The Austin Chamber of Commerce in partnership with South by Southwest honored its A-List Award winners last Wednesday night at a ceremony at the Long Center for the Performing Arts.
It’s the 11th annual awards ceremony that shines a spotlight on homegrown startups. This year was the first time the chamber recognized local investors.
The winners were recognized in six categories.
In the bootstrapped category KungFu.ai, an artificial intelligence consulting firm won.
In the angel and seed stage category Afia, a consumer-packaged goods company that makes Mediterranean foods like three cheese falafel balls in grocery stores, won.
In the early-stage category FloorFound, which handles shipping logistics for retailers on large items that customers return, won.
In the later-stage category: AffiniPay, a payment processing business that serves legal, accounting, architectural, engineering and construction firms, won.
There’s an urgency in Congress to pass legislation before Congress recesses for the month of August. And chief among the bills under consideration is the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund.
The CHIPS-Plus legislation includes incentives for domestic semiconductor manufacturing and investments in U.S. chip research and in total, the bill includes $79.3 billion in funding from 2022 through 2031, according to the Congressional Budget Office. The Senate is expected to vote on the bill this week and if passed, then it will go to the U.S. House of Representatives for approval.
Austin and San Antonio have a strong foothold in the semiconductor industry and a long history of chip manufacturing. The central Texas region would benefit tremendously from the CHIPS legislation, according to local leaders.
Today, Austin is home to Samsung which is building a $17 billion plant in Taylor and has been producing chips at its Austin plant for 26 years. Samsung also recently filed papers with the state of Texas with plans for additional plants in Taylor and Austin and additional investments that could surpass $160 billion.
In addition to Samsung, Austin has NXP Semiconductors, which opened in 1991, Infineon Technologies, whose operations date back to 1995, and Skorpios Technologies, dating back to 1989.
In fact, Austin got its start as “Silicon Hills” when it successfully recruited the headquarters of Microelectronics and Computer Technology Corp., known as MCC to Austin in 1983, followed by SEMATECH in 1988.
And Sony Corp. put its first U.S. chip-making plant in San Antonio in 1990 after acquiring a plant from Advanced Micro Devices. Sony eventually shut down the plant, which is now home to the National Security Agency in San Antonio.
Today, San Antonio has one chip plant TowerJazz, which has had many operators throughout the years but opened in 1989.
Overall, the U.S.’s share of the global semiconductor manufacturing market has shrunk from 37 percent in 1990 to 12 percent today, according to a 2021 report by the Semiconductor Industry Association.
“Mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not,” according to the report. “In fact, three-quarters of the world’s chip manufacturing capacity is now concentrated in East Asia, with China projected to command the largest share of the global product by 2030, due to its government’s massive investments in this sector.
The chip shortage is being felt by consumers throughout the economy with a shortage of automobiles and appliances available for purchase. The COVID-19 pandemic closed plants and led to a decrease, initially, in demand for chips. And that has led to a shortage today, according to the Semiconductor Industry Association.
The CHIPS Act of 2022 would create an average of 185,000 temporary American jobs annually and add $24.6 billion to the U.S. economy as new semiconductor manufacturing facilities, or fabs, are constructed from 2021- 2026. Currently, the semiconductor industry directly employs more than 277,000 workers in high-paying R&D, design, and manufacturing jobs across 49 states and supports 1.6 million additional American jobs.
“As soon as a business has 15 employees, they need H.R.,” she said. But ideally, they should be setting up the framework for human resources in the organization at five employees, she said.
Human resources help a company scale and succeed, Duncan said. Those that do it well early on reap huge benefits in the marketplace, she said. Duncan, an Austin native, has years of human resources experience and a master’s degree in Industrial-Organizational Psychology and is completing her DBA in human resources management.
There are all kinds of software programs and apps that help small businesses and startups handle human resource issues, but the best way is to hire a professional to work with a business to lay the foundation for human resources, Duncan said. That way the solutions can be tailored to fit your business’ problems and needs, she said. HR is not a one-size fits all solution, she said.
“HR is important because businesses need to have guidelines and policies to help their employees know how to perform properly,” Duncan said. “Moreover, managers need to have a guideline for what their employees’ performance looks like. It needs to be spelled out for them.”
