By Chanelle Bessette, reporter
FORTUNE -- Austin-based venture capital firm Silverton Partners announced Thursday its new $75 million fund for investing in Texas-based technology companies. The burgeoning tech scene in Austin in recent years inspired Silverton's three partners, Bill Wood, Kip McClanahan, and Morgan Flager, to raise the investment fund, which will focus on seed and Series A funding for startups. "A number of factors are coming together to contribute to fast-paced tech community in Austin," McClanahan told Fortune. "It's never been more economical to start a company."
While tech startups tend to be cloistered within major metropolitan areas like Silicon Valley and New York City, the community-oriented lifestyle and relatively low cost of living in Austin has fostered a unique environment for startups. $65 million of the new Silverton fund was raised from two prominent university endowments (Silverton Partners are not allowed to disclose) and Wood himself, and the remaining $10 million comes from the support of 40 other entrepreneurs in Austin.
Compared to Silicon Valley in particular, the startup scene in Austin might not seem especially catching. However, the venture capital environment in Austin is quickly growing, as many of the firms are early stage investors and active angel investors. "By definition, this is a smaller geography, so that engenders a tighter-knit community," said McClanahan. "There's a little bit more loyalty between employees and particular companies ... It's a little less of a 'fog of war.'"
In the same vein, the amount of competition on the west coast changes the dynamics of how venture capital funds work. Companies that receive large amounts of funding wind up being able to out-pay other companies for talented employees. "It creates a very haves/have-nots environment," said Flager, who lived and worked in Silicon Valley before moving to Texas. "In Austin, founders can retain more of the company themselves and don't have to raise as much at the beginning."
Silverton Partners has so far worked primarily with business and consumer software companies. One of those companies, SpareFoot, helps its customers compare prices and sizes for local storage units from different providers. Another, Famigo, helps parents create an app section on their smartphone or tablet for their children called the "sandbox," which prevents children from accessing the rest of the device.
Jason Cohen, the founder of WordPress hosting company WP Engine, is one of the people that Silverton Partners helped with early funding rounds. He has found that the startup environment for Austin is more inclusive compared to Silicon Valley, where "bigger is better" when it comes to funding and competition. When Silverton Partners started raising its $75 million fund, he was one of the entrepreneurs that decided to give back to the community with financial help because he believes it's important to support early companies. Austin will continue to be a place to watch for tech talent, especially as investors help entrepreneurs set up shop.
Austin is getting gigabit Internet service. But it will be only for those families who can afford the high fees.
FORTUNE -- AT&T (T) has announced that it will soon offer ultra-high-speed Internet service in Austin, Texas, going head to head with Google (GOOG), which is doing the same. Finally, it seems the U.S., where the Internet was invented, might be on the way to getting Internet speeds more like those MOREDan Mitchell, contributor - Oct 2, 2013 9:21 AM ET
Retroactive tax bills and the elimination of a state tax-break for California's entrepreneurs and early stage investors could force them to move to ... Texas.
By Omar Akhtar, reporter
FORTUNE -- Entrepreneurs and investors in California can expect to receive a rude shock in the mail if they sold their company in the last four years. Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains MOREFeb 21, 2013 7:24 AM ET
With a huge attendance boost this year, big businesses from GM to Microsoft continued the trend of coming to Austin to get in front of hip influencers.
By Elisabeth Long, contributor
Now in its 15th year, the South by Southwest Interactive conference has taken off like the handle of the ubiquitous hockey-stick growth model that startups at the conference aspire to. The 2011 conference saw a spike in attendance – up about MOREMar 16, 2011 12:15 PM ET
A temporary retail outlet to service the tech enthusiasts gathering in Austin for SXSW
Last year, 35,000 people descended on Austin, Texas, for South by Southwest, a music, film and interactive technology festival that has become one of the premier social -- and drinking -- events in the high-tech calendar.
As it happens, this year's SXSW opens Friday -- launch day for the iPad 2. Anticipating that its two Austin-based retail stores MOREPhilip Elmer-DeWitt - Mar 10, 2011 8:28 AM ET
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