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Software Companies Boost Venture Capital Investments in DFW

Early-stage startups gain traction in region, breaking national trend
By Danielle Abril |

First-quarter venture capital investments in Dallas-Fort Worth companies hit at a two-year high this year, with software companies attracting the most dollars and deals.

DFW companies raised $104.11 million in the first quarter, up from $84.5 million in the first quarter of last year and $22.93 million in the fourth quarter. The last time DFW companies raised more than $100 million in the first quarter was in 2013, when Genband’s megadeal helped the region score more $365.47 million in investment.

The numbers come from the latest MoneyTree Report, released Friday by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

“We’re getting the year off to a good start,” said Caroline Gagliardi, Dallas-Fort Worth senior manager at PwC. “Hopefully, we’ll see strong results for the rest of 2016.”

Dallas also was home to two of the top five deals in Texas, according to the data. Dallas-based software company M-Files, which offers enterprise content management solutions, landed $36 million, ranking as the second largest raise in the state. Health tech company Pieces Technologies Inc., which landed investment and adoption from Children’s Health earlier this year, raised $21.6 million, the fourth largest deal. Plano-based Vivify Health Inc.’s $17 million raise its cloud-based remote care management platform ranked as No. 6.

DFW, which usually has investments sprinkled across industries, attracted eight investments in software companies during the quarter – one more deal than last year’s total. First-quarter software deals totaled $104.11 million, representing 80 percent of last year’s total of $215.64 million.

“We usually don’t see that in Dallas,” Gagliardi said, adding that software leads the industry in funding nationally. “We see that in Austin.”

The only two other industries that attracted investment during the quarter were industrial and engineering, with two deals, and consumer products and services landing one.

While national trends show a decrease in early-stage investments, half of the top six deals in DFW were done with early-stage companies.

The region came in third to Austin and Houston, which led the state with $335.48 million in investment dollars due to Sunnova Energy Corp.’s $300 million megadeal. Austin raised $141.38 million during the quarter.

Nationally, companies secured the most investment since the second quarter of 2006. However, the first quarter also represented the slowest quarter for venture-backed initial public offerings since the third quarter of 2011, Gagliardi said.

“The size of these investments will normalize over 2016 based on the likelihood that there will be fewer megadeals,” she said. “But we still expect to still see to consistent investments.”

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