Venture floodgates open for Austin companies in 1st quarter

Apr 28, 2014
Austin American Statesman

The big money is back. Austin companies reaped record-level investments in the first quarter, as venture investors pumped more dollars into more deals


A total of $320 million was raised by 23 companies during the quarter, according to securities filings and a survey by PricewaterhouseCoopers and the National Venture Capital Association


The $320 million raised in the first quarter compares with $406 million raised locally in all of 2013. It was the biggest quarterly dollar figure for investments in Austin since the second quarter of 2001, just before the dot-com bubble burst


Venture dollars are a key ingredient of a homegrown high-tech economy, enabling companies to add more workers; invest in new equipment; hire service providers, such as accounting and law firms; and ramp up product development and marketing


The Austin venture capital surge is being mirrored across the nation. Investors poured $9.5 billion into 951 U.S. companies during the first three months of 2014, marking the highest investment in the last 13 years. As usual, Silicon Valley raked in the most venture money, with 321 San Jose area companies receiving $4.7 billion, the largest amount in any quarter since the end of 2000


In Austin, the ripple effects of the strong first quarter will be felt immediately, said Bob Smith, principal at Austin-based Bridgepoint Consulting, which advises technology companies


“The CEOs who raised this money will want to put it to work as quickly as possible,” Smith said. “The majority of it will be spent on salaries, very well-paying ones, probably averaging $80,000 to $100,000 annually. Their employees will in turn invest in homes, buy new cars and send more dollars into the local economy.”


Venture capital firms raise money from pension funds and other big institutions and invest it in promising young companies. The goal is to get a healthy cut of the profits as those companies are sold or go public


How big was Austin’s first quarter? The $320 million invested during the first three months marked a 221 percent jump from the fourth quarter and a 203 percent increase from the same quarter a year ago


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