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Venture Capital Keeps Austin Startups Flush

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Austin investors may not be keeping the city weird, but they’re sure keeping its startup scene humming.

Like the rest of the country, venture capitalists in the Capital City are riding a wave of exits to big new numbers in startups financed and capital committed over the past few quarters. With the TechCrunch Meetup circus in town, there’s no better time to take a look at how the city’s faring.

“It’s not surprising,” says Josh Baer, of the newly formed and incredibly active early-stage investor Capital Factory. “Austin is the fastest-growing city in the country with 150 people moving here every day.”

The city has had a few recent successes it can point to, with HomeAway, BazaarVoice, RetailMeNot, and Indeed.com, all topping $1 billion exits through public offerings or acquisitions.

Large financing rounds for companies like Spiceworks, SolarBridge Technologies and Noesis Energy pushed Austin’s investment numbers to the most active first half of the year in the last five years, according to CrunchBase data.

And new funds like Live Oak Venture Partners and Baer’s own Capital Factory are helping to boost the numbers of startups in the Austin scene. For Baer, a few companies like Sparefoot.com, which raised about $30 million for its space storage marketplace, or uShip.com, which is a marketplace for shipping, point to the seeds that were planted by HomeAway and RetailMeNot in the marketplace vertical.

But enterprise software companies and mobile developers are also strong in the region, according to Baer. “There’s a rising-tide mentality,” says Baer. “It’s a very collaborative environment and people are very supportive of each other.”

Perhaps no firm has the depth, or breadth of experience, in the Austin community as the synonymously named Austin Ventures. One of the oldest venture firms in the region, Austin Ventures has backed several of the most successful startups coming from Texas including many of the recent winners like HomeAway and RetailMeNot.

“There’s been a genealogy of tech companies over the last 30 years,” says Austin Ventures’ Mike Dodd. “We’ve funded five companies out of BazaarVoice alone over the past three years.”

For Dodd, what’s working in Texas isn’t much different from the types of companies that are gaining traction in New York or Silicon Valley, or anywhere else. “The lens that we use is not if we’re investing in the best company in Austin, or the best company in Texas. We’re investing in the best companies nationally and internationally,” he says.

There are, however, a few deals that could only be done in the nation’s oil capital, says Dodd. “Oil and gas software… There’re 15 different verticals in the upstream oil and gas market,” he says. “We’re looking at a ton of different deals in that market.”