ICON, Spark Cognition, Zebra, Zen Business, Iodine, Abrigo…

The above are just a few of the start-ups headquartered in Austin, Texas that just hit the Unicorn status. For some that do not know what ‘Unicorn’ means; it is about hitting a valuation of $1 Billion as a business!

Many feel that the migration of tech companies and the creation of the entire ecosystem is a relatively new phenomenon. Not true. 

Austin, Texas has a rich history of being a city that has always been able to attract tech companies. Numbers and figures speak for themselves. 

While traditional tech giants have always favored Austin, it is the new breed of businesses that are driving a shift in Austin’s real estate scene. 

In this article, we are going to look at why Silicon Hills (Austin) is giving Silicon Valley (San Fran, California) a run for its money. 

Data Shows Tech Businesses Love Austin, Texas

On 7th October 2021, Elon Musk, modern-day Iron Man and currently the world’s richest man announced that he was moving Tesla’s headquarters from California to Austin, Texas. 

Elon Musk was forced to do this because of two major reasons. For starters, the company, and this is true for many other tech giants, was increasingly coming into conflict with California’s authorities and regulators. 

Secondly, Musk in this shareholder’s meeting also pointed out how for the workforce, California was being quite unaffordable and expensive. Specifically, he pointed to Silicon Valley’s unreal home prices and a valuation that were forcing his workers to travel for two to three hours every single day. 

The same year, Larry Ellison’s Oracle also announced that it was looking beyond Silicon Valley and settling into Silicon Hills. 

Oracle and Tesla are not alone. For the last few years, the world’s biggest software and tech companies have been steadily opening offices and generating employment in Austin. 

You have Facebook, Amazon, Apple, Dell, SpaceX, AMD, Home Depot, Legal Zoom, Cisco, eBay, PayPal, Google, and Xerox. They are either headquartered in Austin or have a sizable presence in the Texas city.

VC Firms are Aggressively Investing in Austin’s Ecosystem

If you are someone that follows the start-up scene, you must have heard of VC firms like Bedrock Capital, Breyer Capital, 8VC, and Next Coast Ventures. 

Cumulatively, Austin was able to draw in $5.5 Billion in investments that were spread across 412 deals and agreements. This was in 2021. 

Just to give you an idea of why this figure is significant, in 2020, the VC investments were less than half of the money invested in 2021!

The funding rounds are getting larger than ever. The top 10 investments in 2021, were able to log in more than $100 Million in funding rounds. This has led many experts like TechCrunch to comment that Austin is no longer just the capital of Texas, it is a city of Unicorns and Giants!

VC firms have gone on record to state that they are pulling funds from the NYC region as well as the Bay Area and pooling it all into Austin. 

The local gaming industry is in the midst of a boom. You have more than 200 established gaming corporations. They are actively taking up everything from VR to AR and employ more than 5000 professionals. This figure has been put out by the Austin Chambers of Commerce. 

Is Austin the New Gaming Capital of the World?

In a recent study that was done by WalletHub, Austin ranks as one of the top cities in America as far as opportunities for game developers are concerned. 

While tech companies are actively migrating to the Sunbelt cities, gaming corporations are not that far behind. Some of the famous names in Austin’s gaming scene include- Zynga, Unity, Rooster Teeth, and ArtCraft. 

If New York Times is to believe, the State of Texas just lies behind California in generating employment in the video games industry. This has been brought upon by generous incentives and tax breaks that have been given to game developers. 

The State of Taxes has an annual incentive plan to the tune of $85 Million that is given to the video games industry. This is fuelling a migration of sorts to cities like Austin, Houston, and San Jose, Texas. 

Along with the low taxes and the incentives, you also have a law that relaxes patent infringement. 

Reasons why Tech and Gaming Companies are Investing in Austin, Texas

In the last two sections, we were able successfully to demonstrate the movement of tech companies, investments, and employment opportunities to Austin. In this section, we are going to list down some important reasons that are helping with this shift.

Affordable Real Estate Market for Tech Professionals

In the opening sections of the article, we mentioned how Elon Musk went on record to state that expensive house prices for his workforce were a major reason for him shifting Tesla to Austin. Tech companies have realized that their employees will be able to afford homes in Austin. This is thanks to both the availability of homes, as well as low median prices (again relative). If you are looking to buy a home in Austin, click here to go to Teifke Real Estate website. 

Growth in New Business Sectors 

The new wave of entrepreneurship in Austin, Texas has been successful in opening avenues in different areas of business. For example, while tech and gaming were Austin staples, now you have Crypto, Blockchain, CPG, Fintech, Insurance Tech, as well as Real Estate Tech. These new business areas are experiencing high growth and attracting the attention and investments of the VC firms that we just mentioned in the last section. 

Relaxed Lifestyle and Low Standard of Living 

Elon Musk has always been candid about his assessments of Silicon Valley and NYC. The hustle and bustle of these places is not something that is being appreciated in today’s times. As opposed to this, Austin promises a more comfortable and relaxed lifestyle. You can say that the rat race is slower and more tolerant. While the standard of living is definitely relative, when you compare the same with Silicon Valley, Austin is far more affordable. 

Ease of Doing Business and Friendly Regulations 

The State of Texas has always enjoyed the distinction of being pro-business. The same cannot be said about its counterpart in California. Large corporations and their founders have spoken about the benefits of doing business in Austin. The government has been aggressive in offering generous incentives to large tech corporations, as well as easing up on the state personal income taxes. This has naturally played a major role in attracting large-scale MNCs to Sunbelt City. 

It is a ‘Cooler’ City to do Business and Live-In

If there is one thing Austin has been remarkably famous for, it is its great nightlife, natural surroundings, lakes, hills, amazing restaurants, brilliant diversity, and love for music. The city is just so culturally and historically rich that you get the best of America at every intersection. You love barbecue, you have the best steak houses and diners. If you love music, you have live festivals all around the year. There is something for everyone in Austin. 

The Bottom Line

Austin offers businesses and professionals a sweet spot of being in the middle of entrepreneurial spirit, art/culture, and human beings. This is driving employment opportunities away from major American centers like NYC, Washington, and California to Austin, Texas.