265 Million Reasons to Look For Startup Funding in Austin, Texas

Startup buzz is pretty heavy within the Austin city limits, but not everyone in the country is aware of the big things that are happening in Central Texas. Many will be familiar with the week-long showcase that is South by Southwest, which has given invaluable exposure to the city’s tech ecosystem, but most would be surprised when shown this ecosystem by the numbers.

Earlier last month the Austin Chamber released its monthly Economic Indicators report, revealing some impressive data:

  • First quarter 2015 funding in Austin is 31% ahead of the same period last year
  • Average investment per deal was $9.15 million, higher than any other quarter over the last three years
  • While software companies continue to dominate VC investing in Austin, nearly $60 million went to biotech — the second highest quarterly total received by biotech in the last 20 years

Austin companies attracted $265.33 million in venture capital (VC) investment in the first quarter of 2015, the highest quarterly total since the first quarter of 2012.

To dive deeper into the startup ecosystem that lives in Austin, we look at the industry verticals that have dominated funding. Software companies have averaged over 40% of the VC funding in Austin over the last five years, while Industrial/Energy comes in second with 18% (Seen Below). However, since Q1 of 2014 Biotechnology has taken over that spot with nearly 12% of Austin’s VC funding.

In addition to investment by vertical, it is important to asses investment by stage of development when evaluating a specific region’s start up ecosystem, as there may be inherent advantages or disadvantages when looking for funding in these regions. PricewaterhouseCoopers National Venture Capital Association defines the stages of development in to four categories: Seed, Early, Expansion, and Later. Shown below is a view of how Austin compared to the U.S.during the last decade by volume of investments per stage of development.

Austin has continually been on par, and sometimes exceeded the U.S. in relative volume of investments for Expansion stage companies (56% in Q1 2015)

Austin is home to countless resources for entrepreneurs and start-ups, especially in the seed and expansion stages. With the amount of start-up and funding growth that has taken place in the last 5 years, Austin is poised to reach a critical mass and become one of the major players that everyone has hoped it would be in the Start-up and Venture Capital world.

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