NEW YORK | LOS ANGELES | GENEVA | November 12, 2015 - Redwood Capital Group, an investment banking firm serving the technology, communications, media, business services and other growth industries, announced that Michael Rosenberg, Partner, joined in a panel discussion around capital investment in technology companies in Austin, TX. Together with Mr. Rosenberg, other roundtable participants included angel and venture investors, as well as leaders from early stage technology companies.
The event offered insights around Austin’s challenges of raising capital relative to its peers, despite having one of the largest start-up densities in the U.S. David Altunian, a professor at St. Edwards University in Texas, kicked off the panel discussion with a presentation around his recent report addressing Austin’s capital landscape, where he challenged that, “We don’t have a shortage in companies to fund – we do have a shortage of [financial] network.”
Several founders said that many of Austin's venture capital firms are very focused on revenue from day one. It may be a sensible approach financially, but it's a far cry from life in Silicon Valley where startups are encouraged to burn up money to accelerate growth.
Mr. Rosenberg, an active advisor in the Austin technology community, and serves on the ATC’s Capital Advisory Council, responded to the question around the possibility that Austin companies exit (sell) too early. He said that often companies have carved out a niche but are not thinking about bigger markets.
Mr. Rosenberg believes that this behavior may result from the inherent risk that Austin’s entrepreneurs and angel investors face with fewer options for securing later stage capital required to fund bigger ideas. "I think a lot of companies that start up and take that tack say, 'hey, I see a white space, it does not necessarily have to be a multi-billion dollar market, we are going to find a little niche, then do a really good job of growing revenue to some level, call it $3 million to $5 million,' then they figure that that's the right time to sell and they exit… that's probably a mentality in Austin, possibly a result of the financial network that is here. If the goal is to get investment outside of Austin... you really need to have a plan that shows that there is a tremendous market opportunity. That is where investors want to be."
About the Austin Technology Council
ATC (austintechnologycouncil.org) is the voice of Central Texas' diverse and thriving technology and life sciences industries. The Austin technology and life sciences sectors contribute $21.5 billion annually to the regional economy and support more than one third of local jobs. By convening Austin's top technology executives, ATC is leading the effort to meet the future needs of the industry through increased access to technical talent, increased access to later-stage capital, the support of a thriving life sciences ecosystem, and connectivity across the industry and with key stakeholders in Texas and around the world. 280 companies, 1,600 executives, & 60,000+ employees make up the Austin Technology Council - the foremost community behind the growth, strength and force of Austin’s technology and life sciences industries.
