From what I saw, they appear to be looking for more polished startups, and their application process does not have the same focus on finding talented hackers that YC's appears to have.
I'm not really sure what motivated them to pick a hodgepodge of me-too web properties (a few niche craigslist-ish things and a pet medical site).
Outside of Capital Factory, it seems like Austin Ventures and friends will continue to fund more of the same recycled enterprise network/virtualization/identity management software companies, being started by the same management teams over and over.
I really hope the next batch of CF startups is more interesting/innovative. Good luck with your venture, it looks promising, even if CF didn't care to fund it.