It's been a wild few years in startup land. After a feverish and record-setting 2021, venture funding in Austin started to fall back to more normal levels last year as tech layoffs started to roll in.
But, as many founders and venture capitalists will tell you, some of the best and most resilient startups are founded during uncertain times or even outright recessions. So, while VC dollars may have slowed a bit and businesses of all sizes face challenges, it's likely that at least a few of the companies that are now just getting off the ground could be the unicorns of years to come.
With that in mind, Austin Inno is back with its annual Startups to Watch list. It contains 23 local startups that we think are poised to have a big year ahead. That's often foreshadowed by funding rounds, product launches and accolades such as winning pitch competitions and entering accelerator programs.
This year's list features a wide variety of technology. From startups that can supercharge rain clouds to those that help us through life's most difficult moments, these companies are proof that Austin's startup ecosystem is vibrant, diverse and ready to rock in 2023.
Now, let's get to the list. And, in case you're curious, here's a look at the startups we included last year, which collectively have gone on to raise hundreds of millions of dollars in the past 12 months.
When TAU Systems emerged from stealth mode in 2022, it instantly became one of Austin's most ambitious startups. The company, led by founder and CEO Bjorn Manuel Hegelich, is developing a small-scale particle accelerator that might help scientists one day analyze proteins and biological processes to fight covid and other diseases. It might also help reduce the dangers of nuclear waste and lead to better batteries and microchips. The company, which spun out of the University of Texas with $15 million in seed funding, has been in talks with several state economic development groups about locating its first commercial installation in 2023. And on Feb. 2, TAU announced research and licensing agreements with the University of Texas at Austin.
Cheryl Sew Hoy had founded a nonprofit, sold a consumer startup to Walmart Labs and was CEO of the MaGIC agency designed to help entrepreneurs in Malaysia and Southeast Asia launch startups. Then, in 2020, she took the lessons learned from having two children to help build the foundation of Seeding Inc., which is the legal name for Tiny Health. The startup has at-home microbiome gut tests that help prevent disorders caused by gut health imbalances. In November, it landed a $4.5 million round to help it further develop tests and expand.
If you have Professor John Goodenough's attention, you're probably a startup to watch. Group1, which emerged from stealth in 2022 and is backed by the University of Texas, is commercializing cathode materials for potassium-ion batteries that could allow electric cars and other devices to charge quicker and have less environmental impact than lithium-ion batteries. The startup is led by co-founder and CEO Alexander Girau, who previously co-founded New Orleans-based lithium-ion battery efficiency startup Advano. Co-founder and Chief Science Officer Yakov Kutsovsky was previously chief technology officer at Cabot Corp. And Chief Product Officer Leigang Xue invented the new potassium cathode materials and was previously a post-doctoral researcher at the Goodenough Lab at UT, named after the lithium-ion battery inventor and Nobel Prize winner. The company, which is poised to announce new funding soon, has already opened another lab at its HQ in San Marcos and is negotiating with a major company for additional exclusive IP rights for potassium-ion battery tech in the United States.
Former Apple fraud detection manager Greg Kuhlmann co-founded Sumatra in 2020 to give more businesses access to advanced AI and real time machine learning methods — both to fight fraud and to develop personalized shopping experiences based on user activity. It raised a $1.5 million seed round in July 2022. To start 2023, Sumatra came out of beta mode and grew its team to seven. And in late January, it launched an updated version of its platform that further expedites the deployment of machine learning models.
The Chubby Diaries/Jeff Jenkins
Jeff Jenkins just might be Austin's most inspiring traveler. Jenkins runs Chubby Diaries, an online community focused on inspiring plus-size and Black travelers to live their lives to the fullest through global adventure. He's also developed a strong social media presence, with more than 104,000 followers on Instagram and 83,000-plus on TikTok. But perhaps his biggest break came in 2022 when he was contacted by National Geographic to host a travel show. The show, called "Never Say Never with Jeff Jenkins," is slated to premiere on National Geographic and Disney+ on July 9.
Building and selling smart devices is tricky business. But Happy Health has a unique product — a high-tech ring that detects stress and helps the wearer reduce it. In 2022, the company, co-founded by Dr. Dustin Freckleton and Tinder co-founder Sean Rad, announced a $60 million series A funding round, much of which has been channeled to research and development. Now, the startup is taking reservations for its rings and membership plans.
