Lately, it seems like we’re either reporting on an out-of-town VC firm that has opened an office in Austin, or a local firm is announcing a new fund. In the five-plus years that I’ve been covering the Austin tech scene, I don’t remember seeing this pace of activity.
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ATX Seed Ventures and Quake Capital, two Austin-based funds are raising $100 million vehicles; Notley Ventures Co-Founder Dan Graham recently partnered with SKU Managing Director Genevieve Gilbreath to form Springdale Ventures, a $20 million fund focused on CPG investing; and Kansas City-based Firebrand Ventures launched an Austin office. (And let’s not forget that last year, Peter Thiel’s Mithril Capital announced it was moving its headquarters here from San Francisco.)
Now, a pair of Austin tech veterans have launched a $125 million fund (with a $150 million cap). Mike Erwin and “Whurley” (more formally known as William Hurley) have formed Ecliptic Capital with plans to invest in the local tech scene.
The two self-described “professional entrepreneurs and startup investors” have a long history of working together. They met at Apple in the 1990s, and worked on a number of companies together, including Chaotic Moon, which they sold to Accenture in 2015. More recently, the duo invested together before deciding to formalize their efforts into Ecliptic. Over the past few months, they’ve built out a team including Mike Boyle, Meaghan Mahoney, Adam Lipman, Nik Levenberg, and Christy Cardenas.
Erwin and Whurley have also already personally invested in five startups that they plan to roll into the new fund: fintech startup SoftMatch, software firm Strangeworks (which Whurley founded and runs as CEO), medical-focused Sempulse, printed circuit board design platform Patchr.io, and Unchained Capital, which lends cash to long-term crypto holders.
“We saw a huge opportunity around operational inefficiency,” Erwin told Crunchbase News. “So our strategy is to use our operational experience to reveal and capture value.”
Ecliptic is focused on seed-stage investing, with an average expected investment in the $1 million to $2 million range. The firm is aiming to be active in a very specific phase of a startup’s life cycle.
“We look to get involved after they’ve identified a product and customers, but before they’ve got it all figured out and start scaling,” Erwin said, adding that the two plan to use the capital and leverage their strong scaling expertise to help the companies during that transition.
Erwin anticipates the firm will make “50 or so” investments out of the new fund. And while it won’t be focused exclusively on Austin or Texas, Erwin acknowledged that both he and Whurley are “longtime Austinites with big networks in the state.”
“We are privy to a fair amount of deal flow and influence locally, so we anticipate much of our deal flow and transactions will be in Texas,” he said.
In general, the team believes there’s huge opportunity in Austin, where Whurley believes the “infrastructure seeds have been planted over the course of the last 25 to 30 years.”
Certainly, Whurley and Erwin have seen dramatic changes in Austin since the early 1990s. The Texas capital is now the 11th largest city in the nation and home to secondary campuses for a large number of tech companies, including Apple, Oracle, Google, and Amazon. The state of Texas as a whole is home to four of the top 11 largest cities in the country, all within a few-hour radius from each other and each with their own specialized industries.
This deep knowledge of the region gives them an edge over out-of-town investors, they believe.
“We know every nook and cranny here, and have given back to our own community,” Erwin said.
Whurley agrees, and is betting that Ecliptic will be one of the dominant players (in Austin) at the early stage.
“We’ll play a critical role here in the ecosystem. Not many firms have three decades of being entrepreneurs in this area building credibility with generations of entrepreneurs,” he told Crunchbase News.
With two female partners, the pair is also focused on diversity.
Cardenas comes to the team from Houston and concedes that she was “shocked” by the lack of diversity she saw in Austin, despite its “open and accepting culture.”
“I’ve been watching Austin and the innovation community. There’s just not enough capital here, and I believe Austin is going to completely continue on this growth trajectory it’s already on,” she said.
The firm started raising money about three weeks ago and is in the process of meeting with potential LPs. It’s aiming to have its first close, in the $30 million range, by the end of the second quarter.
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