Texas Q2 Venture Report
Texas, you must be tired, you’ve been breaking records all over the place! Q2 was one for the Guinness Books, pulling in $2.66B in venture funding across the state from 249 deals, which, as you may have guessed, is a record. In fact, the $4.75B that we have raised so far in 2021 is on pace to double the previous annual record - $5B that we did in 2020. As if it’s straight out of a pitch deck, looks like we have our own hockey stick graph happening!
Venture Activity in Texas
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So let’s take a closer look and see how this maps across the major markets in Texas… Anyone that reads my newsletter on the reg knows that Austin pumps out VC activity like tourist pictures in front of the “I Love You So Much” sign, but what’s interesting, for the 2nd straight quarter, Houston was Texas’ 2nd biggest venture market. From Houston Exponential, TMC, Rice Alliance, to The Ion, this outcome is years in the making and due to a concerted effort to build up Houston’s venture ecosystem.
So let’s take a closer look at the major deals driving this activity in each state.
$1.5B raised in Q2…. There was a time in the not too distant past when I was gushing over Austin raising $1B in a year…. We are in a whole new arena these days, thankfully Q2 just built us a new stadium… What is also nice to see is that over 50% of capital invested went to early stage rounds, meaning we continue to invest in the companies that will shape Austin for years to come. Most notable deals of the quarter are as follows:
Homeward, a residential home-buying enablement platform, raised $371M in financing including a $136M Series B led by Norwest Venture Partners at a valuation “just north of $800 million.” The company has also secured $235M in debt. Existing investors participated in the Series B including Adams Street, Javelin, and LiveOak Venture Partners.
Workrise, formerly known as RigUp, an Austin-based oil and gas skilled labor discovery and matching platform, became a billion dollar company in 2019, and is expanding its focus to renewable energy with a $300M Series E round at a $2.9B valuation led by Baillie Gifford with participating from Founders Fund, Bedrock Capital, Andreessen Horowitz, Moore Strategic Ventures, 137 Ventures, Brookfield Growth Partners, and Franklin Templeton. Workrise has now raised over $750M to date.
The Zebra, an insurance comparison platform, closed a $150M Series D funding round with participation from Weatherford Capital, Accel, Silverton Partners, Ballas Point Ventures, Daher Capital, Floodgate Fund, and KDT. The Zebra was vaulted into unicorn status after doubling its revenue in 2020, with more than a $1B valuation. They have now raised over $255M to date.
Outdoorsy Inc., a Austin-based on-demand recreational vehicle rental company, reported raising $120M in new capital this week from a $90M private placement equity round led by Moore Strategic Ventures with participation from ADAR1 Partners, Monashee Capital, SiriusPoint Ltd., Convivialite Ventures, Altos Ventures, iAngels, and Greenspring Associates and a $30M debt facility from Pacific Western Bank.
Wheel, an Austin-based platform connecting clinicians with companies that provide telehealth services, raised a $50M Series B round led by Lightspeed Ventures with participation from CRV, Silverton Partners, Tusk Venture Partners, J.P. Morgan, and Future Shape. This brings Wheel’s total funding to $66M.
Austin Venture Funding Activity
As I previously mentioned, Houston has been knocking them out of Minute Maid Park this year. Peeling the onion back a bit, in the first quarter, Houston saw over 50% of their deals (58% to be exact) in the information technology sector, while in Q2, health tech/life sciences dominated the scene, pulling in almost 59%. The 5 most notable rounds of the quarter include:
Cart.com, a Houston-based ecommerce services provider, announced it closed a $25M Series A round led by Mercury Fund and Arsenal Growth, with participation from Moonshots Capital and Scarlet Venture Fund. This follows its $20M seed round led by Bearing Ventures.
Syzygy Plasmonics, a photocatalyst reactor developer raised a $23M Series B led by Horizons Ventures, with participation from Equinor Ventures, The Engine, the VC fund backed by Massachusetts Institute of Technology and Harvard University, in addition to Goose Capital and Evok Innovations.
Houston Venture Funding Activity
Dallas-Fort Worth, Texas
North Texas didn’t quite produce its usual volume of venture activity this quarter, coming in with $173M, down from the $374M in Q1. But it’s not always the size of the Q that gets the people talking.. Let’s not forget the realized gains here in Q2. VC backed fintech Alkami saw a fantastic public markets debut, and there was an additional $2.6B across 8 deals in disclosed M&A, including a massive $1.37B exit from Gearbox Software. On the venture financing side, the 5 most notable venture rounds of the quarter include:
Alto, a Dallas-based ride-hailing platform, closed a $45M Series B round led by Tuesday Capital and Goff Capital with participation from Franklin Templeton among other investors. This bring’s Alto’s total funding to $60M.
Take Command Health, a Dallas-based health insurance platform for small businesses and independent professionals, closed a $12M Series A round led by LiveOak Venture Partners and SJF Ventures. This raises their total funding to over $17M, with previous funding coming from LiveOak and Green Park & Golf Ventures.
Nickson, a Dallas-based furnishing subscription platform, landed a $12M Series A round led by Pendulum Opportunities, with participation from Motley Fool Ventures, Revolution’s Rise of the Rest, and Backstage Capital.
Vitaltech, a Plano-based digital healthcare technology designed to help manage health, fitness, and personal well-being, raised a $11.76M of venture funding from BayMed Venture Partners. The company had previously raised approx. $13M according to Pitchbook.
Dallas-Fort Worth Venture Activity
So there you have it, everything is bigger in Texas, and you heard it here first. Subscribe to my weekly newsletter to stay posted on the latest venture activity across the state!