May 10, 2013, 10:12am CDT
Staff Writer-Austin Business Journal
Austin has become the place for angels — investors, that is.
During President Barack Obama’s visit to the downtown Austin incubator and co-working space called the Capital Factory, co-founder Josh Baer barely mentioned the role of venture capital in the city’s technology startup environment. Instead, he pointedly said angel investors are one of major factors in Austin’s booming technology sector.
He also cited spaces for startups and a sense of community as contributing factors. But it was notable that angel investors got the nod from Baer, a serial entrepreneur who has also invested in dozens of startups.
The numbers back him up.
As venture capital funds grow larger, firms have invested larger amounts in later-stage companies instead of startups to generate returns for limited partners. For example, Austin Ventures LP, a major player in the technology sector — both locally and nationally — has shifted to later-stage deals and roll-up investments.
The general move to larger VC deals has produced what’s commonly called the “capital gap” for early-stage companies. It’s a void that has been largely filled by angel investors.
In Austin, the Central Texas Angel Network reported investing about $8 million last year — the largest annual amount since the group was established in 2006 and a 37 percent increase versus the previous year.