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Venture Capital Pullback Slams Austin Office Options

AUSTIN-Startup companies aren't likely to make any sizable dent in Austin's office market. Venture capital, which once fueled an office-building boom, is drying up. Fewer companies will come online in the next two years to help with the space glut.

By Tim Green | Updated on November 07, 2001

AUSTIN-The flow of venture capital that helped fuel Austin’s office-building boom of the past few years is slowing down this year, but should still exceed $1 billion. A fall-off from the $1.65 billion raised in 2000 has been expected in the face of the tech recession.

What’s perhaps surprising is that venture funding in Austin may slow even more in 2002, according to Angelos Angelou of Angelou Economic Advisors. That’s another piece of unwelcome news for Austin’s real estate community, among others. It means there will be fewer startups to eat up the glut of office space now on the market and coming online in the next two years.

So far in 2001, Austin companies have raised $943 million in venture capital. “So we may be able to exceed a $1 billion in venture capital this year, a year which was not very kind to IPOs and the venture capital market,” Angelou says. Then he adds, “Here’s my fear: Next year we’re not going to be able to get these numbers. Next year we’re going to see the brunt in the decline in those numbers. I’m quite certain of it.”

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