Austin’s VC Investments Drop 52 Percent in the Second Quarter Following a Record First Quarter

Austin-based Everlywell, a healthcare testing platform, received $50 million early-stage investment in April, making it Austin’s top venture deal for the second quarter.

Flosports, a sports media startup, claimed the number two spot with $47 million in expansion-stage financing, followed by Lung Therapeutics with $36 million, Arrive Logistics with $25 million and Elligio Health Research with $20 million, according to the PwC/CB Insights MoneyTree report.

Others in the top 10 included Aunt Bertha with $16 million, Coder with $11.4 million, KERV with $11 million, Atmosphere with $10 million and SubjectWell with $10 million.

Overall, Austin’s venture capital investments dropped 52 percent from the first quarter of 2019 to $337 million in the second quarter of 2019, according to the MoneyTree report.

But the number of deals in Austin rose slightly to 41 deals, compared to 39 in the first quarter.

The big decline in Austin’s investment dollars during the second quarter signals a return to normalcy following a few big deals that got done in the Austin area for the first quarter, said John Cummins, partner with PricewaterhouseCoopers, based in Austin.

The Austin-Round Rock area have been experiencing record investment levels for the past several quarters just like the national VC industry, Cummins said.

The Austin-Round Rock area ranked seventh nationally in the top ten most active markets for VC investments by deal activity for the second quarter. San Jose-San Francisco topped the list, followed by New York, Boston, Los Angeles, Seattle, and Denver. The Austin-Round Rock area didn’t make the top 10 markets for dollars invested.

Overall, Texas companies received $687 million in venture capital in the second quarter of 2019, according to theMoneyTree Report.

Deals statewide rose slightly with 72 reported for the second quarter of 2019, compared to for the same quarter a year ago.

Nationally, California led VC investments in the second quarter with 576 deals worth $16.2 billion, followed by New York’s 203 deals worth $3.8 billion and Massachusetts with 112 deals and $2.2 billion invested. Texas ranked seventh.

Nationally, venture capital investment rose almost 10 percent in the second quarter to $28.7 billion in 1,409 deals, up three percent, compared to the first quarter of 2019, according to the MoneyTree report.

“At the 2019 halfway point, US VC funding shows no signs of slowing: At the end of Q2, US VC funding was at $55B, well above the mid-point for 2018 ($48B), which ultimately saw a near-record $116B raised (compared to the record $120B in 2000),” according to the report. “$100M mega-rounds drive funding higher: Driving the trend toward bigger deals, US companies raised a record quarterly number of $100M+ VC rounds in Q2, with 64 mega-rounds accounting for nearly half of all funding raised.”

Another trend that is continuing is a decline in seed-stage funding

“After rebounding last quarter, seed activity dropped below levels last seen in Q1 ’14.,” according to the report.