New Silicon Valley: Startup Ecosystem of Austin

Texas becomes the largest economic center of the United States, and its capital, Austin, rapidly turns into a true Mecca both for American and foreign startups. In this regard, the city is already overshadowing the legendary Silicon Valley.

Austin’s pros and cons for startups

Against the background of the growing popularity of Texas’ capital in terms of business opportunities, you should check out the pros and cons of this city for startups.

Pros for startups:

  • Rapidly developing economy. As practice has shown in recent years, the Texas economy is even more resistant to fluctuations in oil prices, which previously was one of the main sources of state income.
  • Active support for startups with large financial accelerators. Such monsters of the market as Techstars are actively working in Austin.
  • An abundance of skilled labor. The state has a lot of universities, a large number of educational institutions and centers of excellence, which provide a constant flow of various specialists into the business.
  • Tax sphere. Income tax of the state, regions and cities is not charged at all, and individual entrepreneurs and partnerships are exempt from taxes on gross profit.
  • Relatively low cost of living.
  • Highly developed infrastructure. The state has 380 airports, 16 seaports and one of the longest roads and railways in the United States.


Cons for startups:

  • Despite mild winters, high humidity and summer heat in Texas can be unbearable. Terrible summer droughts are frequent there.
  • One of the highest property taxes in the US.


Lodging rental price

The Texas real estate market didn’t suffer such losses from the crisis, like many other states did. Mainly sales and construction volumes fell, but prices remained at about the pre-crisis level.

The last few years, prices for office real estate are growing steadily. Thus, in the last quarter of 2017, the average rental price in the state increased by 3.6%, and at the beginning of 2018 amounted to $2.6/square meter. In 2018, growth continued and the average cost of a square meter in July was $3.1/ square meter. At the same time prices vary depending on the area and class of office. The cheapest offices are located in northeastern Austin (about $1.7/square meter), and the most expensive – in the city center ($4.1/square meter).

Austin has a developed infrastructure and can offer a rich selection of coworking options. Among the most famous are:

  • Capital Factory is very popular, largely due to its location in the heart of Austin. Rental price: $200-750/month for the workplace, $1,700-4,000 for a separate room.
  • Chicon Collective – coworking in the east of Austin, which is especially in demand among photographers and graphic designers, as it offers great discounts on studio and equipment rental. You can rent a workplace for $150-300/month.

Laptop in a coworking space

  • Fibercove is a somewhat unusual and distinctive coworking in southern Austin, created on the basis of a former dance studio. It works 24/7 and is famous for its own cafe. The workplace can be rented for $500/month – this amount includes the ability to freely use any necessary equipment.
  • Link Coworking – a large modern coworking situated in the north of the city, with many offices, meeting and conference rooms, as well as a spacious patio and private parking. The rental price a workplace is $300-500/month, office – $900-3,000/month. When renting for a period of a year, you can get a discount.


Transport expenses

ABIA Rental Car Facility

(photo by Pfaffer Development)

Public transport in Austin is mainly represented by buses. By the way, this is the cheapest way of traveling around the capital of Texas. According to statistics, only 5% of Austin residents prefer bus service.  However, about 70% of locals and city guests choose a private car for getting in Austin, which speaks of the convenience of this type of transport in the city. What’s more, even those travelers who come there for a short time use Enterprise car rental in Austin TX. The average cost of the economy-class car is about $30-40/day.


Funding and support for startups

There are several large American financial accelerator companies operate in Austin:

  • Techstars was founded in 2006 (the office in Austin was opened in 2013) and during this time has established itself as one of the world’s best startup incubators. Of course, high reputation implies a very tough selection – the company approves less than 1% of all applications – and yet, over the 10 years of its existence, Techstars advanced over 800 projects with a total budget of over $2.3 trillion. Startups that passed the selection get to 120 thousand dollars of investments and are included in the three-month program of initial support.
  • Capital Factory is an old-fashioned Texan accelerator company that owns one of the most advanced and popular coworking centers in the center of Austin. The company’s share in the promoted startup is 2%, and the project gets in touch with the partners of Capital Factory. If two or more partners are interested in it, then the investments will follow from Capital Factory itself.

Since 2011, the Austin Startup Week, a five-day festival and exhibition, is held annually in Austin. This event gathers thousands of visitors not only from the United States, but from all over the world. Austin Startup Week allows you to get a direct understanding of the startup market and personally meet with representatives of accelerator companies.

In addition, Austin hosts the annual South by Southwest (SXSW) festival, an event that includes music, film and media festivals and conferences. One of the sections of SXSW – Interactive – focuses on new technologies. Largely due to this, SXSW has a reputation as a breeding ground for innovative technologies.

Researcher and Content Writer at e-Syndicate Network. A constant learner. Learning and growing every day. Salman has over 5 years of experience in the fields of Digital Marketing, Content Writing, Brand and Business Development.