Entrepreneurship

Silicon Valley startups didn’t move to Texas en masse in 2020, but investment dollars did

Read more at www.dallasnews.com

More venture capital funding flowed into Dallas-Fort Worth companies than any other metro area in the U.S. over the course of 2020, according to a new report that tracked where investors put their cash.

Investments in D-FW companies grew 66% in 2020 compared to 2019. That growth rate easily topped the next four cities in the top five — Portland, Ore., Atlanta, Salt Lake City and San Diego, according to an analysis by Australian investment firm Telstra Ventures.

D-FW also saw 19% growth year over year in the number of startups operating in the region. That ranked second in the U.S. behind only Denver. The analysis included metro areas that already had at least 250 startups headquartered there at the end of 2019.

“During the past 12 months, COVID required the VC community to think, act, and work differently,” Telstra Ventures general partner Mark Sherman said in a statement. “An emerging sentiment took hold that you don’t need to be in the Bay Area to build the next unicorn or decacorn.”

Unicorns are privately-owned startups with valuations of $1 billion or more. Decacorns are companies with values over $10 billion.

Telstra’s analysis draws on data from 35,000 companies that received venture capital funding in 2020 across 27 regions of the U.S., including the San Francisco Bay Area and emerging tech hubs like D-FW.

“Emerging tech hubs create jobs, create value for housing markets and create tax dollars for communities to invest in education,” Sherman said.

The report also contradicts the popular narrative that companies are fleeing Silicon Valley in droves for new homes in Texas – whether that be Austin, Dallas or Houston. More than 96% of startups in the Bay Area stayed put in 2020, and only 1.2% opted to move elsewhere, according to the report, which described a Bay Area exodus as “greatly exaggerated.”

Of startups that did move, the majority went to another city in California or New York. Only 12% moved to Texas.

The report also highlights a trend reflected in D-FW start-up funding — money is pouring into health care tech, cloud computing, educational tech and financial tech companies. The Dallas region was a top five market for health care tech investments in 2020.

Dallas-based biotech startup Taysha Gene Therapies raised $157 million in September, and Caris Life Sciences in Irving raised $310 million to accelerate cancer research. And investment in health care startups has continued into 2021 with Fort Worth-based telehealth company TimelyMD raising $60 million in January to double its staff and expand services.

Telstra Ventures’ $450 million investment portfolio includes Snap Inc., Crowdstrike and other tech companies in the mobile app, security and cloud infrastructure business. The firm is backed by Australia’s telecom company Telstra.

Read more at www.dallasnews.com

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