Bloomberg, Deals, By Katie Roof,
Silverton Partners, based in Austin, said that it has raised $144 million for its largest fund yet, which is focused on early stage technology investing in the State of Texas.
Silverton will maintain a geographic focus in Texas despite many people still planning to work from home when the state lifts its stay-at-home order later this week.
“Our reason for investing locally isn’t so much we want to look the entrepreneur in the eye and shake their hand,” said Morgan Flager, a partner at the firm. The idea is to use the firm’s connections in the Austin startup scene and to also help regional startups find talent. About 75% of their investments are in Texas.
Texas ranks fourth for venture investing this year, raising $795 million from 117 investments in the first quarter, according to PitchBook Data.
Silverton was an early investor in the identity software business Sailpoint Technologies Inc., which is now a public company. They’ve also backed women’s shaving brand Billie, which was acquired by Procter & Gamble Co. and WordPress hosting business WP Engine LLC, which was bought out by Silver Lake.
Despite the challenging climate for travel and restaurant-related businesses, Silverton is still open to investments in these categories, Flager said. He said these industries will ultimately recover and that there could be opportunity in areas that other investors shy away from.
The firm closed its fund during the pandemic, with Flager saying that it brought about added stress. He said some investors were wondering if any of the limited partners were going to default on their payments but that it ultimately came together. Flager said that it helped that he had already met the firm’s investors in person.
Silverton will be one of the lucky ones, he added. It’s “certainly going to be tougher” to raise a fund going forward and “some firms will go away,” he predicted.
Yet many investors are quick to point out that large technology businesses like Uber Technologies Inc. and Airbnb Inc. formed in the last recession. Flager said that “the best entrepreneurs generally come out in these sorts of climates,” adding that “only the people that are super resourceful and super passionate,” would be inclined to start a business right now.