Funding Startups In Texas

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  • 7/30/2019 Funding Startups In Texas

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    LOCAL ECONOMIC SNAPSHOT | VENTURE CAPITAL

    By HANAH CHOStaff Writer

    hcho@dallasnews.com

    Venture capital is falling this year after roaring back last year. For the first nine months of the year, venture capitalistsinvested less money in startups and young companies in the Dallas area and in Texas than during the same period last year.

    On that pace, funding in 2012 will fall below investments in 2011, a trend that is also reflected nationally.

    The bottom line

    John Taylor, head of research at the

    National Venture Capital Association

    Joel Fontenot, a managing partner

    of Trailblazer Capital

    Hanah Cho, staff writer,

    The Dallas Morning News

    Were seeing considerable softening

    of new investment in life sciences. The

    number of first-time fundings in

    biotech and medical devices is much

    lower than it has been even in recent

    years. A lot of that is

    caution about the

    future of the FDA

    [Food and Drug

    Administration].

    With entrepreneurs lamenting the

    lack of venture capital, itll be

    interesting to see how the

    Securities and Exchange

    Commissions new crowd-funding

    rules expected next

    year will impact

    how startups

    raise funds.

    Trailblazer Capital has seen a large

    increase in new ventures requesting

    startup capital of $1 million to $3 million.

    Our Fund II investments are experiencing

    receptive markets with financially strong

    companies willing to take

    new product risk. We

    believe this will result in

    robust early-stage

    company growth and

    investment activity in

    2013.

    Funding for Texas startups dips

    SOURCES: PricewaterhouseCoopers; National Venture Capital Association; MoneyTree Report; Data from Thomson Reuters

    Venture capital investments in TexasFunding came back in 2011 after a three-year slump amid an economic

    downturn. Flow of money into young Texas companies in 2012 has slowed again.

    Top 10 industry investments statewideSo far this year, the Austin-based software company

    Drillinginfos nearly $117 million deal has been the largest in

    the state. Software garnered the most money locally,

    statewide and nationally. In North Texas, biotechnology and

    information technology took the next two spots. Companies

    in Dallas attracted about $83 million in investments, coming

    behind Austin and Houston so far this year.

    Top 5 deals in North TexasSoftware companies make up the bulk of the top deals,

    but biotechnology got a rare lift to the top.

    Venture capitalfundraising

    Fundraising dollars this year appear

    to be on track to beat last years

    commitments, but the number of new

    funds has declined. In the first nine

    months of 2012, 139 funds raised $16.2billion vs. 160 funds and $12.4 billion

    for the same period in 2011. In the

    Dallas area, only one raised capital:

    Pharos Capital Group of Dallas.

    0

    250

    500

    750

    1,000

    1,250

    1,500

    1,750

    2,000

    2009

    2010

    2011

    2012*

    163

    173

    182

    139

    $16.3

    $13.6

    $18.6

    $16.2

    YEAR FUNDSAMOUNT(In billions)

    (in millions)

    03 04 05 06 07 08 09 10 11 12*

    *Through nine months

    Industry Amount invested

    Software

    Medical devices and equip.

    Industrial/energy

    Biotechnology

    Semiconductors

    IT services

    Computers and peripherals

    Electronics/instrumentation

    Media and entertainment

    Health care services

    $281.02

    $91.78

    $83.10

    $63.32

    $54.98

    $42.01

    $35.88

    $17.56

    $17.48

    $13.89

    (In millions)

    Texas: $716 million

    North

    Texas:

    $82.9

    million

    Texas North Texas

    Neos

    Therapeutics Inc.

    Grand Prairie

    Biotechnology

    $18.1 million

    Horizon Data

    Center SolutionsPlano

    Software

    $13 million

    SCIenergy

    Dallas

    Software$6.2 million

    SCIenergy

    DallasSoftware

    $8 million

    DeviceFidelity Inc.

    Richardson

    IT Services$6 million