Austin venture capital investing falls in third quarter, but internet activity stays strong

Posted October 13th, 2017

Venture capital investing in Austin companies fell in the third quarter, but activity in the internet sector remained strong.

A total of $151 million was raised by 20 companies during the quarter, according to a survey by PricewaterhouseCoopers and CB Insights.

That’s a 55 percent decline from the second quarter, when 45 companies received $332.3 million.

“A quarter doesn’t tell the whole story, but it feels like things have flattened out a little bit,” said John Cummins, a partner at PricewaterhouseCoopers office in Austin. “It’s a little more pronounced in Texas, but Silicon Valley saw it too.”

Texas saw a 65 percent decline in investment dollars from the prior quarter to $282.8 million. In Silicon Valley, activity fell 46 percent this quarter to $2.2 billion.

Nationwide, activity was flat from the second quarter, with $19 billion going to 1,207 deals.

(MORE AUSTIN DEALS: Mass notification software company raises $8M to expand.)

In Austin, internet companies received the most money, with 12 companies raising $92 million. 

The largest Austin deal of the quarter was in the internet sector: The Zebra, which lets consumers compare car insurance rates online, raised $40 million in a deal led by Silicon Valley-based Accel Partners.

The company said it will use the new money to expand product functionality, ramp up marketing efforts, add new lines of insurance and expand its 75-person workforce.

The investment slowdown in the third quarter affected Austin companies of all stages. Expansion stage companies received the majority of money, with $105 million invested in seven deals. But all stages of development -- from seed stage to later stage -- experienced a decrease in investment funding.

The top 10 Austin deals in the third quarter:

The Zebra, platform for car insurance rate comparison, $40 million

Favor, on-demand delivery service, $22 million

Mighty Swell Cocktail, sparkling fruit juice cocktails, $12.9 million

Continuum Analytics, big data analytics platform, $10 million

Outdoor Voices, active wear for women and men, $9 million

Convey, rate comparison engine for shipping freight, $8.25 million

Mangstor, flash-based solid state drives for enterprise applications, $7 million

Dosh, cash back app for consumers, $7 million

LVL Technologies, wearable fitness tracker, $6.75 million

TrustRadius, review site for business technology, $5.5 million

Source: The MoneyTree Report from PricewaterhouseCoopers and CB Insights