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Austin Dips in VC Investments for Second Quarter But Still Strong for 2015

By LAURA LOREK
Reporter with Silicon Hills News

Photo licensed from IStockphoto

Photo licensed from IStockphoto

The amount of venture capital bucks invested in Austin dropped nearly 49 percent in the second quarter to $162.5 million, compared to the first quarter’s $267.2 million, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thompson Reuters.

But that doesn’t mean Austin’s entrepreneurial activity is slowing down, said Eric Hornsten, managing partner of PricewaterhouseCoopers’ Austin office.

“The first quarter of 2015 was really a blowout quarter for Austin, Metro,” Hornsten said. “The second quarter is still a very positive quarter.”

Overall, for the first six months of 2015, Austin’s total venture capital dollars invested is actually up nearly 16 percent to $430 million, compared to $367 million for the first half of 2014, Hornsten said.

“It’s a very positive first half for VC investing in Austin,” Hornsten said. “What you see is a pretty steady increase in venture capital investment in Austin over the last few years.”

Austin had 27 funding deals in the second quarter, compared to 30 funding deals in the first quarter, according to the MoneyTree Report.

The money came from local, state and national sources. The most active investors in the second quarter were Silverton Partners of Austin, New Enterprise Associates of Menlo Park, Calif. and Capital Factory, all with three deals. Osage Partners of Pennsylvania, LiveOak Venture Partners of Austin, Correlations Ventures of San Diego, Sante Ventures of Austin and Mercury Partners Management of Houston all had two deals each during the second quarter, according to the report.

In the largest deal for the quarter, the report showed Mirna Therapeutics, a clinical stage biopharmaceutical company, received $41.8 million, followed by ATX Innovation, a mobile payment app doing business as TabbedOut, with $21.5 million and Illumitex Inc., LED lights, with $15.2 million, all based in Austin.

“One trend that I would observe, particularly if you look at the first quarter and second quarter of 2015, is the increase in biotechnology deals,” Hornsten said. “If you went back fives years, you wouldn’t see a lot of biotechnology investment in Austin.”

The data shows venture capital investment in the biotechnology area in 2011 totaled just $25 million and last year it was $41 million, compared to $101 million in the first half of 2015, Hornsten said.

Austin still leads the state in the amount of venture capital invested in the first half of 2015 with $430 million, followed by Dallas with $132 million, Houston with $69 million and San Antonio with $35 million, according to the MoneyTree Report.

The Austin and Texas’ venture capital investment trends are also consistent with national trends, Hornsten said.

With the national data, the second quarter is the largest quarter since 2000 with $17.5 billion of venture capital invested in 1,189 deals in the second quarter of 2015, according to the MoneyTree Report. That’s up 30 percent in dollars and 13 percent in the number of deals compared to the first quarter.

And the second quarter is the sixth consecutive quarter of more than $10 billion of venture capital invested in a single quarter.

The software industry attracted the most investment dollars nationally. The quarter had 26 deals with more than $100 million invested and another $1 billion investment, according to the MoneyTree Report.

“Driven by a strengthening fundraising environment, the venture ecosystem deployed more capital to the innovation economy in the second quarter than any period in the last fifteen years. While this uptick can be partly attributed to non-traditional investors joining funding rounds, venture continues to lead the way in deploying capital to the most promising new technologies and companies,” Bobby Franklin, President and CEO of NVCA, said in a news release. “With software companies continuing to disrupt entrenched industries and in some cases creating new industries all together, venture investment into the sector increased 30 percent from the first quarter to $7.3 billion, marking the highest total investment into software companies since the inception of the MoneyTree Report in 1995. As valuations increase and more and more companies choose to stay private longer, we are likely to see software’s share of total venture investment continue to rise.”

SailPoint Buys Whitebox Security

SailPoint_Logo_E_RGB_2013SailPoint, which makes identity and access management software, Thursday announced it has reached an agreement to buy Whitebox Security, another software security company.

The financial terms of the deal were not disclosed.

Whitebox Security, which has more than 70 customers, makes software that identifies and protects sensitive data against hackers and other breaches. SailPoint plans to sell those products under its brand as SecurityIQ.

Whitebox Security, founded in 2007, and based in Sunnyvale, Calif., will join SailPoint.

