The Texas Entrepreneur Networks Startup Funding Report for Q2 2012

The Texas Entrepreneur Networks Startup Funding Report represents the equity investments made into Texas startup and early stage companies for the second quarter of 2012.  This report includes registered investments as well as the business entity filings for the state.  There is also a report from Gust, that highlights dealflow in the Texas-based angel networks.  Trends are noted as well as a forecast for early stage investments.  Here are some highlights from the report. 

Trends in Sectors

Overall the leading category for funding sector was Information Technology at $28M with 11 deals, followed by Healthcare at $28M comprised of 29 deals and Energy at $20M with 6 deals. 

Trends in Regions

The Central Texas region came in first with 35 deals worth $88M in funding, followed by the North region with 53 deals worth $79M.  Following that is the Gulf Coast region with 25 deals worth $46M, the South region with 6 deals worth $8M and the West region with 1 deal at $1.3M.

Texas Startup Investment Trends

Crowdfunding skyrockets in attention and traction with the passage of the JOBS Act of 2012 in April.  While the laws are still under review, there is an explosion in the number of crowdfunding sites coming online. According to Massolution, there are over 520 crowdfunding websites today.   Equity-based sites are growing the fastest at 30%.

Business Filings

Business filings of new entities in the state of Texas in the 2nd quarter grew 39% over the 1^st quarter of 2012 across the state of Texas.   Central Texas grew 41%, North Texas grew 38%, South Texas grew 37%, Gulf Coast grew 41%, and West Texas grew 34%. 

GUST Data

In the second quarter, 1151 deals were forwarded to Texas-based angel networks.  Deal flow within the state increased by 60% from 2012 Q1 to 2012 Q2. The state of Texas falls from 3rd place in the US to 4th place for dealflow. 

TxEN Funded Companies

Startups seeking funding who participated in the TxEN program raised over $21M in the second quarter of 2012. 

You can see the full report at this link.

Best regards,

Hall T. 

Lee Blaylock of Who@ Talks about Startup Grind Dallas

Lee Blaylock of Who@ Talks about Startup Grind Dallas (http://www.meetup.com/Startup-Grind-Dallas/)

Where are you from originally?

Born in Houston, raised in Dallas. 7^th generation Texan on both sides of my family, but all that means is my ancestors were running from the law in Kentucky and Tennessee and didn’t have enough money to fix their wagon wheel while headed to California.

What university did you go to?  


Hook’em.

What brought you to Austin?

The University

What is your group’s mission?

Who@’s mission is to increase business productivity on a global basis by enabling you to leverage who you know, and do it in ways you never dreamed of.

What need does it fulfill?

The need to differentiate yourself  by leveraging your relationships

What exactly does it bring to startups?

Faster access to capital, customers, investors and advisors.

What type of startup would benefit from your group?

Anyone raising capital or looking to sell their product or service in an environment where relationships matter.

What was the most challenging aspect of starting up the initiative?

Getting it capitalized outside of silicon valley.  Both coasts refer to “flyover territory” unless you’re on the coasts.  They invest in business where the exit is a multiple of revenue.  Here in the heartland, too many investors are looking for business that exit as a multiple of EBIDA.  The venture capital market in Texas is embarrassing.  Texas is the 8^th largest economy in the world and the amount of early stage investors is disproportionate to the talent here.  It is a real market opportunity for savvy investors.  The problem is, the smartest money is in CA, NYC and Boston and there’s too much money chasing too few deals so their supply demand equation isn’t out of balance and they don’t see the need to travel + travel for them means lost opportunity to spend more time with other deals.  They do invest here, but not at the seed stage and not at a true A stage either except where there is a previous relationship.   But hey, you have to bloom where you are planted.

What advice do you have for entrepreneurs?

Never ever stop believing in yourself for when you do, bad things can happen.  But remember there is always a delicate balance between self-belief, self-doubt and self-aggrandizement.  Too much of either of those and you will suffer as Icarus did. 

What Austin-based resource have you found to be the most helpful and why?

The engineers and research that comes out of UT.  Without UT, Austin would be a nice little town with outstanding Mexican food,  watersports and too many lobbyists and lawyers.  Not much else.