While Austin continues to grow in the amount of investment and diversity of startups, what's impressive is that this booming innovation hub hasn't lost its small-town sensibilities. The community is invested in companies succeeding and prioritizes collaboration. Entrepreneurs have access to an exceptional amount of resources, and that support has a direct impact on the long-term viability of ventures and the sustainability of the ecosystem.
The Austin area tech industry currently employs more than 270,000 people. Like many ecosystems around the world, it saw a record fundraising year in 2021, raising $4.9 billion, and then a decline in 2022 — to a still-impressive $3.9 billion. VC firm Next Coast Ventures raised $310 million in March 2022. The same month, S3 Ventures raised $250 million to target Texas-based startups and new players Tacora announced the first close — of $250 million — of its debut fund, which is targeting $300 million to provide asset-based lending to venture-backed companies.
For the third consecutive year, Austin topped the CompTIA Tech Town Index in large part due to its comparative affordability. The 2022 Best Cities and States for Startups report from Crowdfund Capital Advisors also ranked Austin as the best U.S. city for startups. In 2022, at least eight tech companies opened new offices in Austin and another 13 tech companies moved their headquarters there. Supporting the ecosystem, the Austin Chamber of Commerce launched a web-based tool to provide data and resources.
SXSW is the ecosystem’s globally recognized annual flagship event, bringing together internationally known artists, musicians, and technology in a collaborative multi-disciplinary festival. Austin Startup Week takes place each November, and Venture Capital Summit held an Austin event in June 2023. Local funding news includes ecommerce platform developer Cart.com raising $240 million in equity and debt funding in March 2022. Jasper AI’s $15 million Series A in November 2022 put the company’s valuation at $1.5 billion.
Ecosystem by the Numbers
The Electric Reliability Council of Texas is headquartered in Austin, offering Cleantech companies access to one of the largest independent electric grids in the U.S. The CleanTech Fellowship offers Texas MBA students the opportunity to deepen their knowledge. The annual UT Energy Week showcases the University of Texas at Austin’s energy research, and RE+ Texas gathers solar-energy professionals. Clean-energy tech startup Energy X secured $450 million in development capital in October 2022 and a further $15 million in December.
There are approximately 250 Fintech companies in the greater Austin area. Financing platform Founderpath secured $145 million in August 2022. Online real estate investing platform CrowdStreet raised $43 million in October, and Billd, a provider of financial solutions for commercial subcontractors, closed a $100 million debt facility in November. StellarFi, which helps underserved communities improve their credit score, raised a $15.5 million Series A round in March 2023.
Employment in Life Sciences in the Austin area has grown by nearly 74% over the past five years and is expected to continue to rise at a rate of 6.5% per year through 2025, according to Newmark. Life Sciences made up 12% of Series B+ investment and 9.8% of all VC funding for the period 2018–2022. Triumvira Immunologics, a developer of immunotherapy-based drugs, raised a $100 million Series A in March 2022. Alleviant Medical raised a $75 million Series A in January 2023.
Reasons to Move Your Startup to Austin
Texas has no income taxes, and local government and economic development organizations create incentive packages to attract qualified companies. Organizations that move to Austin and create 75+ jobs paying a living wage are eligible for relocation incentives including a reimbursement of up to 3% of wages and a property tax reimbursement of up to 50%.Companies opening or expanding in Texas may be eligible for performance-based grants.
Access to Capital
With more than 100 VC firms based in Austin, the city offers founders a robust fundraising environment. The Opportunity Austin initiative is dedicated to attracting investors to the ecosystem and connecting them with local business owners who are looking to expand.
The University of Texas at Austin is one of the 50 best universities in the world as ranked by Times Higher Education. Half of Austin area residents have at least a bachelor’s degree, compared to a national average of 35%. Community and state technical colleges in Texas have received $15 million for the creation and expansion of vocational programs from the Texas Higher Education Coordinating Board.
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