2016 Austin startup report: $912M in fundings and over $8.4B in exits

Kelly O'Halloran
January 30, 2017

Fundings in Austin tech in 2016, including debt financing and private equity rounds, totaled more than $912 million, which was spread across 130 deals and 118 companies. That total is down $54 million from 2015.

Although total funding dollars for the year dipped by about 5.6 percent, we did see a 7 percent increase in number of fundings over $1 million, with the average deal size coming in at just over $7 million.

Additionally, 2016 saw fewer total exits than previous years, with 32 in comparison to last year’s 45.

Despite a lower number of acquisitions, the total amount of disclosed exit dollars from buyouts doubled — and that’s without any local IPOs. Led by Silver Lake Partners and Thomas Bravo's acquisition of SolarWinds for $4.5 billion and KKR & Co. LP’s buyout of Epicor for $3.3 billion, Austin tech saw over $8.3 billion in exits, for an increase of 52 percent over 2015.

Funding breakdown

Austin’s fintech sector scored big in 2016 with over $174 million brought in across 10 companies. Two key rounds put fintech at the top of our industry list, with lending companies like Open Lending and Able Lending raising $40 million and $100 million, respectively.

The B2B software vertical drew in the largest number of deals in 2016, with 23 companies bringing in $151 million. Leading the category was BigCommerce with its $30 million Series E in May, marking the fourth largest deal in our report.

Eleven of the 23 B2B software companies closed fundings over $5 million; five were over $10 million. This total includes video conferencing developer Lifesize’s $17.5 million, TrendKite’s $16.3 million to expand its team for measuring PR efficacies, and TurnKey Vacation Rental’s and BP3 Global’s $10 million rounds each.

In 2015, consumer web led the way with the largest number of companies funded. This year, consumer web fell to second place with 14 companies receiving funding, led by Silvercar’s $27.9 million January round.

Big Data made its first appearance on our report as a separate funding category, with 13 companies securing north of $136 million. Pivot3 led with $44 million, and CognitiveScale also saw the closing of a $25 million Series B in October.

In 2015, adtech was the second most funded industry by total capital, and that momentum continued in 2016. Although the number of deals was down, Spredfast’s $50 million Series F was the second biggest deal of the year, bringing the company’s total funding to over $104 million since its 2008 inception. Phunware’s $22 million Series F and OutboundEngine’s $16 million Series C also helped contribute to that industry.

The IoT scene also seems to be growing, with 10 companies gaining funding totaling $54 million. Hangar, the startup using drone aerial data capture for enterprise, contributed with a $6.5 million seed round, and followed the funding by acquiring Austin-based autopilot software developer Autoflight Logic.

Enter the exits

In addition to the multi-billion dollar exits of Epicor and Solar Winds, a national banking goliath made headlines by buying a barely two-year-old Austin startup. In May, Goldman Sachs finalized the purchase of Honest Dollar, a fintech company that helps small companies offer retirement plans for their employees. Prior to the exit, Honest Dollar had raised a $3 million seed round in 2015.

The third largest acquisition of the year occurred in April when Experian purchased the global fraud prevention service from CSID for $360 million.

 

Built In Austin’s Annual Report is a financial analysis of digital tech employers in the Austin area for 2016. All year-over-year comparisons are based on Built In Austin’s internal funding and acquisition data, collected since 2014. To be eligible for inclusion, a company’s primary business and industry must be digital technology/innovation, including web and mobile applications, software, IoT, e-commerce, VR/AR and digital agency work. Data is compiled from SEC filings, press releases, confirmed news reports and other public databases. Funding data includes venture capital, private equity, debt financing and securitizations.  

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