For Austin, 2013 venture funding finishes strong

Jan 20, 2014
Austin American Statesman

Venture capital activity in Central Texas peaked during the peak of the dot-com boom in 2000, when 178 companies raised a total of $2 billion


The market regained strength in subsequent years, but took another hit during the financial crisis in 2008. In recent years, investment activity has bounced back, with investors funding deals in areas where Austin has long been a player – software, chip design and medical devices – as well as newer markets including social media, mobile Web, cloud computing and data analytics


The software industry was the largest investment sector nationally, with $2.9 billion going into 397 deals


In Austin, software also dominated, with eight deals receiving a total of $65 million. In all of 2013, 40 Austin software deals received a total of $219 million


On the flip side, it was a down year for Austin’s semiconductor industry. Investments have averaged $67 million a year for the past five years, but in 2013, five deals raised just $27 million


Software is expected to continue reaping the biggest share of investment dollars this year, thanks in part to the arrival of three new Austin-based venture capital funds


Silverton Partners and S3 Ventures have each raised $75 million funds and LiveOak Venture Partners, founded by former Austin Ventures investors, is closing its first fund of about $100 million. All plan to focus on startups, in areas including software-as-a-service, e-commerce and analytics


“We’ve spent years investing in Austin companies, and we believe that right now is the best environment we’ve seen in terms of quality,” said Krishna Srinivasan, LiveOak general partner. “No idea is too small. We’ll write a first check as small as a quarter of a million dollars and grow with the company.”


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