Venture capital surged 40 percent in Austin in 2014

Jan 26, 2015
Austin American Statesman

Venture capitalists significantly stepped up their investments in Austin in 2014 — a sign that the area’s strong startup culture continues to be a boon for the Central Texas economy


A total of 114 Austin-area companies received $620.6 million in last year, according to a survey by PricewaterhouseCoopers and the National Venture Capital Association. That’s a 40 percent increase from 2013, when 88 companies collected $444.4 million


More importantly, the number of Austin startups raising money for the first time soared in 2014. A total of 39 such companies received $113 million, a 90 percent jump in dollars raised a year ago


Early stage investment is a closely watched measure of Austin’s startup community because the money allows companies to hire more workers, invest in new equipment and accelerate product development and marketing. New companies create jobs and, if they flourish, wealth


“This money will get a new generation of startups off the ground,” said Kirk Walden, an adjunct business professor at Texas State University. “As they prove themselves, they’ll go out and raise more money and recruit more people. Some of the top talent they hire will go on to start their own companies. That’s how you want the cycle to work.”


The investments – typically $1 million to $3 million – will be put to work quickly, and much of the money will go directly into the local economy, said Bob Smith, managing director of Austin-based Bridgepoint Consulting


Among the recipients: Brewbot, which will use $1.5 million to create smartphone apps; AdBm Technologies, which will put $1.3 million toward developing an underwater noise abatement system; and Cratejoy, which received $4 million to build out its software that lets companies offer monthly subscription programs


Two-year-old Pivot Freight is an example of how it can work. The software company was started in Phoenix, but its founders moved to Austin last year to take part in Techstars, a three-month accelerator program for startups


In December, the company, which helps businesses compare and reduce shipping costs, raised $2.8 million in seed funding led by Austin-based Silverton Partners


That money enabled Pivot Freight to hire software industry veteran Rob Taylor as its CEO, and the six-person company is now recruiting executives to lead its engineering and sales efforts, including expanding its workforce


Nationwide, venture capital investments rose 61 percent in 2014, with $48.3 billion going into 4,357 deals. As usual, Silicon Valley took in the most venture money, with the San Jose area receiving $23.4 billion in 1,409 deals


The software industry was the largest investment sector nationally, with $19.8 billion going into 1,799 deals



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