Free Enterprise Staff  | February 12, 2015

Austin Is a Great (and Weird) City, So Why Are Its Entrepreneurs Worried?

If you happen to talk to an entrepreneur in Austin, you’ll likely hear a familiar take on the city: It’s a great place to a start a business, but it’s a lousy one to find venture funding.

That seemed to be the general theme of a roundtable we recently attended in Austin that featured some of its business and civic leaders. While they hailed from different industries and specialties, representatives from the city’s startup community all expressed their frustration with how paradoxically difficult it is to gain venture backing in a city that’s known for its unique startups. In fact, the Austin Independent Business Alliance coined the “Keep Austin Weird” slogan, developed specifically to promote its small businesses.

Though it’s something city and business officials are working to fix, attracting more money is no simple feat. Even in Texas, where 51 billionaires reside—ranking third among all states, according to Forbes—and where the economy has charged forward in the post-recessionary period, Austin’s small business and startup leaders are still struggling to find men and women with the deep pockets and willingness to invest in their fledgling ideas.

What does that mean for the city’s future? It makes it much more difficult for companies to grow, for starters. It also can contribute to a glut of upshot businesses that are unable to mature or fizzle out before they’re really able to test their products or services on the broader markets.

The Austin Chamber of Commerce, representatives from Austin’s local government, and members of the business community are doing their part to lure venture capital to the city. That means working more closely with their counterparts in cities like Houston and Dallas, and it also requires them to build the kind of network that exists in Silicon Valley, where venture capitalists, angels, and other investors are intimately tied into the region’s startup economy.

Will Austin’s experiment succeed? The city’s beginning to see signs of venture growth, and its leaders are increasingly hopeful that the kind of momentum that they build during the annual SXSW Festival will carry over later into the year. That’s not an overly ambitious goal, either: Austin has seen unprecedented population growth since 2000, when SXSW really began to take on a life of its own.

With tens of thousands of people set to descend upon Austin next month for SXSW, the city’s business community is hoping—cautiously—that this will be the year that its capital problem finds a solution.