“Managing access to unstructured data is a growing problem in the market due to disjointed access control models and limited oversight of data creation by end users,” according to SailPoint. “Many organizations struggle with understanding where sensitive data is stored, how it is secured and who has access to it. This creates new exposure points that put the organization at risk of loss of sensitive data, IP theft and even corporate espionage. In fact, the majority of data breaches over the last several years included theft of unstructured data.”

19 Central Texas Companies on the 2015 Cybersecurity 500 List

Photo licensed from iStockphoto

Photo licensed from iStockphoto

The Central Texas area is a hotbed of activity in the cybersecurity arena and Cybersecurity Ventures, based in Menlo Park, Calif. has named 19 local companies to its 2015 Cybersecurity 500 list.

The list shines a spotlight on the hottest cybersecurity companies to watch worldwide this year.

Absolute Software, an Austin-based mobile device management & security company, ranks the highest on the list, claiming the 36th spot, followed by Austin-based StillSecure, network access control, at the 43rd spot, Austin-based Ziften, an endpoint threat detection company, at 44, San Antonio-based Digital Defense, managed security risk assessment, at 46 and Austin-based SailPoint, an identity and access management company at 62.

Infocyte, a startup based at Geekdom in San Antonio, ranks 71st. It makes an intrusion assessment platform.

Click Security, real time security analytics, in Austin claims the 84th spot.

Brinqa Risk, analytics and management company in Austin, takes the 111th spot followed by 21CT, a security analytics & visualization company, based in Austin at 121.

Others on the list included San Antonio-based Globalscape, secure file transfer, at 147, Innove Managed Security Services of Boerne at 195, Austin-based HID Global, security identity technology, at 272 and Futurex Hardened, enterprise security cloud, based in Bulverde, at 295.

For the rest of the list, please visit Cybersecurity Ventures’ site.

Perk.com Raises $20 million and Begins Trading on the Toronto Stock Exchange

imagesPerk.com, based in Austin, announced Wednesday that its common shares began trading today on the Toronto Stock Exchange under the stock symbol “PER.”

The startup, which creates a rewards platform for users online, also raised about $20.2 million in a private placement financing as part of a qualifying transaction. Canaccord Genuity Corp. and Beacon Securities Limited served as lead agents in the private placement with participation from Cormark Securities and Haywood Securities.

Perk US, founded in 2009, launched its mobile rewards program platform in 2013. The company offers “Perk Points” as a digital rewards to people for their mobile and Internet activities and for playing social games and watching videos. Those Perk Points can be redeemed for gift cards and cash. Users can also earn points through the company’s third party partner network of apps, called Appsaholic.

The company reported revenue of $17.1 million for the year ended Dec. 31, 2014, up from $700,000 a year ago. On April 17th, Perk US acquired the assets and liabilities of Tsavo Mobile Web, based in Canada. the combined company would have reported revenues of $36.4 million for the year ended Dec. 31, 2014.

“This is a major milestone in Perk’s history. Obtaining a listing on the TSX provides us a strong foundation for access to future capital and top talent,” Ted Hastings, CEO of Perk, said in a news release. “The principal purposes of the funds raised from the private placement are to expand the Company’s advertising sales team, grow the user base, product development work, and marketing for the coming year. We will continue to look for international market expansion opportunities.”

Ziften Raises $24 Million in Venture Capital

searchZiften, which develops security software, Wednesday announced it has raised $24 million.

The Austin-based startup reported that Spring Mountain Capital led the funding with participation from Fayez Sarofim, an early investor in Ziften.

The company plans to use the money to market its products globally. The company has created security tools that allows companies to deploy throughout their organization within hours. Its software discovers, analyzes and responds to security problems within a network quickly and easily.

In addition to the latest funds, Red Herring recently named Ziften a Red Herring 100 award winner. CIO Review named the company one of the “20 Most Promising RSA Security Solution Providers.” It was also named the top Endpoint Threat Detection vendor on the Cybersecurity 500.

The company, founded in 2009, has raised $35.3 million in venture capital from four investors in three rounds, according to Crunchbase.