Human resources keep all employees on track to achieve company goals, Duncan said.
“When you go from five to ten employees that’s not a lot to manage, but when you go from 10 to 20 to 50 employees, you really need to have a foundation in place,” Duncan said. “That’s a lot of chaos and there is a lot of makeshifts going on. Without consistency, there is chaos. And then you do have the bad employee experience and bad culture.”
H.R. keeps a business in legal compliance with local, state, and national laws concerning the health and safety of employees, Duncan said. It also helps with recruiting, onboarding, training, and retaining employees, and it can help build a positive company culture and productive workplace, she said.
“A lot of times when you’re in a growth phase and you don’t have a person to handle human resources, you’re stretched too thin, and you may not get the best employees that you would like for your organization,” Duncan said.
And startup founders don’t necessarily have the bandwidth to do it all and that’s ok, Duncan said.
“That’s why you hire someone,” she said.
Duncan works with any company that has employees in a variety of industries from high-tech startups to restaurants and retail operations.
HR does help set a company’s culture with the founder and the people who are running the organization, Duncan said. With today’s work-from-home arrangements and remote working brought on by the Covid-19 pandemic, human resources can also help foster a culture virtually, she said.
“HR is a partnership,” she said.
In today’s competitive marketplace, it’s also important to have H.R. in place to keep valued employees, Duncan said. To retain employees, you want to pay people what’s fair, but you also want to have employee development plans in place that allows them to grow within the organization through training and other valued experiences and perks, Duncan said. Some employees value flexible work schedules and paid time off over higher raises, she said. It’s important for employers to be in tune with their employees’ needs to succeed, she said.
Cambara Duncan Consulting offers a monthly consulting service as an HR department on call. Duncan assists with employee job descriptions, recruiting, retention, and employee development, and can create an employee handbook for the company.
Companies should not wait until they hit the 50-employee milestone to establish human resources within their organization, Duncan said. Those startups are most likely to struggle with recruiting and retaining the best employees, she said.
“Also, HR is a strategic business partner,” Duncan said. “HR can identify threats out there as well as new business opportunities. They can tell you what’s coming down the pipeline from a different perspective of looking at the business or industry.”
HR can identify a disruption coming to the industry, Duncan said.
Last November, Samsung Electronics announced plans to build a new semiconductor manufacturing plant in Taylor and invest $17 billion.
But that may be just the beginning.
Last week, Samsung filed papers with the Texas Comptroller’s office outlining plans for “up to ten separate fabrication facilities” if the project were located in Williamson County. Fab 1 is Samsung’s current Taylor project underway. Applications for Fabs 2 through 10 show two of the plants could be located in Travis County at Samsung’s Austin facility.
The proposed additional investment is $160.1 billion for the chip manufacturing plants known as Fab. 2 through Fab. 10 which would be built during the next two decades. And the projects are expected to generate more than 8,200 new jobs.
The projects are highly competitive, and Samsung is looking at national and global sites, plus sites in South Korea where Samsung Austin Semiconductor’s parent company is headquartered, according to the filings. Samsung is seeking tax abatements from Taylor and Manor Independent School Districts.
The most important factors for Samsung’s new facilities are access to talent, existing semiconductor manufacturing ecosystem, speed to market and strong public-private partnership.
“Because of its strong ties to the local community and the successful past 26 years of manufacturing in Texas, Samsung Austin Semiconductor would like to continue to invest in the region and state,” the company wrote in its filing.
FAB1 – Is the $17 billion plant underway in Taylor that will create 2,000 new jobs and is expected to be operational in the second half of 2024.
FAB2- Fab 2 investment would be approximately $15.1 billion dollars, and the project would result in the creation of at least 1,000 quality, net-new jobs. The proposed investment would be used to build a new semiconductor wafer fabrication facility and purchase new production machinery & equipment used in connection with manufacturing, processing, and fabricating semiconductors in a cleanroom environment. Should Samsung make its investment, Samsung Austin Semiconductor estimates that production would be up and running by 2034
FAB3 – If the new project were located in Austin, it would comprise two new separate fabrication facilities located on the company’s 640-acre site. The investment associated with Fab 3 would be approximately $12 billion dollars, and Fab 3 would result in the creation of at least 900 quality net-new jobs. Should Samsung make its investment, Samsung Austin Semiconductor would be up and running by 2034.
