- Austin, Texas, is becoming a tech hub in its own right, with massive tech companies like Amazon, Facebook, and Google moving in with an army of well-off employees looking for better cost of living without compromising vibrant culture.
- The influx of talent also highlights the city’s fast-growing startup scene growing along with its burgeoning venture capital industry.
- Perhaps best known for birthing PC and enterprise IT giant Dell, some of the city’s fastest growing startups are making names for themselves in the athleisure, healthcare, and finance industries.
- See the 11 startups Austin’s biggest investors are keeping an eye on in 2020.
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Ask any investor where the next big startup will come from, and odds are they won’t say San Francisco.
The high costs of living, and the accompanying costs of labor, have pushed many investors to look elsewhere to stretch their venture dollars further. On top of that list is Austin, Texas — where Business Insider recently spent a week talking with investors and founders to get the pulse of its fast-growing tech scene.
The capital of the Lone Star State is commonly referred to as the “Silicon Hills,” a reference to the hills just over the highway bordering the city to the north. With a top-ranked university, desirable downtown housing, and thriving outdoor leisure scene, Austin is drawing more attention to itself as an incubator for some of tech’s hottest up and coming startups.
“We’ve always been called out as being a second-tier startup environment,” investor and Osano founder Arlo Gilbert told Business Insider. “There was San Francisco, Boston, New York, Los Angeles, and then Austin was like, five. And I think that most of us here have felt like that wasn’t fair.”
Read More: As Big Tech doubles down on Austin, startups are moving to its cooler neighbor. Take a look at how one startup is bringing Silicon Valley style to East Austin.
But with the arrival of Silicon Valley giants like Apple, Amazon, Facebook, and Google, tech industry notables have been forced to acknowledge Austin’s thriving startup scene. One investor told Business Insider that when he moved from California to Texas, his colleagues in the Bay Area threw him a “Texas, not taxes,” themed party.
And with its venture capital renaissance, Austin feels poised to give Silicon Valley a run for its investor money in 2020. So we asked them — which companies are armed and ready to take on Silicon Valley’s red hot startup economy?
Here are the 11 hottest startups Austin investors say they’re watching in 2020.
SEE ALSO: Austin is seeing a startup boom. Meet Austin’s top VCs, giving Silicon Valley investors a run for the money.
ScaleFactor wants to remake finance software for small businesses.
What it is: ScaleFactor provides accounting and financial software for small and medium businesses, and is perhaps best positioned to become one of Austin’s breakout unicorns. The startup uses machine learning to automate bookkeeping, payroll, and other complex tasks.
The fintech startup has gained acclaim with local and Silicon Valley investors as an improvement on Intuit’s Quickbooks accounting software, and most recently raised Series C funding at a $360 million valuation.
Founded: 2014 by Kurt Rathmann.
Funding: $105.89 million from Coatue Management, Citi Ventures, Stripes Group, Bessemer Venture Partners, Flyover Capital, Firebrand Ventures, and Canaan Partners.
Outdoor Voices wants to make athleisure for everyone.
What it is: Outdoor Voices makes athletic apparel for women, men, and children who are “doing things,” as its marketing materials suggest. The female-founded online apparel company highlights function and comfort over form and aesthetic — the antithesis of other popular athletic brands like Lululemon.
Outdoor Voices is one of Austin’s many successful consumer retail startups, having moved to Texas from New York in 2017. The startup encourages athleisure in its corporate dress code, and its employees are active in Austin’s burgeoning fitness scene. It has opened traditional storefronts in several cities, but its flagship remains in its Texan hometown.
Founded: 2013 by Tyler Haney.
Funding: $67.18 million from GV, Forerunner Ventures, General Catalyst, Collaborative Fund, Bam Ventures, and Gwynneth Paltrow.
The Zebra wants to change how car owners purchase insurance.
What it is: The Zebra offers transparent car insurance policy comparisons in “black and white,” hence the name. By partnering with over 200 insurance providers, The Zebra is able to compare a specific customer’s options in a highly-regulated and often confusing industry.
The startup has goals to expand to other areas of insurance as younger consumers start making large purchases like homes, broadening its appeal. Because it is not providing insurance itself, The Zebra cofounder Joshua Dziabiak told Business Insider that the startup is well-positioned to withstand an economic downturn, should one occur.
Founded: 2012 by Joshua Dziabiak, Adam Lyons, and Keith Melnick.
Funding: $61.5 million from Accel, Silverton Partners, Floodgate Fund, Ballast Point Ventures, Mark Cuban, Daher Capital, and Birchmere Ventures.
Anaconda wants to make open source data analytics accessible to everybody.
What it is: Anaconda is an open-source data analytics tool for in-house data analytics teams. The service uses its own machine learning and artificial intelligence technology to simplify analytics for young startups and legacy companies alike.
