The tech incubator 1776 is a collegial place, with offices painted in lively colors, couches to greet visitors, and members who share seats, desks and the fixings for peanut butter and jelly sandwiches.
It’s an atmosphere carefully cultivated by its founders, Evan Burfield and Donna Harris, and it helped position the outfit as a caretaker, connector and capital provider for tomorrow’s big technology companies.
But after Thursday’s announcement that 1776 would acquire Disruption Corp., a Crystal City tech hub, there is little doubt that the founders have aspirations to grow one of those big companies themselves. The move raises questions about how its founders will balance their own financial success with support for the companies they’re helping to build.
In a former life, Harris and Burfield were software entrepreneurs themselves. Harris founded the online educational services firm Kinderstreet, while Burfield started netDecide, which provided wealth management services to financial services firms.
They launched 1776 two years ago with $200,000 from the D.C. government and set about creating a local network backed by jurisdictions eager to attract jobs and entrepreneurs. Having already inked partnerships with the District and Montgomery County, 1776’s addition of Disruption’s offices will give it a Crystal City location, which Harris said “completes the circle of the region.”
On Thursday, Burfield said the local tech industry needed to “tear down some of these borders between D.C., Maryland and Virginia” to compete with the likes of California’s Silicon Valley.
Principals at both companies agreed not to reveal details of the deal. A person familiar with the transaction who didn’t want to publicly violate that agreement said it was an “all-equity” rather than a cash transaction.
Frank Bonsal III, director of entrepreneurship at Towson University, who has worked with Harris, Burfield and Disruption founder Paul Singh, said the acquisition “either means they’re extremely aligned and they create cost-efficiencies by working together, or one was starting to compete with the other and they decided to roll it up.”
What is more clear is that the 1776 founders have acquired in the Disruption deal two central components to advance their company.
The first is venture capital expertise. Singh, 34, has raised eight venture funds in five years and has ties — from living in India, Virginia and Silicon Valley — to investors around the world.
Last fall, he announced an expansion of his work backed by Halifax-based Innovacorp, with the support of the Canadian government. Harris and Burfield have invested with him previously and have known him for years.
[Related: Disruption Corp. expands in Crystal City]
The second is asset is software. At Disruption, Singh developed three products, including Dashboard, a tool to help start-up founders network, raise money and efficiently identify mentors and partners as they grow. Singh made Dashboard available to accelerators and investment communities around the world, creating more than a dozen disparate groups of entrepreneurs and venture capitalists who use the program to communicate, plan meetings and track growth.
Before the acquisition talks, Burfield and Harris had begun developing competing software, dubbed George, aimed at providing similar tools to its 270 members and members of affiliates in Chicago, Toronto, Berlin, London and nearly a dozen other cities.
Demonstrating George recently, Burfield said, “What we can do is track every interaction our founders made, how frequently they make those interactions and what each interaction meant to them.”
Gary Hensley, founder of an education-technology company housed at 1776, said the George platform has become “an everyday tool” for his team.
“Without it, there’s no way we could keep up with everything that’s going on here, all the events and speakers and investors who are coming by,” he said.
Dashboard and George — which will be combined — seem like a mash-up of communication and scheduling tools from LinkedIn, Facebook and Google Calendar. As Burfield sees it, they are critical time-savers for young entrepreneurs: “If you’re a start-up, you spend 90 to 95 percent of your time with your head down trying to solve a problem.”
But the software might have a far more valuable use to 1776. It creates a detailed and proprietary store of information on start-ups and their employees that Harris and Burfield could use to invest or sell to other investors.
Burfield said they were still considering how that data would be used. Say MedStar Health, a 1776 sponsor and partner, wanted to know specific information about meetings a health-focused 1776 start-up had taken. Would 1776 sell it to them? “We wouldn’t, but we could aggregate, rank or compile information about our members to our partners,” Burfield said. “There are a lot of possibilities here.”
He later added: “We have no interest in selling data to anyone but rather using data and tools to help our community connect and innovate.”
Despite 1776’s call for regional cooperation, there are likely to be parochial concerns raised by its expansion. Though the District put up the money to launch 1776, Virginia Gov. Terry McAuliffe (D), speaking beside Burfield and Harris on a Crystal City rooftop at the announcement, trumpeted Virginia as the future “hub of innovators and start-ups in America.”
The building was one owned by Vornado Realty Trust, a major backer of Disruption’s work in Crystal City. Mitchell N. Schear, president of the firm’s Washington office, has bet on tech growth to fill the company’s many Crystal City office buildings.
As he put it, “We hope that they go from start-up mode to speed-up mode to scale-up mode and continue their full life span here.”
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz