2015 Austin Startup Report: $966M in fundings and a $3.9B exit

Amy  Reagan
In 2015, a new narrative began to emerge in Austin tech.
 
Built In Austin analyzed data from 44 exits and 169 fundings, 72 percent of which were greater than $1 million.
 
All told, 147 companies in Austin's digital tech industry raised more than $966 million in new capital.
 
Thanks to HomeAway's blockbuster buyout from Seattle-based Expedia for $3.9 billion, Austin has proven itself capable of launching a consumer tech brand, growing it aggressively and navigating it through a 10-digit exit.
 
Not bad for a town mostly known for dating the consumer web's unsexy sibling — enterprise.
 
"We've been building upon the recent history of growing consumer brands here in Austin," SpareFootSpareFootVisit their siteView company profile+ Create Job Alert CEO Chuck Gordon said. His company raised one of the largest local rounds in 2015 with a $33 million investment led by Steve Case's Revolution Growth.
 
SpareFoot wasn't alone. Austin digital tech funding held steady in 2015, even amid speculation of another bubble as investments slowed nationwide.
 
Continuum Analytics, Inc.Continuum Analytics, Inc.Visit their siteView company profile+ Create Job Alert had the seventh largest funding of the year when it raised $24 million in July. CTO and co-founder Peter Wang said the entire tech world will feel valuation pressure in the next 12 to 18 months, but Austin has something "very special."
 
"Some unicorns will not make it, and this will cause people to stop assuming that valley investors, founders and engineers somehow have a Midas touch that places them above business fundamentals," he said. "Perhaps some of the folks there will come to Austin seeking a more balanced approach to life and startups. I feel like there is a very supportive environment here for people who want to do purpose-driven work."
 
 

Funding breakdown

E-commerce led the Austin startup scene, with 20 deals topping $165 million.
 
Ad tech, web publishing, social media, and marketing companies followed closely behind with 21 deals worth nearly $160 million. The six acquisitions in that category that reported their values totaled $9 million.
 
That ad tech category included companies like Main Street HubMain Street HubVisit their siteView company profile+ Create Job Alert, which raised $45 million in 2015, starting with a $20 million debt financing from Silicon Valley Bank in February and followed by a $25 million funding round, the year's fifth largest, led by Vista Equity Partners.
 
The same category includes companies like SpredfastSpredfastVisit their siteView company profile+ Create Job Alert, which makes media monitoring software for PR agencies and raised $24 million in March, the year’s eighth largest funding round overall.
 
Consumer web companies collected 26 fundings totaling $100 million; cloud computing, development, data and analytics, had 22 fundings totaling $153 million; and enterprise and talent tech, racked up 22 fundings totaling $108 million.
 
SpareFoot dominated the consumer web category with its $33 million funding in March led by Monkfish Equity, Insight Venture Partners and Revolution LLC.
 
Gordon of SpareFoot said the company has unlocked a big opportunity in consumer web services.
 
“[We] introduced a new class of storage provider — storage as a service,” he said. “A lot of VCs are funding these types of companies because they are chasing the big dollars in the $25 billion storage industry, and SpareFoot has an opportunity to be the source of demand for them.”
 

E-commerce cashes in

E-commerce was the largest category of investment activity in 2015, accounting for 21 fundings totaling $167.4 million.

This category claimed HomeAway's massive acquisition as well as the year's second largest funding. VolusionVolusionVisit their siteView company profile+ Create Job Alert, which makes and hosts online stores for small and medium size businesses as well as the enterprise market, raised $55 million in January 2015.

TabbedOutTabbedOutVisit their siteView company profile+ Create Job Alert was the only other Austin e-commerce company to break into the top 10 fundings of the year. Its $23.5 million series C round placed it in the number nine slot, just ahead of Snap KitchenSnap KitchenVisit their siteView company profile+ Create Job Alert.
 
Although Snap Kitchen began as a chain of brick and mortar food stores, it’s included in the rankings because the company is designing its own e-commerce system for in-store pick-up and delivery through partnerships with potential on-demand partners such as Favor and Postmates.
 
CEO Dave Kirchhoff, who joined Snap Kitchen from Weight Watchers last summer, said he aims to build a team of designers and developers at Snap Kitchen that can compete with any startup in Silicon Valley.
 

HomeAway’s home run

The 2015 numbers were bolstered by at least two marquee deals: Expedia’s $3.9 billion acquisition of HomeAwayHomeAwayVisit their siteView company profile+ Create Job Alert and the $60 million investment committed to Civitas Learning by New York private equity firm Warburg Pincus.
 
The HomeAway acquisition was significant for several reasons. First, it bucks a trend of small exits by Austin tech companies. And perhaps just as importantly, it shows Austin tech — long known for its specialty in enterprise software and hardware — is capable of nurturing consumer tech brands.
 
HomeAway Chief Revenue Officer Jon Gray said the company employs about 1,000 people in Austin. When he joined in 2004, he was employee number three.
 
“If anything, Expedia’s ties to HomeAway help globalize the Austin tech scene a little bit more,” he said. “I believe that Expedia’s confidence in HomeAway is also a mark of credibility for the larger Austin tech scene and the talented people living and working in this great community.”
 

Civitas at the head of the class

The Civitas LearningCivitas LearningVisit their siteView company profile+ Create Job Alert investment, which also came from outside Texas, will help the ed tech company make acquisitions of its own to expand its open data analytics platform into new markets.
 
The funding was widely reported as $60 million and the company confirmed a commitment from investors for that amount, but the full amount wasn't closed at the time of the deal's announcement.
 
Civitas had already raised $16.2 million in January, bringing the company's 2015 total to $50.8 million closed, or $76.2 announced. The company had previously raised $7.2 million in 2013, according to filings with the SEC.
 
 
Infographic is sponsored by SkylesBayne
 
*Sources: SEC filings, press releases and confirmed news reports (amongst other public information)
**Digital tech companies counted only. Computer hardware and electronics excluded

***Correction: Perk.com's $20 million funding round was wrongfully omitted from this list. The infographic was updated on 1/22/16. 

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