2020 Outlook: Experts on DFW Funding What is the funding landscape in Dallas-Fort Worth like and what makes DFW unique? North Texas has a robust economy that is an inviting home to startups and established companies alike. Because innovation cycles are happening at an ever-quickening pace, Dallas-Fort Worth has become a region in which some business sectors—from AI to healthcare to fintech, for example— are ripe for disruption by the right company with the right product. Are worthy startups finding funding in the current environment? We asked five Dallas-Fort Worth-based investors to look at the region now and in the future. Here are their thoughts.
Managing Director JF2
Partner Intelis Capital
Co-founder and CEO Health Wildcatters
Partner Cypress Growth Capital
VP, Accelerator & Investment Fund Capital Factory
What is unique about the Dallas region, in terms of a startup hub?
Where are you seeing opportunity?
How do you characterize the current funding landscape in Dallas-Fort Worth?
How has the funding landscape changed over the last five years?
What markets are most ripe for disruption?
There is so much Dallas has to offer to companies, their founders, their teams, and all of the stakeholders involved in startup companies. A better question I ask founders is Why not Dallas? If you’re looking for a beach or mountains, Dallas may not be for you. But if you’re looking for a place to launch, grow, and scale your business and raise your family, or if you’re looking for talented folks, in an affordable, business-friendly climate with a supportive ecosystem, why wouldn’t you start that business in Dallas?
Data analytics. This year, we invested in two companies that are using existing data sources to drive insights that were never possible before. In past decades, our energy grid was a topdown structure: build power plants, build poles and wires for consumers use and pay. Now, we’re starting to see the development of an “internet of energy,” where electric vehicles, batteries, smart thermostats, solar panels, and more all connect to the grid and could theoretically communicate. These new endpoints present a tremendous opportunity for a data layer to emerge and interactive software to be built on top of it. There’s also a cybersecurity component to this development.
Robust—even though I know every startup that’s having a hard time raising will disagree. There continue to be a lot of deals to invest in out there, so competition is harsh. But plenty of startups are finding funders, even early-stage ones.
How has that changed over the last 5 years? Angels have continued to show an interest in healthcare, but angel groups are harder to enthuse about these investments. There are a few angel groups interested exclusively in healthcare, and they apply a lot of scrutiny. Generally, it seems to have become more normal to make early-stage investments.
Five years ago, DFW from a tech standpoint was a growth equity and private equity market. Now you are seeing series A investors coming to town and doing deals. You are seeing out-of-town investors making DFW a geographic focus.
Looking to 2020, what’s your outlook for funding in the region? I do not see things slowing down, I see more companies moving to DFW and more investors making Dallas a market they are betting on.
All of the big ones. Innovation cycles are happening faster and faster, which means the markets that seem like they have been disrupted will continue to be disrupted. The obvious ones for the DFW region include healthcare, mobility and transportation, gaming and new media, financial technology, energy, cloud, and data infrastructure.
What is unique about DFW in terms of a startup hub? Relative to other major markets in Texas, there is one unique factor in my opinion: a startup would choose Dallas over the other Texas markets because there are more large corporations headquartered there for startups to engage with.
What makes a pitch stand out? I M PAC T = VA LU E O F W H AT YO U ’ R E S AY I N G / N U M B E R O F WO R D S Rachel West Dallas Director SoGal Foundation
“Entrepreneurs who can articulate their value propositions quickly and effectively while demonstrating impressive traction will always get my attention. Balance professionalism with charisma, and I’m very interested. Once I believe in the concept, I look for entrepreneurs who give away credit and value their teams—both the value their teammates bring to the table, as well as their colleagues’ well-being. Scaling a startup is a team sport, and a deep appreciation for those around you is critical to running a successful company.”
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