Austin’s VC Investment up 22 Percent to $198 Million in Third Quarter

By LAURA LOREK
Reporter with Silicon Hills News

iStock_000018108618Medium-300x199While the rest of the country saw a slight decline in venture capital dollars invested in the third quarter, Austin is still going strong.

“The message is we’re trending in the right direction,” said Larry Westall, partner with PricewaterhouseCoopers, based in Austin. “We’re up 22 percent in the last quarter, while the rest of the nation is down 5 percent.”

VC investment increased 22 percent in dollars invested in the latest quarter in Austin, compared to the second quarter, according to the MoneyTree Report from PricewaterhouseCoopers LLP and the National Venture Capital Association, based on data provided by Thomson Reuters. The number of deals decreased seven percent, compared to the previous quarter.

Nationwide, venture capitalists invested $16.3 billion in 1,070 deals in the third quarter, with dollars invested down 5 percent and deals down 11 percent, compared to the previous quarter, according to the MoneyTree Report.

But the third quarter marked the seventh consecutive quarter of more than $10 billion of venture capital invested in a single quarter. And the $47.2 billion invested so far this year is higher than the full year totals for 17 of the last 20 years.

In Austin, the MoneyTree report shows venture capitalists invested $198 million in 25 deals with software getting the most investment. Software deals increased 151 percent compared to last quarter with $120.8 million in investment. They made up 61 percent of the total investment dollars in Austin.

The other big industries to attract investment included IT services with $31.3 million, the second largest investment sector, followed by semiconductors with $24 million and four deals, according to the MoneyTree report.

“I’m expecting this amount of funding could exceed the amount of funding as far back as 2000 for the year,” Westall said. “It’s really great to see.”

Surprisingly, Austin did not have any biotechnology deals in the third quarter. In the second quarter, one deal attracted $41.8 million in investment dollars.

Austin companies in the expansion stage saw an uptick in funding dollars, compared to the previous quarter. But money for early and later stage investments in Austin declined in dollars, compared to the previous quarter.

Austin did see a dip, a 22 percent decline in dollars invested in early stage companies in the third quarter. Overall, 12 deals attracted $61 million in funding. And seed stage companies did not receive any investment in either the prior or current quarter, according to the MoneyTree report.

“Companies seem to be staying private longer,” Westall said. “It allows the management to be able to maintain control and avoid the public market. They don’t need it. There’s money available to them.”

In Austin, Civitas Learning attracted a $60 million investment in the third quarter, the top deal. Main Street Hub got $25 million as the second largest deal followed by Ziften Technologies and Continuum Analytics with about $24 million each.

In San Antonio, WellAware Holdings closed on $16.5 million in early stage funding, making it the city’s largest investment deal for the quarter.

Dallas had the state’s largest investment deal in the third quarter with AveXis, a clinical stage gene therapy startup, attracting early stage investment of $65 million.

And Dallas actually beat Austin as the lead metro area for the state attracting the most investment dollars in the third quarter. Dallas got $229.9 million, compared to Austin with $198.2 million. Austin had more deals with 25, compared to 12 in Dallas. Houston got $44 million in nine deals followed by San Antonio with $20.5 million in two deals.

By far, Austin still leads the state in the amount of venture capital invested in the first three quarters of 2015 with $627.8 million, followed by Dallas with $361.5 million, Houston with $102.9 million and San Antonio with $55.5 million, according to the MoneyTree Report.

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