Austin Entrepreneur Network

Venture Investing Down by 63%

Isaac Barchas, director of ATI, was quoted in Austin Business Journal’s article on Venture funding on Friday, January 29 talking about the decline in venture capital investing.

The region’s relatively small size enables a few deals to skew such results, which don’t account for alternative sources of capital. The $250 million funding of HomeAway Inc. in late 2008, for example, may have inflated Austin’s numbers for that year and set the stage for last year’s steep decline.

“In general, venture capital is an important indicator,” Barchas said, “but there are other sources of funding, such as the [Texas Emerging Technology Fund] and angel investors.”

Last year, local angel investing did increase from the year before and the state’s Emerging Technology Fund continued to dole out capital as it typically does, but when combined those sources of capital collectively poured about $14 million into local companies last year.

The sharp decrease in venture capital occurred a year after Austin Ventures, Central Texas’ dominant investment firm, closed on a nearly $900 million fund. Thirty-one percent of the firm’s 2009 investments were in Austin-area companies compared with 56 percent during 2008 and 62 percent during 2007.

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