Topics
Latest
AI
Amazon
Image Credits:Bryce Durbin / TechCrunch
Apps
Biotech & Health
clime
Image Credits:Bryce Durbin / TechCrunch
Cloud Computing
Commerce
Crypto
initiative
EVs
Fintech
fund-raise
gismo
back
Government & Policy
Hardware
layoff
Media & Entertainment
Meta
Microsoft
Privacy
Robotics
surety
societal
blank
startup
TikTok
Transportation
Venture
More from TechCrunch
Events
Startup Battlefield
StrictlyVC
Podcasts
Videos
Partner Content
TechCrunch Brand Studio
Crunchboard
get through Us
Techstars has paused its chapter in the city; it’s not alone in dialing back
Texas has been historically fuck for its oil booms . Today the state is perhaps better known as a attractor for tech companies and tech talent , especially in its capital metropolis of Austin . But with some inauguration pull up bet , and decisive manufacture participants cut back their natural process in Austin , the Texas dreaming of submit on tech ’s traditional base in California could be hitting some focal ratio swelling .
TechCrunch has exclusively learned that after a decade in the Texas upper-case letter , startup accelerator Techstars is pumping the brake on its Austin chapter .
Managing Director AmosSchwartzfarb , who ’s been with Techstars in Austin for eight years , announce that he ’s leaving the company ; his last mean solar day will be February 15 . That ram Techstars — which has range 15 programme in Austin — to make a decision about the company ’s time to come in the metropolis .
“ Unfortunately , we are pausing the Techstars Austin accelerator , ” Techstars spokesperson Amalia Lytle confirmed , adding that the formation did not jazz for how long the chapter would be on hold . Once Schwartzfarb made the decision to leave to join a local startup consulting business , Techstars decided that perchance “ the accelerator program is n’t the best way of life fore ” in the city , according to Lytle . Instead , Techstars may decide to invest more in other programs such as Startup Weekend or Founder Catalyst , she said .
During the COVID-19 pandemic , investors and startup founders alikeflocked to the Texas capital , attracted to the gloomy price of living , “ hip ” lifestyle and business - favorable surroundings ( i.e. no state income taxes ) .
But as the years have lead by , it appear that some have lost their enthrallment with Austin , to the point where companies and founders are also leave or looking to go out the city . The summers are brutal — 2023 ’s was the hot on book with78 days of triple - digit temperatures . The startup shot , some argue , is lusterless . And financial backing — particularly for midsize companies — can be voiceless to come by . A perceived want of multifariousness is also an issue .
multitude who move here for affordability reasons quickly realized the metropolis was not as inexpensive as they expected — especially when it come to lodging .
Join us at TechCrunch Sessions: AI
Exhibit at TechCrunch Sessions: AI
Austin ’s housing grocery store went possessed in 2020 and 2021 . As recently report by Newsweek , “ by mid-2022 , Leontyne Price were more than 75 per centum high in the metropolis compared to before the pandemic . ” What went up is now coming back down , with the same issue reporting that “ prices in Austin are dropping 10 metre fasterthan the national average . ”
Funding is also down . Venture funding in the city totaled $ 6.75 billion in 2021 and $ 5.5 billion in 2022 , according to PitchBook data . In the first three quarters of 2023 , venture support was down 46 % to $ 2.9 billion compared to $ 5.3 billion arouse in the first three quarters of 2021 , and down 36 % compared to $ 4.5 billion in 2022 ’s first nine months .
Others are moving out of Austin, too
Techstars is n’t the only entity scale back in Austin , either . In November , unicorn Cart announced that it wasmoving its HQ back to Houstonafter relocating to Austin in late 2021 . The company , which key out itself as an e - commerce - as - a - divine service business , reached a $ 1.2 billion valuation in June afterraising a $ 60 million Series Cround of funding .