Ribbon helps charities make the most of their budgets. The startup, legally known as Flourish Change Inc., acquired Chicago-based competitor RoundUp App in 2020. In 2022, the company led by CEO Branden Fineberg announced a $2.7 million funding round led by Trust Ventures. Ribbon has a fiscal sponsorship model that helps people and nonprofits take on new charitable activities with the advantage of the sponsor's tax-exempt status.
By now, you've seen plenty of hand sanitizer dispensers hanging from walls near elevators, bathrooms and drinking fountains. Vaask is an Austin startup that makes this relatively new necessity much more attractive, as well as hands-free. The touch-less fixture pledges to eliminate drips, which often plague traditional dispensers. The company's product was among Time Magazine's Best Inventions of 2021, and its design has been honored at at BDNY and other hospitality trade shows. Founder and CEO Jon Olsen was nominated as one the city’s top business leaders at the Austin Business Journal's 2022 Best CEO Awards.
Jasper AI Inc. may have been able to use its artificial intelligence to write this entire story. We didn’t try it — we’re old-school journalists. But these words you’re reading are similar to the kind Jasper markets to the masses. It’s one of the companies on the forefront of using AI for content generation for marketing, blogging and a wide variety of other applications. Its growth has been remarkable. About two year after its founding, Jasper has pocketed about $130 million in funding — investors tagged it with a $1.5 billion valuation in October. That makes it one of Austin’s newest unicorns, and one of the fastest ever to achieve such a rich valuation.
You don't have to go far to see a "help wanted" sign these days. So retaining employees, especially at hotels, restaurants and bars, is paramount. Grazzy is an Austin startup that has developed a payments platform for such hourly employees that allows for digital tipping, instant tip-outs and other banking solutions. The company — led by CEO Russell Lemmer, previously a founder at fleet management company Dealerware — disclosed $6.8 million in funding in 2022. The fintech is being used at several hotels already, and is in pilots with big brands for nationwide rollouts.
We've all felt the big push toward Web3. And Austin's Anode Labs Inc. aims to be on the forefront of the movement by creating community networks that connect renewable power, such as consumer solar panels, to energy storage assets. The React Network's virtual power plant aims to support a full power grid that lets consumers with home batteries get rewards, as well as its "KWH" tokens, for the energy contributions. Last year, the startup co-founded by Jason Badeaux, Dallas Griffin and Evan Caron raised a $4.2 million first round of funding co-led by New York-based firm Lerer Hippeau.
This new venture from former Resideo CEO Mike Nefkens might be the youngest company on this list, having launched in December with plans to go public on the New York Stock Exchange in the first half of 2023 through a merger with a blank check company. Rainwater Tech’s ambitions are matched by its vision for its climate technology — the company aims to use a ground-based ionization system to enhance rainfall by up to 20%, which could help refill bodies of water such at Lake Travis and the Great Salt Lake. In addition to cities and municipalities, Nefkens envisions the service luring customers such as golf courses, ski resorts, large landowners and farmers. The company announced Jan. 17 that it had nominated Dr. Jim Yong Kim, former president of World Bank Group, to join Rainwater Tech’s board when its merger closes.
Sometimes you find clothing you want online but aren't sure about the fit. Crave Retail helps bridge the gap with its platform that helps retailers provider shoppers with all the sizes and styles they want to try on, as well as checkout from inside the fitting room instead of waiting in line. The startup, led by retail veteran and CEO Matthew Cyr, was part of the Austin Techstars program in 2020. It has raised more than $600,000 in funding from Techstars and RevTech Ventures. The company has found customers across the nation and recently announced its launch in Norway.
To get things rolling in 2023, Austin 3D animation startup Aquifer Motion announced it is teaming up with toy company MGA Entertainment on personalized and animated videos for the latter's "L.O.L Surprise" line of dolls. Led by co-founder and CEO Chen Zhang, Aquifer Motion specializes in instant animated episodes and social videos. And it allows creators to export video in multiple formats. Last year, the company launched its desktop app and it integrated a speech-to-speech generative voice AI. The startup previously went through the Techstars Austin program and it has raised $3.3 million from Techstars, LDV Capital and others.
Serial entrepreneurs Stuart Wall and Ben Rubenstein are capitalizing on interest in property technology — aka, proptech — with their new company, Setpoint. While many proptech startups already help consumers with home purchases, Setpoint provides the technological infrastructure behind such transactions, with software to track assets and more quickly close loans. Clients have included Opendoor, Offerpad, Orchard and Austin-based Homeward. Setpoint was founded in 2021 and last year raised a $43 million series A round led by Andreessen Horowitz plus $615 million in debt financing to help proptech startups buy homes on behalf of clients. Wall told Techcrunch last year he expects Setpoint to power more than 100,000 home transactions in 2023.
