IT Services, Healthcare Attract Most Venture Investment in Texas

Venture capital investments into Texas startups and other high-tech companies totaled $255.6 million in 39 deals for the second quarter this year. The amount invested marked a 16 percent increase from the same period last year, while the number of deals was essentially flat.

The state data is from the latest MoneyTree report on venture capital activity nationwide. The MoneyTree Report is prepared by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters.

It was the 12th consecutive quarter that venture firms put at least $200 million into companies based in Texas. For the first half of the year, about $852.5 million in venture capital has been deployed in the state. Should this pattern continue for the rest of the year, 2016 totals could supersede the state’s total last year of $1.18 billion. (For the national picture, please see my colleague Bruce Bigelow’s story here.)

The IT services sector received the most funds in Texas last quarter, with $72.9 million invested. Healthcare services ($59 million) and software ($37.5 million) took second and third place, respectively. Much of the activity in each sector came from a single deal: in healthcare services it was an early-stage investment in Fort Worth-based US HealthVest that represented that category’s entire $59 million; a $34 million investment in Austin’s Lumos Pharma was the lone deal in the biotechnology category. The biggest chunk of the IT services investments went to Spredfast, an Austin maker of social media marketing software, which received $50.1 million.

Among the Texas metro regions, Austin continued to receive the lion’s share of funding, with more than twice the number of investments than the next area. In the second quarter, Austin received $151.8 million in venture money in a total of 24 deals, with the Dallas area in second place with 10 deals worth $72.6 million. In the first quarter this year, the Houston area racked up $345.4 million in investment, largely through a $300 million infusion into Sunnova Energy in March. Typically, Houston ranks third among the state’s metro regions for venture capital.

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