ATC Names Suzanne Kho Executive Director of its Foundation

ATC Foundation Executive Director Suzanne Kho, courtesy photo ATC

ATC Foundation Executive Director Suzanne Kho, courtesy photo ATC

The Austin Technology Council announced Wednesday that it has hired Suzanne Kho as its executive director of the ATC Foundation.

In that role, Kho will oversee partnerships and programs in Science, Technology, Engineering and Math, known as STEM. She will also focus on fundraising and other community initiatives in Austin and Central Texas.

ATC, which represents 1,600 technology executives and 280 technology companies, did a research report that shows the city needs to fill up to 3,500 technology jobs through 2024. ATC is looking at ways to connect members of its tech community to Austin to youth to encourage them to pursue STEM careers. The ATC created the Austin Technology Foundation in 2011 to help with that mission.

Kho has more than 25 years of experience with nonprofit organizations. She previously served as executive director of EarthShare of Texas. She has also worked at Beyond Batten Disease Foundation, the Livestrong Foundation, the Pew Charitable Trusts and the University of Pennsylvania.

“We’re facing a tech talent shortage in Austin, and with the addition of Suzanne to the team, we are confident that the ATC Foundation will take a critical step towards igniting the spark to inspire Austin youth to pursue STEM careers,” Julie Huls, President of the Austin Technology Council, said in a news release.

TrueAbility Pivots to Include IT Training and Certification

TrueAbility photo featuring Co-Founders Luke Owen, Marcus Robertson,  Dusty Jones and Frederick Mendler. Photo by Gary Hartman

TrueAbility photo featuring Co-Founders Luke Owen, Marcus Robertson, Dusty Jones and Frederick Mendler. Photo by Gary Hartman

TrueAbility, which created a platform to test job candidate’s technical skills, has pivoted.

The San Antonio-based tech startup still offers its AbilityScreen which tests job candidates’ technical aptitude but it is no longer offering its jobs board and instead plans to focus on the information technology certification and training business. It wants to help companies manage and execute performance-based exams securely from anywhere in the world.

The company, which has raised $3.7 million in venture capital, also recently let go ten of its 15 employees and moved out of its Geekdom offices and into a home-based office.

As part of its reorganization, co-founder Luke Owen has left the company. Frederick “Suizo” Mendler, also a co-founder, is now CEO. Marcus Robertson and Dusty Jones, both co-founders, are still with the company as well as two engineers.

TrueAbility is bullish on its new market, Mendler said. The three-year-old company has seen the highs and lows of running a tech startup, he said.

The team of founders spun out of Rackspace, won the Startup Weekend competition, graduated from the Techstars Cloud program, landed funding, had an idea to change the way companies recruit technical talent, but it wasn’t as easy to execute, Mendler said.

“We had success but we had moderate success,” Mendler said. “For us it was about solving a global problem. Today, we haven’t changed anything about our platform.”

TrueAbility grew its community to more than 20,000 Linux professionals.

Meanwhile, TrueAbility started getting requests from large software companies to provide certification in a cloud-based environment and test skills in a live environment. So now TrueAbility is going to focus on certification for IT programs.

“We’re creating a standard for which no standard exists,” Mendler said.

TrueAbility officially made the decision to abandon the HR and recruiting side of things in May and it re-launched on July 20th focused on online exams and certifications.

“We have a proven track record,” Mendler said. “We’ve executed over 40,000 assessments. We have over 400 different working scenarios.”

Today, TrueAbility offers three clear product lines: certification, training and the IT skill assessments, Mendler said.

MapR Technologies, a big data software company, is using TrueAbility’s AbilityScreen platform to train and certify both employed and incoming developers. Innovative Exams is also a new partner with TrueAbility.

“We’re excited to be back to the platform which was the original idea,” Mendler said.

Rackspace Invests in CrowdStrike’s $100 Million Financing

imgresCrowdStrike, a cybersecurity software as a service platform, Monday announced it has raised $100 million in Series C financing.

Google Capital led the financing which also included participation from Rackspace, a CrowdStrike customer, and existing investors Accel and Warburg Pincus.

To date, the Irvine, Calif.-based company has raised a total of $156 million.

CrowdStrike’s platform helps companies detect, prevent and respond to attacks on their computer systems. The company said the funds raised will help it further accelerate its domestic and international expansion.