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Facial-recognition technology has come under fire for ethical and discriminatory concerns. Executives at Zenus think they’ve found a solution: videos are analyzed immediately and do not store identifying info, with the aim of avoiding abuse while still providing valuable insights to retailers and marketers. The company, which calls its tech “ethical facial analysis,” announced in October a $3.2 million seed funding round. Co-founders Rakshak Talwar and Panos Moutafis think this approach of using computing power on the so-called “edge” of networks can the cost of facial recognition while making it more useful for clients, who have included hotel giant Hilton.
BalkanID applies artificial intelligence to the modern tech problem of identity governance and administration — the time-consuming task of managing who can access your company’s networks and ensuring they are who they say they are. AI is used to automate the BalkanID process, which puts a different spin on “IGA” and positions the company as an upstart competitor to bigger tech companies such as Austin’s own SailPoint, TechCrunch noted. Led by serial entrepreneur Subbu Rama, BalkanID raised more than $8 million in seed funding in 2022, the same year it emerged from stealth mode. Rama’s co-founders are Jeremy Patton and Sameer Sait, former chief information security officer at Whole Foods under Amazon and at Forcepoint.
Closinglock, a financial-technology startup in the real estate space, has been on Inno's radar for a couple years. But it set itself up for the trickier economic times ahead in August when it snagged a $4 million seed round led by Austin's LiveOak Venture Partners. Led by CEO Andy White and his wife and VP of Communications Abigail White, Closinglock launched its first product back in 2018. It was a portal designed to protect title companies from real estate wire fraud. Since then, it's added document sharing, e-signatures and loan payoff verifications to its platform.
CEO Cara McCarty and CTO Albert Swantner have each sold successful startups in Austin — McCarty's Code Pilot to AngelList and Swantner's Mobile Tech RX to Repairify. In 2022, the duo, who are also both part of The Fund Austin, launched Betterleave to help families navigate funerals, memorials, estate planning and other tough administrative tasks that come up when someone loses a loved one. It teams up with employers and insurance companies as well as hospice care and other organizations. The company has caught the attention of Forbes, Fast Company and other major publications.
Former Bumble VP Chelsea Cain Maclin co-founded R Labs with Geeta Sankappanavar and Ashley Vickers in 2022. The Web3 startup uses blockchain technology to produce and market digital assets in the metaverse. It's part of a large wave of companies building for a decentralized iteration of the internet with transactions using cryptocurrencies and other digital tokens. But many of R Labs' primary objectives are real world ideas that aim to help solve societal problems in the U.S. and Canada. The startup last year raised $5 million in pre-seed funding, and it has teased that its first offering will be an NFT with real world impact.
Lynx emerged from stealth last year offering a new form of payment between startups and service providers. Its SWEAT Note lets service providers, such as PR firms and fractional CFOs, work for startups at a discounted rate in exchange for a note that will become equity in the future. That helps startup balance sheets, and, if things go well with the startup, gives service providers the chance at a larger paycheck. The startup, co-founded by Jameson Pitts and David Stockton, provides runway and revenue calculators, in addition to its payment notes.
Howdy, formerly known as Astro and Austin Software Inc., was founded back in 2018 by Jacqueline Samira and Frank Licea. The startup helps companies build distributed engineering and product teams in Latin America. It raised $2.1 million in 2021 and earlier this year announced it added $5 million to a $13 million series A funding round raised in August, boosting its valuation by more than 20% in the process. The startup's clients have included Austin's Workrise, WP Engine and OJO Labs. Howdy went through Y Combinator's accelerator last year; investors include Softbank and Austin-based Capital Factory.
This real estate tech startup churned in stealth mode for three years. In 2022, it announced a rapid go-to-market campaign backed by a $10.3 million series A led by Updater, a New York company focused on relocations that operates brands Updater, Dolly and MoveHQ. Milestones is led by founder and CEO Dustin Gray, a former Deloitte consultant who went on to found an online marketplace for retrofitting called GreenPSF before becoming a senior vice president of consumer products and innovation at RealPage and, more recently, head of operations at Realtor.com. Milestones offers a free access home ownership portal that helps people manage their home's major maintenance issues, as well as track home value and manage transactions when owners decide to sell.
