Those burn marks on the pavement may have come from Austin's startup scene. Local companies have been on a tear for several years, bringing in nearly $2 billion in 2018 and topping that last year with even more venture capital funding.
So what's coming in 2020?
“I think it’s going to be more of the same unless the macro market really goes sideways quickly," said Mike Dodd, a general partner at Silverton Partners, one of Austin's largest and most active venture capital firms.
More of the same thing would be a good thing for local startups, according to 2019 data in the new PitchBook-NVCA Venture Monitor, which tracks funding events, acquisitions and other startup funding information.
"There’s just a lot of dollars flowing every which way."
Austin ended 2019 with its biggest fourth quarter since PitchBook started collecting comparable data in 2013. Local startups raised $738.12 million across 54 deals in Q4 2019. The only other quarter that topped $700 million was the first quarter of 2019 when local startups reported 80 deals, which was the highest deal count since 2013.
Overall, Austin metro area startups logged $2.2 billion across 263 venture deals in 2019. The deal count was fairly typical of recent years. We had 272 last year and 270 in 2017. But the dollar amount, fueled by RigUp's $300 million round, was exceptional. It topped last year's $1.9 billion, which was the previous record, at least in the post-dotcom years.
"I think it's a natural progression of a trend that will likely continue," Dodd said, noting a strong local and national economy and low interest rates. “There’s just a lot of dollars flowing every which way. Therefore, there’s a lot of money in the venture space.”
Even if there is a national slowdown, which many people have forecast for the coming year or two, Austin could continue to thrive, Dodd said. If Silicon Valley companies get fewer investments, pay will likely decrease and many technologists will look for opportunities elsewhere.
“If that’s the case, we’re one of the top two or three places that people from the Bay Area move to," he said.
Here are the top 10 VC deals for Austin-based startups in Q4 2019, with amounts, close dates and valuations from the PitchBook report. While the close dates were all in Q4, you might notice some of the deals were reported before or after the close date and sometimes at slightly different amounts.
- RigUp raised a $300 million round in October with a $1.5 billion pre-money valuation and $1.8 billion post-money valuation.
- SparkCognition landed a $100 million round in October at a $650 million pre-money valuation and a $750 million post-money value.
- Lung Therapeutics in October raised $39 million
- The Zebra reported $39 million in December at a $170 million pre-money valuation and $209 million post-money value.
- Shipwell in October raised $35 million with $130 million pre-money and $165 million post-money valuations.
- Jask reported $33 million in October with a $60 million pre- and $93 million post-money valuation. It was acquired in November by Sumo Logic for an undisclosed amount.
- Triller, a startup that we believe is based in San Francisco, not Austin, in October reported a $28 million round.
- Tethr in November reported a new $15 million investment.
- LeanDNA in December landed a $15 million deal that gave it $50 million pre- and $65 million post-money valuations.
- Ambiq Micro in November reported raising $13 million.
Most of the top deals in Texas came out of Austin. But the Texas top 10 list includes Houston's Goexpedi, which raised $25 million; San Antonio-based AirStrip, which raised $21 million; and Houston-based Thrasio's $20 million round.
As you might expect, the Bay Area logged the most funding in 2019 - $50.7 billion. They were followed by New York, Boston, Los Angeles, Seattle, San Diego, Washington, D.C., and then, Austin. Austin's funding totals topped those of Chicago and Philadelphia, in the top 10 grouping.
National Trends
U.S.-based companies raised about $136.5 billion across more than 10,700 deals in 2019, PitchBook reported.
Last year's VC activity was slightly lower than 2018, when U.S. companies raised $140 billion across 10,500 deals. The dip was due to a slower fourth quarter, PitchBook says. But overall, the shows that venture capital raised by U.S. companies has been steadily rising since 2006.
California startups saw the most funding of any state, with companies raising more than $63 billion across 3,623 deals. The state had several multi-million-dollar deals from San Francisco companies such as DoorDash, which raised $700 million last year, and Databricks, which raised $400 million in October.
Following California was New York, whose startups raised more than $27 billion across 1,315 deals, and Massachusetts, which saw more than $10 billion raised in 2019 across 740 deals.
When it came to startup exits, 2019 hit a new record for U.S. VC exit value, coming in at $256.4 billion across 882 liquidity events. One of the year’s largest exits was Honey, which was acquired for $4 billion by PayPal in November.
Female-founded companies saw record activity on both a capital and deal count basis, raising $18 billion across 2,184 deals in 2019, compared to nearly $17 billion across 2,057 deals in 2018.
Chicago Inno's Katherine Davis contributed to this report.
