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Austin’s LiveOak Closes $105M Fund To Invest In Texas Startups

Texas startups just got another new source of potential capital.

Austin-based LiveOak Venture Partners has announced the close of its second fund, topping it out at $105 million.

The early-stage VC firm joins a growing list of venture shops that have recently either launched, or closed on, new funds in Austin. (Read more about the others herehere and here.) In fact, LiveOak’s closure marks at least the fourth nine-digit venture fund that has been announced in Austin since the start of 2019 (to be fair, though, this is the only one that’s actually closed so far.)

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I talked with co-founders and partners Venu Shamapant and Krishna Srinivasan to hear more details about their latest fund. But first, by way of background, LiveOak was founded in 2013 and has led or co-led 24 investments in companies past their seed stages, investing more than $100 million over the past six years. (Co-Founders Srinivasan, Shamapant and Ben Scott met at Austin Ventures in 2000.) The trio made 18 investments out of LiveOak’s first fund, which raised $109 million in 2014.

The firm is self-described industry agnostic, preferring instead to focus on the potential of the founders and founding team. Generally, Shamapant said, LiveOak is much more “entrepreneur-driven than industry-driven.”

Recent exits include Digital Pharmacist being acquired by K1 Investment Management for over $100 million and Opcity being acquired by Move for $210 million. LiveOak has also put money into legal tech startup Disco, which recently raised $83 million in a round that included participation from Bessemer Venture Partners. It’s also invested in OJO Labs, an AI-driven personal assistant for real estate agents and home buyers, which recently raised a $45 million Series C.

The new fund’s focus will still be on being the first institutional funding for startups headquartered in Austin, Houston, Dallas, and San Antonio. Initial investments will range from $1.5 million to $4 million with the firm targeting somewhere between 15 and 25 percent of ownership.

“After an initial investment, we reserve plenty of capital to do follow-on financings,” Shamapant said. The firm usually invests $6 million to $8 million total in a company and in some cases, up to $10 million, he added.

“We’re typically the first checks in a company, almost always take a board seat as a lead investor and continue to participate, and sometimes lead, follow-on rounds until an exit,” Srinivasan told Crunchbase News.

So far, LiveOak has invested in six companies out of its latest fund including Austin-based companies Eventador, Osano, and Rollick, and Dallas-based AmplifAI.

Two-thirds of its investment has been in Austin-based companies. It’s then invested mostly in Dallas companies, followed by Houston and San Antonio-based startups. Its strategy mostly mirrors that of overall funding in the state, Shamapant pointed out.

“Texas is exploding with opportunity,” Srinivasan said. “Early-stage investing is a local neighborhood sport, and as such, we are looking to be the local lead investor and first money in companies.”

Shamapant notes that the firm’s founding trio has seen the spectrum of boom and bust cycles over the past two decades.

“We continue to believe in, and back, Texas entrepreneurs,” he added, noting that the latest fund included participation from several new institutional LPs along with existing investors. “Of the four investments we made in 2018, each was led by a repeat entrepreneur that had exited before.”

As Austin continues to gain a higher profile in the VC world, I expect we’ll continue to see more nine-digit figure funds close. The only issue I’m seeing is that all four funds announced this year primarily focus on the early stage. As these companies continue to mature, the city’s startups will either have to look to the coasts for later-stage funding or relocate. For the region’s sake, I hope it’s the former.

Featured image credit: Nico Loayza, The Perfect Headshot

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