Austin VC Deals Increase but Dollars Drop in the First Quarter of 2016

iStock_000030057966Large copyThe good news is venture capital flowing into Texas topped $591.9 million in the first quarter of 2016, up nearly 40 percent from $423.5 million for the same quarter a year ago.

But venture capital flowing into Austin during the first quarter of 2016 dropped 49 percent to $141.3 million, compared to $277.8 million for the same quarter a year ago.

Those figures are from the latest MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, based on data provided by Thomson Reuters.

In Austin, venture capitalists invested in 25 deals during the first quarter, a 24 percent increase in deals compared to the first quarter of 2015, according to the MoneyTree Report. It’s also a 56 percent increase in deals and a 41 percent increase in terms of dollars compared to the fourth quarter of 2015.

The top deals in the first quarter included SilverCar which landed $27.9 million in venture capital, followed by Pivot3 with $19.1 million, InsuranceZebra with $17 million, Vast $14 million and Dispersol Technologies of Georgetown raised $12 million, according to the MoneyTree Report.

In Austin, the software industry attracted $57 million in eight deals making it the top investment sector, followed by media and entertainment with $32 million going into five deals and computers and peripherals attracting $19 million in one deal.

Five industries saw a decrease in investment dollars in Austin during the first quarter including healthcare services, industrial/energy, medical devices and equipment, semiconductors and biotechnology.

“In Q1 2016, all stages of development have experienced an increase in investment funding in terms of dollars compared to the prior quarter,” according to a news release. “The number of Seed, Early, and Later Stage deals increased, while the number of Expansion Stage deals decreased compared to the prior quarter.”

The rest of the state did well in attracting venture capital dollars in the first quarter with Dallas getting $104.1 million in 11 deals, Houston attracting a whooping $335.4 million in 11 deals and San Antonio bringing in $11 million in one deal.

Nationwide, venture capitalists invested $12.1 billion in 969 deals in the first quarter of 2016, with dollars and deals down 11 percent compared to the same quarter a year ago, according to the MoneyTree Report.

“Forecasting the year based on the first quarter is always difficult, but a few interesting trends stand out. While total venture investment activity didn’t jump out of the gate as quickly as last year, it was still a strong first quarter for venture activity compared to recent years,” Bobby Franklin, President and CEO of NVCA, said in a news release. “Of the decline that we did experience, most of that can be attributed to nontraditional investors scaling back their investment activity and refocusing on their core businesses. After a string of strong quarters for fundraising, venture investors will continue to be busy putting risk capital to work by finding and funding innovative ideas and growing them into the next generation of great American companies.”

“The first quarter appears to tell us that investors still have faith in the venture ecosystem,” Tom Ciccolella, US Venture Capital Market Leader at PwC, said in a news release. “However, the increase in expansion and later stage financing, combined with the drop in first-time financing, suggests a shift towards relatively mature startups.”

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