Austin-Based Silverton Partners Raises $75 Million For Its Fourth Fund To Invest In Local Startups

Austin has seen huge growth in its startup ecosystem over the past few years, driven in part by the general low cost of living and high quality of life, along with a whole bunch of repeat entrepreneurs re-entering the startup scene and mentoring the next generation of startup founders. As a result, there are some investors who see lots of opportunity for growth in the city.

Local VC firm Silverton Partners is one of those investors, and it’s just raised $75 million for its fourth fund, which will be committed to investing solely in early-stage Austin startups. That includes $10 million of which was raised from local entrepreneurs and founders that the company has worked with, who wish to re-invest in the startup ecosystem.

For Silverton, investing in Austin is nothing new: The firm has been putting money into local startups for the last 30 years. It’s also seen a fair amount of success, with Fund III exits that include Convio, which went IPO; BlackLocus, which was acquired by Home Depot; Crimson, which was acquired by The Advisory Board Company; Hyper9, which was acquired by SolarWinds; and Javelin, which was acquired by Avago Technologies.

But there are some positive changes happening lately which it feels could make Fund IV — which is the same size as its third fund — one of its best. Partner Kip McClanahan, who joined the firm in recent years for Fund III, said that the Austin tech scene has benefitted from a lot of the same trends that have driven growth in other startup ecosystems. That includes the lower-than-ever cost of getting a company off the ground.

But Austin in particular is also seeing some other positive trends that should help it grow faster than some other tech ecosystems, McClanahan told me. That includes a low cost of living, relative to other major tech centers, as well as a high quality of life for those who settle there.

The tech ecosystem is also benefitting from a number of newer incubators that are helping early-stage companies to establish themselves. There are also a number of repeat entrepreneurs who not only have the experience to start better companies, but help mentor newer startups just coming up.

In addition to mentorship, they’re putting in their own cash to help the Austin market grow. In addition to traditional LPs and university endowments, Silverton Partners Fund IV includes $10 million from 40 local entrepreneurs that the firm has worked with who wished to invest in the fund.