Austin Reaches Top 10 In US Venture Markets With Record Funding In 2019

Several venture capital firms based in Austin announced nine-figure funds, a new unicorn was born, and venture funding hit record numbers.

As is typical, Dallas-Fort Worth- and Houston-area startups trailed far behind the Texas capital when it came to venture dollars raised during the year.

Even though it sometimes feels like it, Austin is not the only Texas city bringing in venture dollars it’s just the largest (for now).

Area startups brought in 61 percent of the venture dollars raised (a total of $3 billion) in the Lone Star state last year.

To put Austin’s record figures in context, I asked Jason to rank Austin’s funding last year to other major tech markets in the U.S. What we found is that in 2019, Austin officially broke the top 10 when it comes to recipients of known venture capital funding.

Austin was also the only city in the top 10 to be located outside the historically largest recipients of venture capital markets of the Bay Area, Seattle, Boston/Cambridge and New York.

It also marked the largest funding round raised by a Texas company in all of 2019, according to Crunchbase data.

The round also represented more than half of all venture that was raised in Austin during the fourth quarter.

That round took place just days after AI startup SparkCognition’s $100 million Series C, which was led by March Capital Partners and included participation from Temasek, among others.

Dallas-based Peloton Therapeutics raised a $150 million Series E in February before getting acquired by pharma giant Merck in May. And, Houston-based biopharmaceutical company AlloVir (formerly known as ViraCyte) announced $120 million in Series B funding, which Jason covered in May. SparkCognition’s raise marked the fourth largest in Texas as a whole for the year.

The 6-year-old venture firm primarily invests in early-stage startups with a focus on the Texas market.

Austin has historically been known for its large number of software startups.

Another example lies in real estate startup (and LiveOak portfolio company) Homeward’s July 2019 close of $25 million in debt and equity financing.

“Years ago, people asked us why there were so many large financings in the Bay Area and not in Texas,” he said.

The companies that could raise those big financings just started getting funded four to five years ago.

S3 Ventures Partner Eric Engineer said he believes the growth of so many large tech companies in Austin (such as Apple and Google) is having a direct impact on the startup scene.

In 2018, Austin-based S3 Ventures (which also focuses on Texas startups) saw six exits.

For those who are unfamiliar; 16-year-old Silverton Partners is Austin’s most active venture firm and is in the process of raising a targeted $120 million sixth fund.

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