Share on Facebook
Share on Twitter
Share on LinkedIn
By Sanjeev Kumar
Founding Attorney

Why is Austin attracting so many startups and entrepreneurs?

Austin continues to be a magnet for startups for  a variety of reasons. The region offers a favorable cost of doing business, a well educated labor force, a good lifestyle and good weather, all of which are attracting young people to the area. Combine these factors with no personal income taxes, and a low cost of living, and it makes for an environment well suited for entrepreneurs.

Growing Workforce

The educated workforce is due in part to the University of Texas at Austin and other area universities, that also attract foreign students. A educated, diverse population is beneficial to employers and a boon to business growth. As the population rapidly grows, currently at over 885,000 people, the rate of startup growth is impressive, by more than 81 percent in 2106 according to some studies. And these businesses are being launched by new entrepreneurs who have thrown their hats into the ring.

Breeding Ground for Innovation

Austin is also highly regarded for a collaborative entrepreneurial community where new businesses support one another and are tightly interconnected through social media. In addition, the city boasts a number of startup incubators and shared workspaces that allow for seamless communication among entrepreneurs,  freelancers and small businesses. By sharing ideas and experiences, this new breed of small business  owners is pushing the limits of innovation.

Cost of Living

Although the cost of living in the city is rising, Austin is still more affordable than other places like Silicon Valley and New York. With lower housing costs and other life expenses being more affordable, Austin-based companies save costs by paying lower salaries that other tech regions.

A Few Speed Bumps

This is not to say, however, that there are not challenges. The booming hi-tech scene is making it harder for some businesses to find quality people, the competition for attracting new employees is fierce, especially engineers. At the same time some observers note that software developers and other tech workers tend to stay with Austin-based companies longer than the Silicon Valley counterparts.

Another challenge is that the venture capital scene is not as robust as it is in other cities like Seattle, Chicago, San Francisco and New York. Nonetheless, hundreds of companies have been able to raise hundreds of millions of dollars over the last three years. 

The Takeaway

In light of the fact that Austin is attracting startups, small business owners face a number of crucial decisions prior to launching from selecting the right business structure, negotiating partnership, shareholder and vendor agreements, arranging for funding and attracting and retaining talent. By engaging the services of an experienced Austin startup attorney, you can readily navigate these challenging hurdles.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.