. But insiders have their theories. “The truth is it came from an anonymous source who had very detailed information that only a few people had,” Draney Zielke says. “I checked with two law firms … like, ‘Have I done anything wrong as the manager?’ and they [said] …’No, everything’s perfectly fine.’ I did see where I could’ve potentially been set up.”
Since the allegations suggested questionable financial activity, Draney Zielke invited investors to a private meeting in early January to address concerns. “I got what I expected,” says Ryan Scripps, managing partner of TCD Services LLC/TLP Capital LLC, who has been an investor since 2010. “The problem … is to address some of those issues head-on, you’re giving some validity to [the author(s)] in the first place. I feel like all the issues weren’t addressed directly, but it was the right forum to opening it up to transparency.”
Tech Wildcatters also hired a third-party audit company to run checks on its books, Draney Zielke says. It will be the first time the group has undergone an audit. Investors like Scripps and Stephen Hays of Deep Space Ventures, a venture capital group, aren’t worried. They were paying for a stake in new startups and for access to further investments, and that’s what they got, they say. They will not seek the return of their investments, they add. “I’m trying to deploy a fund, and I don’t have time to distract myself,” Hays says about the commotion stemming from the email. “I love being able to go to Gabriella or her general partners and get some market color on what’s going on. Frankly, that’s worth $100,000 to me.”
But not everyone is as comfortable with the latest developments. “We were excited about the opportunity to … assist in the growth and development of new startups in the Dallas community. So much so, we planned on being a premiere sponsor,” says Scott Beckmen, Beckman Law founding partner. “However, when we started to see management issues arise, along with the uncertainty of the 2017 program, we have decided not to formalize our relationship. We are waiting to see what happens.”
As Draney Zielke begins work on her new plans, she says she has just one regret: “Believing things about people that they supposedly did … then making decisions on things that I haven’t fact-checked,” she says vaguely. “I’ve definitely made a few apologies there,” she adds about decisions she’s made. “I got so beat down by everyone telling me you have to do it this way, I stopped trusting myself. But that will never happen again.”
Back to Basics
Draney Zielke started this journey in 2009, after serving as an associate for Dallas venture capital firm HP Growth Partners. Back then, there were no accelerators in DFW. “The only way people were raising money was to leave and go west,” recalls Dave Copps, a Tech Wildcatters mentor and CEO of Addison-based Brainspace. “Once you got traction, you’d leave. It was almost like we had to put a plug in the dam.”
Draney Zielke saw an opportunity to be an agent of change. At Dallas co-working space CoHabitat, founded by Copps and Blake Burris, she connected with key players such as managing partner Jon Feld, a cousin of famed Techstars founder Brad Feld.
Draney Zielke teamed up with Feld, Reed, Omnitracs Vice President Brad Taylor, and Green Park & Golf founders Carl Soderstrom and Clay Heighten. Today, Reed and Draney Zielke serve as managing partners of Tech Wildcatters, with Green Park & Golf and Taylor serving as minority partners and Feld as a partner emeritus.
“Don’t be dismayed. If you believe in the vision, the rest will fall into place.”Gabriella Draney Zielke, Tech Wildcatters
Her brainchild gained national attention in 2012 after Forbes ranked it as one of the top 10 accelerators. To date, Tech Wildcatters has garnered four exits. “Over time, it definitely grew from startup in its own right to an actual cornerstone of the entrepreneurial community,” says Stewart Youngblood, who was hired as program manager in 2011.
“The platform and others worked really hard to create connections,” says TJ Person, founder of Koupon Media, which raised $1.5 million a day after graduating. “Those connections are the reason why I’ve been able to be successful in Dallas.”
Looking ahead, Draney Zielke says she’s told investors she won’t ask for new funding for the next several months. She’s still raising investments for the 2016 fund—a process that typically closes in the spring of the fund year, according to Lindenmeyer.
But can she drum up enough interest to get the startup community behind her, despite the turmoil? The CEO, who relieves stress with long-distance running, has risen to the occasion before. “She’s very engaging, so she has a charm that does draw people in,” Scripps says. “She plays to that strength to first get people’s attention and then to get people to take action.”
This time, however, she’ll be forced not only to gain the trust of investors and sponsors, but to do so despite the negative forces that still are targeting her. Draney Zielke says she can’t make any promises but, true to her personality, she remains positive. “With early-stage startups and entrepreneurs in general … it can look super-chaotic from the outside. We’re not an exception,” she says. “But don’t be dismayed. If you believe in the vision, the rest will fall into place.”