The startup counts Jim Curry, Peter Freeland, and Lanham Napier – all formerly of pioneering Texan tech company Rackspace — as some of its core investors through BuildGroup. That’s a fitting match given the investors’ expertise in open source and enterprise software.
Founded: 2011 by Peter Wang and Travis Oliphant.
Funding: $48 million from BuildGroup, ORIX Growth Capital, Quansight Initiate, Citi Ventures, General Catalyst Partners, and DARPA.
EverlyWell wants to make lab test pricing transparent.
What it is: EverlyWell offers at-home testing kits for food sensitivity, fertility, hormones, STDs, and thyroid or metabolism issues, all compliant with federal standards. The tests are not currently covered by any insurance provider, but EverlyWell says that it tries to keep its pricing simple and easy for consumers to understand.
EverlyWell patients receive results that have been reviewed by licensed physicians through a mobile app. They are then able to take those to a primary care or specialist provider without having to step foot in a traditional medical testing lab. The startup received national attention when founder Julia Cheek pitched the idea on Shark Tank.
Founded: 2015 by Julia Cheek.
Funding: $45.1 million from Goodwater Capital, Highland Capital Partners, NextGen Venture Partners, SoGal Ventures, Next Coast Ventures, and Sequoia Capital.
AlertMedia wants to help companies communicate with employees during emergencies.
What it is: AlertMedia offers tools for companies to communicate with employees during all types of emergencies, from hurricanes and wildfires to terrorist attacks or mass shootings.
AlertMedia sends an alert across multiple modes of communication, including push alerts and traditional SMS messages. According to Crunchbase, the startup has also been used for logistics coordination and filling on-call shifts at hospitals.
Founded: 2013 by Brian Culver.
Funding: $42.58 million from JMI Equity, Next Coast Ventures, ATX Seed Ventures, Silverton Partners, and Capital Factory.
SpyCloud wants to warn businesses of data breaches in real-time.
What it is: SpyCloud provides enterprise software that alerts companies to account takeovers in real-time to help better prevent data breaches. The startup’s technology alerts companies as soon as employee, customer, or company assets appear to have been compromised by an outsider.
The rise of SpyCloud comes as cybersecurity becomes even more important to every kind of company: Breaches like the Capital One hack show what can happen to a business and its reputation in the the wake of a cyberattack.
Founded: 2016 by Ted Ross and David Endler
Funding: $28.5 million from M12, Silverton Partners, March Capital Partners, and Altos Ventures
Diligent Robotics wants to automate hospital tasks.
What it is: Diligent Robotics makes robots that perform repetitive manual tasks through a combination of artificial intelligence software and proprietary hardware design. It announced on October 1 that its flagship robot, Moxi, will be available in Texas hospitals in 2020.
Moxi is designed to perform tasks like transporting tools around large floors, but is explicitly not made to interact with patients. That said, many healthcare providers are eager to automate processes like chart reading and reading of vitals given current nursing shortages in Texas, cofounder Andrea Thomaz told Business Insider.
Founded: 2017 by Andrea Thomaz and Vivian Chu.
Funding: $5.25 million from True Ventures, Ubiquity Ventures, Capital Factory, Next Coast Ventures, and Grit Ventures.
Osano wants to help users take control of their data.
What it is: Osano is a certified B-Corporation — meaning that it’s designed to serve the public good, not profits — that helps users understand different company’s privacy and data collection policies, which are usually stored deep in a lengthy terms of service agreement.
Instead of just clicking “Agree,” Osano wants website users to better understand what data is being collected about them, who has access to it, and who is profiting off that information. Armed with a clear explanation of what, exactly, they are giving up to a specific website, users can make informed decisions about where to go online.
Founded: 2018 by Arlo Gilbert and Scott Hertel.
Funding: $3 million in seed funding from LiveOak Ventures, Barracuda Networks, Next Coast Ventures, Social Starts, and Capital Factory.
Enzyme Health wants to match doctors with telehealth providers.
What it is: Enzyme Health matches doctors with telemedicine providers using machine learning technology. The software matches providers with doctors and nurses based on availability and expertise, allowing patients to better access care without needing to be physically nearby.
Enzyme Health also works with more traditional healthcare groups, like hospitals and insurance providers, that need to offer remote care.
Founded: 2018 by Michelle Davey, Griffin Mulcahey, and Philip Johnson.
Funding: $1.7 million from Silverton Partners.
Bthere wants to make sure friends get home safe.
What it is: bthere is a mobile app for iOS and Android that lets friends share locations with each other. The app was started on campus at the University of Texas at Austin to help friends keep track of each other after leaving a party.
The app officially launched in April without outside funding. It also has gamified features, doling out coins to users that spend time IRL with connected friends on the app.
Founded: 2019 by Ben Johanson.