Lower Costs, Laid-Back Lifestyle Continue To Draw Tech Companies To Austin, Texas
When I attended graduate school at The University of Texas in the early 2000s, Austin’s slogan was “Keep Austin Weird” (in a good way) and it was known for a vibrant live music scene. Its downtown was colorful, but the skyline was far from impressive.
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Fast-forward to today and it’s startling how much has changed. Construction projects and high-rises abound. And while the skyline can’t compete with the likes of New York City (few can), for those of us who live in Austin, it’s not only a beautiful visual landmark welcoming people to downtown, but a clear symbol of the immense growth the city has experienced over the past few years.
A large part of what’s behind these changes can be found in the city’s evolution into a tech hub. In recent years, it has become a formidable alternative to the Bay Area and New York City for companies, big and small, looking to grow.
More than ever, I am hearing about a company that has either relocated its headquarters to Austin, is expanding its presence here, or has plans to open a secondary office in the capital city. Last year, we took an in-depth look at this migration and it seemed only logical to do it again in 2020.
In 2019, the Austin Chamber of Commerce recorded 58 relocations to the Austin area (keep in mind this does not include companies opening second offices here or those like Apple, Amazon and Google who have announced major expansions in recent years). Those 58 relocations translated into 4,648 new jobs in 2019.
The rate of company relocations to the city just keeps going up. In 2019, 26 percent more companies relocated to Austin, compared to 46 relocations the year prior. (It’s worth noting that this only includes known relocations, and the chamber expects there others that were not publicly announced.)
Concurrently, Austin experienced record venture funding in 2019, with local startups raising $1.84 billion for the year, up 19.5 percent compared to the $1.54 billion raised in 2018, and an impressive 87 percent compared to $983 million in 2017, according to Crunchbase data.
For the first quarter of 2020, 38 Austin startups raised $434.4 million compared to 71 companies hauling in $577.5 million in Q1 2019, according to Crunchbase. The larger average round sizes for known investments points to an increasingly maturing venture scene, with the caveat that seed stage funding rounds commonly get added to our database weeks or months after they close, so we’ll likely see the Q1 2020 round counts rise.
In the first few months of 2020 alone, we’ve seen a number of startups as well as other bigger, more established companies move to the city.
In April, San Francisco-based Airtable opened a customer engagement center in Austin with plans to hire 100 people over an 18-month period. The startup has raised more than $170 million in capital to date, according to Crunchbase data, and achieved unicorn status in 2018.
At the time, Airtable said it had tapped Brian Hagen to serve as the office’s general manager. Hagen had also helped other companies such as Nextdoor and Twitter expand out of the Bay Area, according to a report by Austin Inno. Most recently, he was leading the sales team for Austin-based Dosh.
“I’ve been long drawn to Austin as a place to learn and grow, and I’m thrilled to be growing Airtable’s presence in this vibrant city,” Hagen said in a statement. “Suffice to say, Austin is the perfect place for Airtable to be investing in because it truly is one of the most tech-forward, innovative, and creative cities in the U.S., and it has so much to offer in terms of talent and culture.”
In January, QuestionPro relocated its global headquarters to Austin from San Francisco, saying that it was drawn to the city’s high quality of outdoor activities, affordable living and desirable housing costs, and the fact that it “attracts top talent from all over the world.”
“Austin is the perfect tech-friendly city for QuestionPro to place our roots and to drive our business to the next level,” said QuestionPro Founder Vivek Bhaskaran in a statement. “It offers a mix of vibrant startups, incubators, and classic technology corporations that we’re excited to be a part of.”
At the time, Bhaskaran also told the San Francisco Business Times that he had previously moved the company’s headquarters to the Bay Area but “economically, could not make it work.”