Austin TX Business Law Blog

Saturday, May 28, 2016

Austin Food and Beverage Start-Ups Attract Venture Capital

Start-ups based in Austin, Texas have faced some headwinds in the past year, with reports showing a decline in new venture capital investment. In the first quarter of 2016, Austin start-ups suffered a 49% decline in investment. Experts say venture capitalists lost enthusiasm because of economic unease and high valuations on untested start-ups.

But there has been at least one bright spot: the food and beverage industry. Start-ups offering consumer packaged goods ranging from healthy snacks to gourmet cider have attracted new investment interest even as others have suffered setbacks.

Losses in Tech Sector Discouraged Investors

A decade ago, investors were enthusiastic about tech investments, and many of those investments succeeded. But zero returns from some tech start-ups were a reality check and investment slowed. At the same time, start-ups in consumer packaged goods thrived and the venture capital community took note.

Many of the new Austin-based companies manufacture creative products that, while focused on new demographics, have wide appeal. One cold-brewed coffee start-up now has products in 11,000 stores nationwide, including Target and Whole Foods.

Venture capital firms tend to invest where they see success. One firm that typifies the trend has made ten investments totaling $60 million in Austin consumer packaged goods start-ups.

Successful Start-Ups Acquired By Major Corporations

Some start-ups that have succeeded have been sold to large companies seeking new, exciting brands. A vodka start-up was recently sold for an estimated $400 million, while a barbecue sauce company earned $100 for its founders and angel investors.

Whether you are launching a new business in Texas or seeking to invest in one, an experienced Texas-based business lawyer can guide you through each stage of the process. From structuring a new business to obtaining financing to running or selling a going concern, expert counsel can help you avoid mistakes and capitalize on opportunities.

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