Venture capital had a record year in 2018. The capital invested totaled nearly $131 billion, with most of that coming from deals of $50 million or more. It was the ﬁrst time since the dot-com era that venture capital investments for the year surpassed $100 billion. The funding is a key indicator of startup growth.

Where Texas stands

California — the home of Silicon Valley — topped the charts once again in 2018. Texas came in ﬁfth place, behind states with cities that have become startup powerhouses like New York City, Boston and Seattle.

"For Dallas, it seems like overall funding was relatively flat, but the number of Series A deals increased year-over-year. There were more Series A deals funded by venture firms outside of Dallas-Fort Worth. It shows that VCs [venture capital firms] recognize there's deal flow here and it's an underserved market — and it's less competitive than some of the coastal markets."

managing director of Silicon Valley Bank in Dallas

Regional roundup

All of Texas's major metros attracted more venture capital in 2018 than they did a year prior. The jump was especially large in San Antonio, which raked in $110 million of funding in 2018. It got a bump from $43 million of venture funding for Xenex Disinfection Services, which is developing ultraviolet lights that ﬁght infection in hospitals and health care facilities. For the ﬁfth year in a row, Austin led the state in venture capital. The Austin area attracted $1.53 billion of venture capital in 2018 — more than twice as much money as the Dallas-Fort Worth area and nearly 60 percent of the Texas total.

"VCs are always wanting to know. 'All right, I'm going to give you this capital. What are you going to do with it?' Series A is a different level where they are wanting to see you already have some success in the market, you have a product that's proven and you have some tailwinds behind the business."

CEO and cofounder of Bestow

Local standouts

Dallas-Fort Worth attracted sizable venture deals in 2018 that went to a diverse mix of companies in software, biotech and other industries. Many of the startups raised funding from outside Texas. For example, Dallas-based online life insurance seller Bestow raised money from Valar Ventures, a New York ﬁrm cofounded by Peter Thiel focused on ﬁnding fast-growing companies outside of Silicon Valley, and Meritize raised funds from Colchis Capital Management, a San Francisco-based ﬁrm. The roundup of funding includes money from angel investors but does not include some types of growth capital, such as private equity raised by companies that haven't previously raised venture funding.

"About 10 Dallas-area companies raised rounds of $5 million or more in 2018. That's up from three companies that raised rounds of that size a year prior. The larger rounds are a promising sign that local startups are growing and expanding. The investments could lead to more deals, too. When VCs fly in from the coasts to visit a portfolio company, they may meet other Dallas-area startups that they want to invest in."

staff writer,

SOURCES: Venture Monitor report by Pitchbook and National Venture Capital Association; Silicon Valley Bank; and Dallas Morning News research