If you’re a startup in Austin, get ready to put up your dukes. The capital city’s pool of late-stage funding is as dry as the dogs days in the Texas desert, with very little from the likes of investment and commercial bankers to go around.
A study from St. Edward’s University shows startups may not be the only ones at a disadvantage. If founders considering Austin as a place to start their companies see their growth potentially stunted because of funding, many may turn to go elsewhere.
While early funding plants the seeds for a startup, middle and late-stage funding act as the water and nutrients that keep it growing. Without the latter, it may be nearly impossible for startups to take their next steps, whether it’s expanding their workspace or reaching out to international markets.
Stuck in a Stalemate
For growing startups in Austin, it means connecting with and attracting outside investors. But with a recent report from Dow Jones VentureSource, outside investors may be hesitant to come.
The report showed growth for investment funding shoot up to $186.3 million in the third quarter of 2015 while the third quarter of 2014 raked in only $118.5 million for startup investment.
But the numbers could be misleading, as venture capitalists may have invested in a few large deals rather than a greater number of smaller ventures, resulting in the jump in funding.
The St. Edward’s University study shows the struggle for growth-stage startups is real. According to the report, Austin has only 144 funding sources as opposed to New York City’s 739, Chicago’s 371 and Silicon Valley’s 785 funding sources.
Startup-rich areas around the United States, like New England, Seattle and southern California, also invested billions into new companies last year while Austin’s venture capital amounted to $620 million.
Several Austin organizations will soon gather to discuss what the area can do to boost late-stage investment opportunities for startups. Until then, it’s survival of the fittest as startups vie for Austin’s tiny oasis of venture capital.
TWO PLACES, ONE GOAL
EAP only requires the majority of your company to be located in Louisiana. We have several companies who are split between two cities (including Austin!). You could be one of them.