FAB4 –The investment associated with Fab 4 would be approximately $12.5 billion dollars, and Fab 4 would result in the creation of at least 900 quality net-new jobs. Fab 4 would consist of a new manufacturing facility for semiconductors. Should Samsung make its investment, Samsung Austin Semiconductor would be up and running by 2042.
FAB5- Fab 5 investment would be approximately $17.5 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 5 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2037.
FAB6 – Fab 6 investment would be approximately $18.5 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 6 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2038.
FAB-7 – Fab 7 investment would be approximately $19.5 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 7 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2039.
FAB-8 – Fab 8 investment would be approximately $20.5 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 8 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2040.
FAB-9 – Fab 9 investment would be approximately $21.5 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 9 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2041.
FAB-10 – Fab 10 investment would be approximately $23 billion dollars, and the project would result in the creation of at least 900 quality, net-new jobs. Fab 10 would consist of a new manufacturing facility for semiconductors. If approved, it would be up and running by 2042.
Beth White, Founder and CEO of MeBeBot, photo by Errich Petersen
Beth White, founder, and CEO of MeBeBot, created a virtual assistant powered by artificial intelligence that can answer frequently asked questions for companies. MeBeBot, founded in 2018, was also one of twelve startups featured in Silicon Hills News’ 2022 Austin Technology Calendar. White recently did a Q&A with Silicon Hills News about her company.
Q. What motivated you to create MeBeBot?
A. I spent years working in HR, manually responding to employees’ needs at the expense of focusing on strategic tasks. And I know that employees are often frustrated, waiting for responses to their inquires/help desk tickets or spending countless hours looking for answers to their questions on outdated Intranets. When I saw how consumer-facing chatbots were providing quick answers to their customers’ questions, I realized that this same technology can be used within the workplace to provide 24/7 support and consistent communications to keep up with the constant changes in our world.
Over the past few years, the workplace has changed dramatically. We went from busy offices to working in our homes. Now, hybrid work and global teams are the norm. Yet, companies are not ready for the new “world of work” and they lack the solutions to support their employees’ needs while providing consistent communications. Now more than ever, there’s a need to free up valuable time while everyone is doing more with fewer resources and lower budgets. Providing companies with a cost-effective solution to provide automation for routine tasks and let people do what they do best (more meaningful work) just makes fiscal and business sense.
Q. What does MeBeBot do?
A. MeBeBot is like the “Alexa” for the workplace, automating answers to routine employee’ HR, IT, and Facilities FAQs. Our AI Intelligent Assistant installs as an app in Teams or Slack, so when employees have questions like, “How do I use the VPN?” or “What is our remote work policy,” or “When do we get paid,” MeBeBot provides them an instant answer to their question that is configured by each company to fit their business processes and policies, 24/7. And, best of all, we provide a curated knowledge base of hundreds of FAQs that are commonly asked by employees, for all areas of the business. Our customers simply personalize our suggested answers for their unique needs and the entire AI solution can be launched to employees in weeks…across the globe.
Last year, our customers needed to provide real-time updates to all the changes happening in our world, from return to workplace protocols to updates to benefits programs. We responded with push messaging that allows our customers to send messages, reminders, or notifications to select user groups, via MeBeBot in Slack or Teams. This gains higher visibility of messages, as email is overused and does not always get read by employees. We also added pulse surveys, delivered via Slack or Teams, so that employee feedback on hot topics can be gathered in real-time…with over 50% participation in 2-4 hours (well exceeding traditional survey results).
Q. This week, you won the 2022 “Digital Transformation Project of the Year” by Women in Cloud, an economic development agency based in Bellevue, Washington, can you explain what that award means to your company?
