After a record-setting year for venture capital funding in Austin in 2021, the market settled down ever so slightly in 2022.
Investments in Austin area startups fell from $5.4 billion in 2021 to right around $5 billion last year, according to a new report by The Greater Austin Chamber of Commerce and Opportunity Austin, in partnership with startup data company Dealroom.co.
A few massive funding deals helped push the local ecosystem's funding numbers to near record levels. The largest was the $675 million series C round raised by Elon Musk's The Boring Company in April. That was the biggest round ever for a locally-based company, although Boring had only recently planted its headquarters in the Austin area.
Energy Exploration Technologies Inc., which does business as EnergyX, landed the second-largest round of 2022 with a $450 million commitment from private equity firm Global Emerging Markets in July.
FlashParking's $250 million deal, Icon's $184 million round and Wheel's $150 million series C rounded out the top five.
That means about $1.7 billion, or a third of the total for 2022, was concentrated across the top five deals. That fits with a long-term trend of VCs providing bigger rounds across fewer overall deals.
“The Austin region is home to a vibrant tech ecosystem, with a large cohort of rising stars and more than 25 unicorns born across the region,” Roland Pena, the chamber's senior VP for global technology and innovation, stated. “We are proud of the startup community here, and the Austin Chamber is dedicated to supporting this sector continue to grow.”
Austin's $5 billion year is impressive in many respects. It came at a time when many early-stage companies have reported difficulty in raising venture dollars to jumpstart their businesses, and during a year in which the tech sector was hit especially hard by layoffs.
Aside from major layoffs at big tech companies such as Amazon, Salesforce and Meta, Austin-based companies that had layoffs in 2022 included BigCommerce, Homeward, The Zebra, ZenBusiness, Spreetail, Khoros, Nyriad, Rev.com, Wheel, Core Scientific, Tesla and Workrise.
The new year-end report from the chamber is the first of several annual wrap ups from organizations that track venture funding. Reports in coming weeks from sources such as PitchBook and CB Insights will add fresh context into how 2022 went for local startups.
The Dealroom.co data also showed that transportation and real estate tech were the most heavily-backed sectors in the Austin tech ecosystem, each with more than $1 billion raised. Health, energy and fintech rounded out the top five sectors, each with $500 million-plus in venture investment.
All told, the report estimates that Austin's startups are valued at a combined $128 billion. Dealroom has analyzed more than 200 startup hubs globally, and for 2022 it ranked Austin at No. 25 overall and No. 16 for early-stage funding. The Bay Area, New York and Boston led the way.
