Keep Austin “Techy” - Why we are opening an Austin Office
We’re excited to announce that we’re opening our first US office in Austin, Texas. In this blog post we explain why we picked Austin over other locations and why we are so excited to add this location to our existing presence in other amazing tech hubs like Toronto and Ottawa!
Introduction
For the past two decades there has been a cultural movement in the city of Austin, marked by the slogan “Keep Austin Weird”. The slogan was originally coined by a local librarian, Red Wassenich, while donating money to support a local radio station. The phrase gained traction and eventually became a symbol of the City’s support and pride in the local business ecosystem. In the early 2000s it was successfully used to save two local stores from displacement by Borders Books. Over time it grew to influence both the cultural and socio-political fiber of the City and created a vibrant celebration of individualism.
More often than we would like to admit, local pride and unique individualism tends to come at the cost of investment, development and growth in that area as it conflicts with general commercialism. But Austin is a unique situation and environment. Rather than the fore-bearer of economic decline, “Keep Austin Weird” has led to an interesting marriage with one of the fastest growing business sectors in the world, Technology. Over the same two decades, Austin has seen billions of dollars in investment from high technology, a surge of population and corporate hiring and the creation of one of the most desirable places to create your next start-up. So how did we go from “Keep Austin Weird” to what we would call “Keep Austin Techy”?
The Waning of Silicon Valley
The birthplace and home of such tech giants as Google, Apple and Facebook, the Bay Area has been the dominate location for technology for decades. From the abundance of engineering talent to the availability of capital, Silicon Valley has consistently been the “it” spot for any and everything tech. But the Golden Gate has started to lose some of its shine over the last 5 years. With the birth of new billionaire founders almost every year, all clamoring for the same small stretch of coast and talent pool, the Bay Area has created a culture of excess and exorbitant costs. The median price for a single-family home is almost $1mm. Combined with some of the highest income and sales taxes for any state or city in the country, the cost of living has become unmanageable for many, in particular the small to medium size software company.
But it is not just the success of Silicon Valley and the resulting costs of doing business there that has resulted in the spurning of small tech companies. It is also the revolution of technology itself. Technology has impacted every other vertical market and industry. There no longer exists businesses that don’t have, or need, technology. This has created a demand for engineers and tech entrepreneurs across the country as well as a much more diversified pool of capital looking to invest in technology. No longer forced to move for work or set-up operations for funding, there is a growing class of entrepreneurs and investors staying put. One of the locations benefiting the most from this transition is Austin, Texas.
Austin Technology Roots Bear Fruit
Austin’s technology roots go back to the mid-1950s with the launch of the Austin Area Economic Development Foundation (AAEDF), which was formed with the goal of attracting non-oil-based employers. Like the present day, the AAEDF leveraged lower costs of living, a strong higher education partner in the University of Texas (UT) and the proximity to the state government to attract business and talent. Over the next 3 decades Austin saw the development of operations from the likes of Tracor, IBM, Texas Instruments and MCC. Then in the mid-1980s came Michael Dell and the launch of Dell Inc. Fast Forward to today and this pattern of high-tech investment into Austin continues. Google, Amazon, Facebook, Cisco, eBay and others now all have large operations in the City. Apple recently announced an additional $1bn in investment to expand their presence.
But it is not just high technology that is thriving in Austin. Private Equity and Venture Capital investment have seen steady growth in the area. Over the past four years, software VC deal counts have grown faster YoY in Austin in comparison to the San Francisco Bay Area as seen in the following graph:
Source: Pitchbook.
Over the past four years, Austin has also seen faster YoY growth in software VC capital raised in comparison to the San Francisco Bay Area after cost of living adjustments as seen in the visual below:
Source: Pitchbook.
With all that being said, Austin is now home to over 15 start-up incubators and has seen the birth of software successes such as BigCommerce and Indeed. With low costs of living, a supportive tax environment and plenty of opportunity, Austin is primed for continued growth. Nicknamed the Silicon Hills, Austin’s technology is certainly ingrained within the fiber of the City.
Sampford Advisors Sets up Operations
Recognizing the growing number of technology businesses in a rapidly developing market and remaining focused on our goal of being the #1 mid-market M&A advisory in technology, Sampford Advisors is pleased to announce the opening of an Austin office starting April 1st, 2020. We pride ourselves on providing a balanced mix of expert experience and advice, with a genuine and honest relationship with our clients. We are excited about the new partnerships we hope to build in the coming years. Located at the new Spaces office at 501 Congress Avenue, we look forward to becoming a part of the Austin ecosystem and helping to Keep Austin Techy!
Written by Mike Lambrix of Sampford Advisors.
About Sampford Advisors
Sampford Advisors is a boutique investment bank exclusively focused on mid-market mergers and acquisitions (M&A) for technology, media and telecom (TMT) companies. We have offices in Toronto, Ottawa and Austin and have done more mid-market tech M&A transactions than any other adviser.