A. We were so honored to win this award, as the nominees were from across the globe and focused on various types of digital transformation solutions. The panel of judges is comprised of respected leaders from some of the most admired technology companies in the world. I believe they realized the value MeBeBot brings to companies of all sizes and to their employees. We designed an AI solution that’s a catalyst for change, reduces the high-cost barrier to entry, and allows non-technical business users to launch a sophisticated AI solution in weeks…and this is truly unique.
Q. Who are your customers?
A. MeBeBot has amazing customers: Epicor, e2open, Ziff Davis (includes Spiceworks, RetailMeNot, IGN, etc.), HireVue, Abrigo, CrowdStreet, Terminal, Massage Envy, Toyota Insurance Management Solutions, Care.com and IGT. Over 22,000 global employees are paid users and we’re proud to say that all of our customers have renewed their subscriptions to MeBeBot, as they are experiencing significant gains in efficiency and are benefitting from the usage and feedback they receive from employees (all visible in our real-time customer dashboard). We love seeing our customers shine and to help provide them with a quick win towards digital workplace transformation for the employee experience.
Q. Who is on your team?
A. We have a lean, yet dedicated team of talented people, all focused on solving real customer problems that exist in the workplace. Jana Wilson is our fractional CFO and Ellen Madonia is our Chief Marketing Officer. They both worked at PeopleAdmin and Vibe HCM, other successful workplace technology companies. We also have sales and marketing team members, customer success, and an amazing development team in Argentina. We are also fortunate to have some amazing advisors that provide ongoing support and guidance. And a shout out to the team at Capital Factory, who has also been so helpful to us in our growth.
Q. What are the biggest challenges you face in the marketplace today?
A. We evangelize for digital workplace transformation and educate on how using AI and automation to create efficiencies and streamline manual tasks is a strategic imperative. We want companies to understand that they don’t have to be a Fortune 100 company to reap the benefits from an AI solution like MeBeBot. Our technology is affordable, easy to install, and available today. We believe that now is the time for companies to act….and we do see that they’re motivated to make these changes to support hybrid work, as they must reduce employee turnover while “doing more with less.”
Q. How do you acquire customers?
A. Our target customers are companies that are between 250-10,000 employees (mid-market) as that’s when they may be experiencing growing pains that we can improve. We sell directly to them, and we are also an app in the Slack App Marketplace (we were the “brilliant bot” for May) and in the Microsoft Azure and Teams Marketplaces. We also have some strategic referral partners and we’re working towards channel/reseller sales opportunities as well. We really love it when our customers recommend us to their network as well (our average rating on G2 is 5 out of 5).
Q. What is the business model?
A. We’re a software-as-a-services company, and our product includes an AI App or chatbot for Teams or Slack and a customer-facing portal. We sell on an annual subscription basis and our pricing is on a per employee per month basis.
Q. Are you bootstrapped, or do you have angel or VC financing?
A. We were bootstrapped for the first year of business, then kicked off fundraising an angel round at a “not so opportune” time in March of 2020 (the start of the pandemic). We did raise the angel round (late 2020) and we’re really excited to kick off a $3M seed round, to accelerate our growth.
Q. Why did you decide to start your company in Austin?
A. I’ve been part of the startup world in Austin since moving here in 1998. I worked with a dot com and then many emerging tech companies, so I was familiar with the ecosystem in Austin, and I have many connections and supporters here. Austin has a wonderful business community of people that are truly helping each other out and I’ve loved being a part of it for years.
Q. What has been your biggest win so far?
A. I believe if you can attract and bring on the best talent possible for your team (especially as an emerging company), that is always the biggest win. Our people make our solution great, they support our customers’ successes, and they help to attract new customers that are also passionate about solving real problems with smart solutions.
Q. What is your long-term vision?
A. We say we are like the “Alexa” for the workplace as we are expanding MeBeBot’s functionality to be each employee’s assistant, just like we all appreciate our consumer devices (mobile phones, GPS devices, health trackers, etc.) that help to make our lives easier. We want each employee to have personalized answers to their needs, use MeBeBot to help them facilitate work processes, and provide our customers a rich dashboard of information so that they can learn more about their people through actionable insights.
