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Austin

As the country’s fastest growing city, Austin has a reputation for being an attractive destination for entrepreneurs and investors alike. The city’s affordable cost of living, combined with its presence in a pro-business state makes Austin an ideal choice for bootstrapping startups. When compared to more mature markets such as Silicon Valley and New York City, Austin is a perfect attraction to those who want to be a part of the “rising tide”. The presence of UT Austin serves as a pipeline of globally sought after talent. A recent partnership with video game icons Warren Spector and Paul Sams has created the first video game program taught by the industry’s top executives. Unique among most American cities, the Austin city government and the chamber of commerce both have been helpful in improving the atmosphere for startups in the city. That said, startups in Austin face difficulty raising capital after seed rounds, and often have to look outside the city for upstream capital.

In This Market

These businesses offer industry expertise and are a source of startup talent and potential customers. They help fuel the local startup community.

Opportunities

  • Excellent source of talent, UT Austin is premier among engineering schools in the world. Software companies Trilogy and Tivoli recruited talent heavily from top schools in the 1990s.
  • Rapidly growing city; it has doubled its population in the past 30 years. A greater population means a larger customer base and more options for recruiting.
  • Pro-business state government, no income tax.
  • Presence of established tech companies such as Facebook, Qualcomm, and Google, Apple and IBM. These companies anchor and reinvest in the developer scene.
  • Google Fiber has been implemented, giving Austin the advantage of lightening speed internet (1,000 Mbit/s), which is about 100 times faster than what most Americans have.

Risk Factors

  • Few VCs that are able to provide Series A/B funding. Startups are forced to look outside of Austin for growth capital.
  • The “bootstrapper’s town” reputation in Austin makes it hard for companies to have a “think-big” mentality.
  • While the Austin market has plenty of angel capital, it is concentrated within a small group of investors. For startups who are fundraising, this makes it more challenging to raise their first round.
  • Austin is facing what many growing metros face in terms of traffic (exacerbated by South by Southwest), and the shrinking supply of affordable housing.
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