Mitch Goulding , music director of communications at Cart , say TechCrunch via email that the company had originally relocate its headquarters to Austin “ with the explicit goal of attract more software program natural endowment . ” But as the company continues to surmount ( it claim to have seen its revenue climb by 9x since the end of 2021 ) , it settle it demand to “ augment other areas of the companionship , ” including HR , finance , accounting and legal .
“ We feel the move to Houston will unlock a deep talent pool in these areas base on its situation as a hub for major business , ” Goulding sound out .
It ’s also a affair of price and gadget .
“ Costs in Austin are gamey relative to Houston ’s affordability , [ and ] Houston is also more approachable , ” Goulding said . “ It is typically easier and cheaper for employees take flight in . It also tends to be easier for employees who labour in from across the state . ”
In January , Laundris CEO Don Ward announced that he ’d decidedto relocate his B2B software startup ’s headquartersfrom Austin to Tulsa .
“ A deal of it [ Tulsa ] reminded me of where Austin was 10 year ago in terms of the tech ecosystem being build , ” Wardtold Tulsa World .
Joah Spearman is a founder who of late relocated to Sacramento from Austin after growing thwarted with a number of things about the city .
Spearman institute Localeur , a travel recommendation service aimed at millennials , in January 2013,and is working on a unexampled inauguration speculation now that is in stealth .
Though he ’s not totally sour on Austin , he trust that the weaknesses are constraining its growth .
“ The University of Texas has an unstable funding partner in the State of Texas , given the political science of the state , making it take exception to predict their on-going investment in the local ecosystem . The monetary value of living , especially trapping , has made it more challenging for middle - class professional — peculiarly people of color — to buy into the market , which hurt inauguration that have to compete with the Googles and Teslas for talent , ” said Spearman , who is opprobrious . “ The monoculture utter more to the income disparity that is pricing out musician , artists and cordial reception workers who are so of the essence to the originative culture that get Austin a great market for startup father in the first place . ”
Spearman get going as far as to fly the coop for City Council in hope to help move alteration in the city . “Eventually it got to a full point where I had to stop trying to solve problem on behalf of a urban center I roll in the hay and focalise on taking forethought of myself and follow up on other opportunities , ” he say .
Mike Chang , a 30 - twelvemonth - old founding father and saint investor , toldBusiness Insiderearlier this year that he regretted moving from Los Angeles to Austin during the pandemic . “ Austin is where ambition fail to pass away , ” he tell the publication .
One venture investor who wished to remain anonymous recently made the move from Austin to California . He go down to comment further .
Migration still happening
Still , some believe that while hoi polloi are n’t moving to the city like they were two to three years ago , Austin still continues to appeal people from other locale .
“ Anecdotally , I believably still meet someone every few weeks that proceed here within the past year or so , ” sound out Eric Engineer , a collaborator with Austin - based S3 Ventures . “ They tend to be in their 20s to 30s . ”
And not everyone who is frustrated with the metropolis is actually leaving .
Paul O’Brien , CEO of MediaTech Ventures , posted on LinkedIn that the bellwether of a sizeable startup ecosystem is if big businesses , like camber and VCs , fund the ecosystem . But the problem is that Austin did n’t have that sustenance .
In his view , the cause founder ( or anyone ) might be souring on Austin has to do with the electronic messaging and packaging of the city being “ inconsistent with the time value delivered to the food market . ”
“ Of of course , many of us , myself for example , absolutely love Austin for all that it is full and bad , but many move here hearing that it ’s the ‘ next Silicon Valley , ’ ‘ secure place for inauguration , ’ or ideals such as the ‘ Live Music Capital of the World , ’ and it ’s not that those ideal are invalid but rather that expectation exceeds reality , ” he told TechCrunch via email .
Techstars ’ going is not the only dissatisfactory accelerator - related news in the city this year . In May , TechCrunch reported that the now - defunctNewchip , an on-line accelerator that had plight to aid startups , hadfiled for bankruptcyamid employee and client discontent .
This Austin accelerator made big claims ; employees and customers say it did n’t deliver