A. Frankly, this event is great for anyone who wants to learn how business users can launch an AI solution within their company in weeks. We will have Lynn Pattin and Kristin Foxx, two of Care.com’s Senior HR team members, discuss what business challenges they had to manage employees’ needs and how they were able to solve their pain points with MeBeBot. We’ll also share information about how accessible AI can be to any company and the benefits that will be gained.
Q. If you could put a billboard in downtown Austin, what would it say?
A. Work Smarter, not harder. MeBeBot’s your Intelligent Assistant for the workplace.
Austin Startups Raised $870 million in the second quarter of 2022, down 55 percent from $1.9 billion during the same quarter in 2021, according to the latest Pitchbook-National Venture Capital Association Venture Monitor report.
The deal volume also dropped 13 percent to 80 deals in the second quarter compared to 94 deals for the same quarter a year ago.
DealHub and SANA both raised $60 million each in the second quarter, tying for the two biggest deals of the quarter.
MicroTransponder raised $53 million, followed by Data.world with $50 million and Albedo with $49 million, according to the Pitchbook-NVCA report.
Overall, in Texas, 165 startups raised nearly $1.7 billion in the second quarter of 2022, 37 percent decrease compared to 201 startups raising $2.7 billion for the same quarter in 2021.
“While deal count remained strong when compared with the highs of 2021, deal value declined significantly across all stages,” according to the report.
“As the market continues to react to volatility over the past six months, the venture ecosystem demonstrates strength as dry powder reaches new heights and fundraising levels surpass more than $100 billion for the second consecutive year,” said John Gabbert, founder and CEO of PitchBook. “Exits remain extremely low while late-stage companies act with caution as a result of bearish public market activity. There are still uncertainties as to what to expect in the second half of the year, however, market indicators show resilience to weathering the potential economic downturn.”
Austin-Round Rock, TX MSA
1
DealHub
$60 million
Austin-Round Rock, TX MSA
2
SANA
$60 million
Austin-Round Rock, TX MSA
3
MicroTransponder
$53 million
Austin-Round Rock, TX MSA
4
Data.world
$50 million
Austin-Round Rock, TX MSA
5
Albedo
$49 million
Austin-Round Rock, TX MSA
6
WIN Reality
$46 million
Austin-Round Rock, TX MSA
7
Redbud Brands
$42 million
Austin-Round Rock, TX MSA
8
Onramp Funds
$40 million
Austin-Round Rock, TX MSA
9
Iris Telehealth
$33 million
Austin-Round Rock, TX MSA
10
Spot (Life and Health Insurance)
$31 million
Source: according to Pitchbook-National Venture Capital Association Venture Monitor data.
Multicoin Capital, a crypto fund founded in 2017, announced last week its latest venture fund, $430 million Venture Fund III.
The Austin-based firm invests between $500,000 and $25 million in early-stage opportunities. It also finances later-stage projects up to $100 million or more.
“We’ve been investing in crypto for about 5 years now and have watched innovation slowly move up the stack,” according to a blog post. “While we continue to make deep tech and infrastructure investments, we are spending an increasing percentage of our time on things that directly face consumers and that are poised to reshape massive consumer-facing markets.”
Multicoin is most interested in investing in proof of physical work companies like its portfolio companies Helium and Hivemapper, DataDAOs like its portfolio company, Delphia, and creator monetization like its portfolio companies Metaplex, Aduius, Strata Protocol, and FanTiger. It is also interested in investing in consumer products, new business models for collaborating on IP, Web3 infrastructure and open finance, India, and DAO Tooling.
Multicoin, founded by Kyle Samani and Tushar Jain, has made 97 investments and had one exit, according to its Crunchbase profile.
1. High-tech salaries in Austin are up since 2020 by nearly 10 percent to an average of $150,026, compared to the average annual salary in Austin of $78,224 for all jobs.
2. Lots of companies have relocated to Austin from California, Illinois, New York, and other states. Today, Austin has 9,565 high-tech companies, up nearly 15 percent in 2021.
3. Austin outpaces the nation when it comes to high-tech industries, which make up nearly 17 percent of all jobs in the Austin metropolitan area, compared to 9 percent nationally.
