Austin VC Investments up 20% in 2015 to $740 Million

By LAURA LOREK
Reporter with Silicon Hills News
iStock_000030057966Large copyNationwide the venture capital industry had one of its best years ever in 2015.

And that’s true for Austin too.

Austin ended the year with $740 million in VC investments, up 20 percent from 2014, in 99 deals, 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 dropped 13 percent with 99 deals in 2015, compared to 114 in 2014.

“It’s nice to see the dollars flow into Austin at this level,” said Larry Westall, partner with PricewaterhouseCoopers, based in Austin.

Software deals attracted the most money in Austin and nationwide, followed by biotechnology investments, according to the MoneyTree report.

The slowdown in the fourth quarter in deals in Austin doesn’t mean there will be a slowdown in 2016, Westall said. There may be some leveling off because of macroeconomic news with the Presidential election, oil prices, Isis activity, stock market fluctuations and China’s cooling economy, Westall said. But new investments are definitely seeing headwinds in 2016 locally, he said.

In 2015, Austin led the state in venture capital investments followed by Dallas with $214 million in venture capital in 29 deals, Houston with $161 million invested in 30 deals and San Antonio with $55.5 million in five deals, according to the MoneyTree Report.

Overall, Texas attracted $1.17 billion in 2015 in venture capital invested in 163 deals, down 18 percent in dollars invested from 2014, according to the MoneyTree Report. The number of deals dipped nearly 13 percent to 163 in 2015, down from 187 in 2014.

In Austin, the number one deal for the year was Civitas Learning attracting $60 million in venture capital, followed by Aeglea Biotherapeautics with $44 million, Mirna Therapeutics with $41.8 million and SpareFoot with $30 million.

In the fourth quarter, Austin companies received $100 million in venture capital, down 52 percent from the previous quarter in 16 deals, also down from 32.

In Austin, the top deal in the fourth quarter was Phunware with $19.3 million in investment, followed by Savara Pharmaceuticals with $18.5 million, Trendkite with $10.7 million, TVA Medical with $8.7 million and Vital Farms with $8 million.

Nationwide, venture capitalists invested $58.8 billion in the U.S. in 2015, up 16 percent from 2014, marking the second highest full year total in the last 20 years, according to the MoneyTree Report.

For the fourth quarter of 2015, venture capitalists invested $11.3 billion into 962 deals, down 32 percent in dollars and 16 percent in deals compared with the third quarter.

“While a handful of unicorns and late-stage funding rounds by nontraditional investors continue to grab the headlines, more than half of all deals in 2015 went to seed and early stage companies, with more than 1,400 companies raising venture capital for the first time,” Bobby Franklin, President and CEO of NVCA said in a news statement.

“It was a great year for Austin in terms of overall progress,” said Krishna Srinivasan, partner in LiveOak Venture Partners in Austin. “In the 16 plus years of being in the business, we saw this as the best year for entrepreneurial investment in quality and quantity of deals.”

First financings are improving immensely, Srinivasan said. LiveOak Venture Partners made five new company investments in 2015 and several follow on investments, he said. It also had its first exit in December when its portfolio company, StackEngine sold to Oracle.

“It was our biggest year in terms of financing,” Srinivasan said. “We are seeing a lot of activity.”

Srinivasan doesn’t expect a slowdown going into 2016. The technology industry in Austin is stronger than ever before, he said. Even if the rest of the country starts to slow down, Austin’s technology industry will remain strong, he said.

“Overall the ecosystem is achieving some good maturation,” Srinivasan said. “Talent is moving here from other parts of the country…We’re seeing more interest from the coastal investors. We should see a lot more coastal activity for follow up activity in much greater numbers this year.”

Comments

  1. As a consumer and seed stage entrepreneur, I must say it’s alarming that the deal flow with Austin VC investments is not going up, but down, both in relation to the number of deals from 2014 to 2015 and in the extremely high percentage of this money that continues to go to growth-to-late stage software companies. I know there are a few newer VC firms trying to feel the shoes of Austin Ventures, but the pace at which this is happening is still frighteningly slow.

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