Texas Startup Indicators: 2020 Update

Early Stage Capital Slips Again

Fort Worth-based startup companies raised $13 million in early stage capital in 2020. If that sounds low, it’s because it is, especially when compared to other large Texas cities and to the nation as a whole. In fact, while the United States set a 10 year high for most capital invested ($148B), Fort Worth actually slipped in its funding efforts, raising $4 million less than our previous five-year average of $17 million per year.

In the past, we’ve looked at early-stage capital raised in Texas’s largest cities. This time we are taking a look at 2020’s updated numbers to see how COVID-19 has impacted local funding. In previous comparisons, we analyzed data from Austin, Houston, Dallas, and San Antonio. We are expanding our scope to include Plano in order to provide a better comparison of data in the DFW area. All data is provided by PitchBook.

Figure 1

Figure 1 shows early-stage investment in Texas cities in 2020. In the past year, Fort Worth’s $13 million raised means we still lag far behind our neighbors. For a city whose population is the 13th largest in the nation, this investment number simply isn’t enough to fund local investable startups and will send a signal to local entrepreneurs that local funding is scarce. Fort Worth will essentially be pushing local entrepreneurs to pursue funding opportunities elsewhere – like Dallas and Plano. In many cases, companies relocate to be closer to investors, meaning Fort Worth would lose the myriad of benefits that startups generate. Fort Worth already has a negative reputation from entrepreneurs when it comes to the availability of local funding, and this could be enough to dissuade some entrepreneurs from ever even launching their venture.

Perhaps the most interesting finding of this analysis is how well Plano has been doing comparatively. Because of its proximity to Dallas, Plano could be experiencing some kind of entrepreneurial trickle-down effect. With continued efforts and entrepreneur-friendly policies and plans in Fort Worth, who’s to say our city can’t steal a page from Plano’s book?

Major highlights from the data analysis:

  • COVID-19 doesn’t seem to have had a major impact on early stage deals in major Texas cities, with Austin reporting a more than $400 million increase from its five-year average while Dallas reported an even more eye-opening $600 million increase from its five-year average.
  • Fort Worth lags behind our neighboring cities in most of the early-stage investment metrics we have considered here.
  • The DFW area is dominated by Dallas, but proximity to Dallas has more than likely helped Plano, who has raised $68 million in early stage capital in 2020. 
  • Perhaps the best route to pursue at this point is to focus on Fort Worth’s already existing assets and talent, such as its vast healthcare and aerospace infrastructures, in order to create synergies within and between key industries and centers of expertise (universities, etc.).
  • More research needs to be conducted to determine if there is some kind of a talent leak of promising entrepreneurs from Fort Worth to other Texas cities due to a lack of proper early-stage investment options.

In conclusion, why should Fort Worth focus on startups? The answer is simple: startups are a leading source of job creation. In 2018 alone, startups created more than 25,000 jobs in Fort Worth (Read here). This is just one small indicator of how transformative a good startup environment can be for a city like Fort Worth. In the last 10 years, the population grew by more than 150,000 people, and we are certain that this includes people who have game-changing ideas but might be lacking resources. The growth of our local economy depends on it.

Interested in seeing more stats on the Fort Worth entrepreneurial ecosystem? Click here to view other data related posts.


This post is a collaborative effort by Sreejith Kizhakkeveettil and Trent Barron, HSC Next Innovation Ecosystem interns,

TK

About the Author

Sreejith Kizhakkeveettil is a UNTHSC Innovation Ecosystems Intern and a final year MBA student at TCU Neeley School of business. He is passionate about technology, soccer and telling stories with the help of data. You can find more info on him here.

Trent Barron

About the Author

Trent Barron is a student intern for the Department of Research Development and Commercialization for the University of North Texas Health Science Center in Fort Worth. Trent is a Fort Worth native, but is a fourth year student at the University of Georgia, pursuing a BA in Cognitive Science, with a Minor in Business, a Certificate in Entrepreneurship, and a Certificate in New Media Studies. Go Dawgs and Texas Forever!

2 thoughts on “Texas Startup Indicators: 2020 Update

  1. We know that there is AMPLE money available in Fort Worth, so what do we have to do to get potential investors interested in supporting local startups?

  2. I would also add fort worth is not as let’s just say technology-focused as other areas, from my experience all the tech jobs are in the industrial zones outside of fort worth in the Keller areas, Arlington, Dallas, and Plano. This is where we have our Amazon facilities, manufacturing facilities, as well as restaurants and other businesses that serve the larger companies. including contractors and subcontractors.. it a trickle down effect.. businesses serving other larger businesses.. the only issue is the pools of advanced labour and talent are being gathered in the areas outside of Fort worth.. we have the talent in our city if you look at the traffic in the mornings at 5-8 am you will see the flow of talent and assets leave fort worth and go to Keller, white settlement, Arlington, Plano and Dallas.. it is where the money is at and higher pay.. they have a competitive advantage in that area, in my opinion, we could do one thing to attract more investors to fort worth. offer something they cannot like an autonomous business zone inside a certain zip code that would play by different rules on the tax, regulation side of things, that would attract more companies to buy up the buildings that are not being utilized and incentivise more training opportunities to create a larger pool of skilled and specialized trades.. those two things are the recipe needed.. high skill and incentives that will create the enviornment that will bring in what investors and tech componies both need to work.. with those things met there will be an abundance of skills, companies will have incentives.. then investors will have more oprotunities to see a return on their investments through rapid growth of industries due to regional policy changes. similar to silicon valley or shenzhen special economic zones.

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