4. Tech industry job growth in Austin shot up nearly 29 percent in the last five years.
5. Tech industry job growth in Austin grew by 58 percent in the last decade, compared to 19 percent nationally.
6. Today, 184,177 people work in tech in the Austin area, up 4 percent from 2020.
7. Most Austin high-tech jobs are in nonmanufacturing industries, which make up 78 percent.
At the UnidosUS Conference in San Antonio on Monday, Google announced the 50 recipients selected for its first-ever Google for Startups Latino Founders Fund.
Among the recipients, Google chose three startups based in Austin including Handsome, Kiss & Tell, and Lena Health.
Two startups, CodersLink, and Irys were from San Antonio.
And four others were chosen from El Paso and Houston.
All of the founders selected will receive $100,000 each to help grow their business. The founders will also receive hands-on support from Google employees across the company, $100,000 in Google Cloud credits, and access to mental health therapists at no cost.
The goal of Google’s fund is to increase economic opportunity for promising Latino startup founders in the U.S., who receive a disproportionately low percentage of investment, according to Google.
“We are excited to support these talented Latino entrepreneurs as they build innovative solutions and solve tough problems,” Daniel Navarro, U.S. marketing lead with Google for Startups, said in a news release. “I hope the launch of our inaugural Google for Startups Latino Founders Fund not only catalyzes the growth of these incredible Latino-led startups, but also inspires other Latino entrepreneurs, and ultimately generates wealth within the community.”
In addition to the Latino fund, “Google for Startups has provided $10 million in cash awards to 126 Black founders in the U.S. through its global Black Founders Fund,” according to a Google blog post.
The Austin founders selected included April Dominguez, founder of HANDSOME App, which is a career and advice sharing platform for the $190 billion beauty and barber industries to find coaching, techniques and earn more income.
“HANDSOME’s mission is to bring equal career opportunities for women in this industry, as well as to be a leader in diversity,” Dominguez said in a news release. “This support from Google for Startups allows us to put fuel on that fire and to continue pouring into the advancement of inclusion in our industry.”
Amy Jarczynski, founder of Kiss & Tell, a private social network and event planning site, based in Austin, also received a $100,000 Google grant.
“The Google for Startups Latino Founders Fund means an opportunity to launch our 2.0 product and rebuild our wedding and group travel bookings that were demolished during COVID,” Jarczynski said in a news release. “The support will be used to execute our go-to-market strategy”.
Alex Harb, founder of Lena Health,
Alex Harb, founder of Lena Health, a personal assistant for concierge care navigation, based in Austin, also received a $100,000 Google grant.
Instead of calling the clinic and dealing with call centers, patients can now send an SMS text to their Lena Assistant and request a task. A customer study showed that Lena reduced avoidable costly care by reducing ER visits, hospitalizations, and 30-day readmissions.
“We’re honored to be selected for the Latino Founders Fund and be included with a prestigious group of Latino founders,” Harb, founder of Lena Health, said in a news release. “The financial support allows us to accelerate our growth while we leverage the Google network to continue to transform the health experience with a tech-enabled Care Concierge.”
Two entrepreneurs from San Antonio also received Google Latino Founders Fund grants including Jesus Salas, founder of CodersLink, a platform that empowers global companies to recruit, manage, and develop their LATAM tech teams, on-demand. Beto Altamirano, the founder of Irys, based in San Antonio, also received a grant. Irys is an innovative and collaborative two-way engagement tool that helps to drive community inclusion and infrastructure projects, improving project workflows and optimizing outcomes.
Silverton Partners announced this week it has closed on Fund VII at $248 million, its largest fund ever.
The Austin-based venture capital firm, founded in 2006, closed on Fund VI in 2000 worth $144 million, and Fund V at $108 million in 2018.
Silverton plans to invest about two-thirds of the fund’s capital to support Texas-based early-stage startups.
“We’re excited to put Fund VII’s capital to work in supporting the growth of companies in Texas and beyond,” Morgan Flager, managing partner at Silverton Partners, said in a news release.
“Though the current economic conditions are complex, there’s never been a better time to invest. History has shown that the best companies are often created in difficult times, and we remain committed to serving extraordinary entrepreneurs. We’ll keep investing and delivering exceptional results for our partners.”
