This VC fund is betting $105 million on Texas tech startups as more talent leaves Silicon Valley for the Lone Star State
- LiveOak Venture Partners thinks there's a goldmine in the Texas tech scene.
- The investment firm has focused on Lone Star State startups and plans to use its new $105 million fund to back more of them.
- Founding partners Krishna Srinivasan and Venu Shamapant say the ecosystem has matured in Texas and there's plenty of tech talent there, many of it in the form of California ex-pats.
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Silicon Valley has long been the heart of the tech industry. But if you ask Krishna Srinivasan or Venu Shamapant, there are plenty of tech business opportunities in the heart of Texas.
Srinivasan and Shamapant are two of the founders of LiveOak Venture Partners, an Austin, Texas, based investment firm that focuses on startups in the Lone Star State. Last month, the firm finished raising $105 million for its second fund, which it plans to invest in nascent Texas tech companies.
"We see tremendous opportunity here in the state of Texas for early-stage investing," Shamapant told Business Insider in an interview earlier this month.
Part of the reason why LiveOak is bullish on the local market is because the tech ecosystem in Texas has matured and the state offers some big advantages, Srinivasan said.
Texas has a host of major corporations that are headquartered there, including more than 50 of the Fortune 500. LiveOak sees a lot of opportunity for startups developing software and tech services for those corporations - and a good number of people coming out of those companies looking to form startups to address their needs, Srinivasan said.
Texas is luring people from California
Additionally, there are a lot of people there who have now served as the no. 2 or no. 3 executive at other startups who are now looking to start their own companies, he said. And there also are plenty of people who have experience in the tech industry, whether at startups or at big companies, who have moved to Texas in recent years, especially from California, he said.
"Texas is at a pretty interesting tipping point here with respect for talent," he said.
California and Texas have a longstanding rivalry. Former Texas Governor Rick Perry famously encouraged California companies and people to decamp to his state. And Austin has long sought to market itself as Texas' version of Silicon Valley.
However, the Bay Area still gets the lion's share of tech venture investing, and is home to many of the biggest tech firms, including Apple, Google, and Facebook. Meanwhile, many companies have relocated from other parts of the country or world to Silicon Valley.
But in Shampant's experience, few Texas companies have made that move. Most of LiveOak's portfolio companies have have set up sales or small tech offices in the Bay Area. But its "very seldom" that a Texas company would move its headquarters there, he said.
"Most of the traffic, I would argue, is the other way around right now," he said.
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