“Rackspace was an early adopter of the CrowdStrike Falcon platform and we have seen first-hand the decisive advantage that CrowdStrike offers to proactively detect and prevent sophisticated attacks,” Brian Kelly, chief security officer at Rackspace, said in a news release. “Unlike other endpoint security tools, CrowdStrike’s scalable cloud-based architecture provides unrivaled visibility and enables significantly faster response time to cyber threats. CrowdStrike also will be a key component of an upcoming line of security offerings being launched at Rackspace this year.”

Google Fiber Expands Signups to East Austin

austin_fiber_vanGoogle announced Monday it is now taking sign ups for its high-speed Fiber Internet service throughout Southeast Austin.

Now residents and businesses in East Riverside, East Oltorf, Montopolis and Dove Springs neighborhoods can sign up for Google Fiber. Google Fiber offers Gigabit Internet service that is up to 100 times faster than today’s average connection speed. Google is also offering TV with hundreds of high-definition channels.

“The signup deadline for East Riverside fiberhoods is Oct. 8; the signup deadline for East Oltorf fiberhoods is Nov. 19; the signup deadline for Montopolis fiberhoods is Jan. 14, 2016; the signup deadline for Dove Springs is Feb. 25, 2016,” according to a news release. “Residents and businesses living in Onion Creek areas still have a chance to signup for service before the upcoming deadline this Thursday, July 16.”

All of Google’s “fiberhoods” in Austin can be found on this map. Google plans to offer the service throughout the entire Austin city limits.

“For updates on Google Fiber in Austin and to help bring Google Fiber to your neighborhood, sign up on the website.

Three Companies Join Austin’s International Accelerator

Angelos Angelou, founded the International Accelerator in Austin.

Angelos Angelou, founded the International Accelerator in Austin.

A couple of years ago, Angelos Angelou helped a Greek entrepreneur move his company to the U.S.

Angelou, founder of Angelou Economics and a long-time economic adviser to the tech industry in Austin, found the process of opening a bank account for the new entrepreneur, getting a Visa, and all the rest of the paperwork tedious and time consuming.

That’s when he decided to create a one-stop place for foreign entrepreneurs to get assistance. He founded the International Accelerator in 2013 to help as many as 15 foreign-born entrepreneurs set up operations in the U.S. The accelerator, based in Austin, just graduated one entrepreneur and has a second one in place, Angelou said.

And the International Accelerator had a pitch event two weeks ago with eight startups from around the world. From those pitches, the accelerator selected three companies to move to the U.S. and another two are pending, Angelou said.

“It’s pretty exciting for me, as the founder, to enable young global entrepreneurs to come to the U.S. and launch their companies in the largest market in the world,” Angelou said. “That’s what gives me a lot of hope and a lot of energy coming to work.”

Eight startups pitched to a panel of judges, investors and mentors at the event held at Andrews Kurth, an international corporate and litigation law firm.

The winning companies included Loren Medical Devices from Italy, which makes a catheter, Dextr, from Australia, a mobile app that seeks to replace the QWERTY keyboard for smartphone users and Plored, fashion social network from Buenos Aires, Argentina.

The yearlong program gives the startups $50,000 cash investment from the International Accelerator and investor community in exchange in the form of a convertible note. The accelerator, which takes up to a 15 percent stake in each startup, also connects the startup with mentors and providers of professional services in exchange for a negotiated equity stake. The accelerator provides other assistance such as finding housing, legal assistant and help getting a Visa.

In December, the International Accelerator will have another event and one more next March around South by Southwest Interactive. By next year, Angelou would like to have anywhere from 15 to 20 companies working at the accelerator.

“We’re basically doing economic development,” Angelou said. “We are providing a way for a lot of these young people to fulfill their American Dream.”

The International Accelerator is also working with the MIT Forum, which has infrastructure in many countries, Angelou said. They are doing a pilot project in Greece right now.

“They just had a competition and we’re talking to three more companies to join our accelerator,” Angelou said.

The International Accelerator is also raising a $4 million seed round, of which $1 million has already been raised, Angelou said.

Last year, the International Accelerator brought 50 foreign startups to SXSW Interactive. Next year, it plans to bring a couple of hundred, Angelou said.

“Thirty percent of all entrepreneurs in the U.S. are foreign-born,” Angelou said. “This is a growing market.”

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