Silverton Partners plans to allocate $177 million to Fund VII and $71 million to Silverton Opportunities II, which is earmarked as follow-on funding for existing portfolio companies.
To date, Silverton Partners has more than $950 million in assets under management. It has had 30 acquisitions and four Initial Public Offerings including SailPoint, Ping Identity, and Vacasa.
Silverton Partners is led by partners Kip McClanahan, Mike Dodd, Roger Chen, and Flager.
In addition, Silverton Partners announce the promotion of Matthew Saitta to Principal, Alyssa Dadoly to CFO and Operating Partner, and the addition of Aneesh Desai as an Associate on the investment team.
Via email, Flager answered a few more questions about the new fund.
Q. You’ve raised Fund VII just two years after your last Fund VI, which was $148 million, this one is $248 million – the largest ever. The fund size is getting bigger and bigger, why has Silverton Partners’ fund size grown so big?
A. Flager: First we are excited to announce SPVII and Opportunities ii because of what it means for Austin. The local ecosystem is growing quickly, and the increasing set of world-class entrepreneurs here need more capital to compete and win. As the most active and longest-standing firm in the region, we want to ensure we can meet that need and help take Austin to the next level.
While we have grown assets under management, we haven’t changed our strategy since we started investing in 2006. We are still focused on being the first institutional investor and want to roll up our sleeves and serve as a true partner to our founders. We still invest early, primarily at the seed stage, and continue to support our companies as they grow.
Q. A lot of capital from a variety of VCs has flowed into the Austin market in the past few years, why do you think that is happening now?
A. Flager: Capital flows to where the best opportunities are…..Austin has proven itself as a leading destination for top-quality entrepreneurs and investors have followed the talent. Since I moved to Texas from California in 2006, Austin has been growing, but the past couple of years have seen that growth accelerate dramatically. While some elements of growth always pose challenges, it is hard to not be excited about what is in store for this city.”
Q. In the news release, Silverton states that the firm plans to use the bulk of the fund to invest in Texas-based startups. Are there any particular industries that Silverton is focused on investing in?
A. Flager: We tend to back the best entrepreneurs and focus on people, rather than verticals, we have been particularly active in SaaS software, Fintech/Insuretech, HealthTech, Web3, and many digital marketplaces.
Q. What is the $78 million Silverton Opportunities II fund?
A. Flager: “Our Opportunities fund allows us to continue to invest in existing portfolio companies as they scale. We’ve been fortunate enough to have been involved in several exciting companies from the seed stage that have gone on to grow quickly and raise large, growth rounds. Historically, we’ve sat those rounds out because the focus of our flagship funds is and has always been early-stage investments. Our Opportunities fund allows us to continue to invest in these exciting projects. We raised our first $27 million Opportunities fund and started investing out of it in 2019. Due to the success we had with that fund and the volume of interesting deals we have access to, we decided to increase the size up to $71 million in Opportunities II.
Q. How many companies did you invest in with Fund VI?
A. Flager: We invested in 22 companies in SPVI.
Q. How many companies do you plan to invest in with Fund VII?
A. Flager: We expect to have a similar number of portfolio companies in SPVII as we’ve had in prior funds. I’d anticipate we’ll make 18-25 new investments.
Q. Do you see any major trends developing in Austin as the tech industry continues to flourish here?
A. Flager: The biggest trend is the growth and increasing diversity of the tech ecosystem. When I moved here in 2006, Austin was primarily a B2B software and semiconductor town. Today, the city has market-leading companies in Fintech/Insuretech, HealthTech, Web3, CPG, PropTech, and many other verticals. We have been fortunate enough to back some of the companies that paved the way in these sectors like Self, The Zebra, TurnKey/Vacasa, and Wheel. Also, there is a lot more B2C and marketplace expertise in Austin now-which is great to see. The more diverse the talent pool here, the stronger and more resilient Austin will be to market changes and different economic cycles.
Q. How many employees does Silverton Partners have now? Do you plan to add more staff?
A. Flager: We currently have 11 employees. We are actively looking for an executive assistant. We also expect to add to the investment team later this year.
