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Austin boom, startup bust

Posted on: 20-Feb-2007

Page Views: 2012

Austin is as much of a boom town as the environment can stand. Bulldozers are tearing up once-rural ranches at a fast pace, and building is going on everywhere.
And it is not all suburbia. Nearly every week comes an announcement of a new high-rise condo/office building near downtown, often alongside the Texas version of the Colorado River.
The semiconductor industry is playing its part: AMD, Freescale, IBM’s Austin research center, and Samsung are hiring engineers at a steady rate. Maxim is starting a new analog design center here. Dell is looking for 500 engineers.
Among all of this prosperity lies a dark side: little money is going to the chip startups which have fueled innovation.
The prime example of a successful Austin startup is Silicon Laboratories, which over the last decade became a $400-milion-annual revenue success story. Recently, a big chunk of Silicon Laboratories – its Aero cellphone chipset business –was sold to NXP, based on a realization that Silicon Labs just wasn’t big enough to handle the complex software needed for handsets.
Nevertheless, Alereon, Bandspeed, and other wireless IC startups are up on their feet and likely to succeed. However, few new startups are following in their wake, and very little VC money is going into chip-related startups.  Only 7 percent of the total VC money invested in Austin last quarter went to semiconductor companies, while Internet software companies claimed half.
The large chip companies tend to be risk-averse. And private equity firms are sopping up much of the capital that earlier went into early-stage venture funding.
Is that a problem? You bet. Compared with 10 years ago, Austin is a larger, wealthier city. But the generation of exciting new ideas expressed in silicon is on the decline.
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About weQuest:
weQuest's are written by G Dan Hutcheson, his career spans more than thirty years, in which he became a well-known as a visionary for helping companies make businesses out of technology. This includes hundreds of successful programs involving product development, positioning, and launch in Semiconductor, Technology, Medicine, Energy, Business, High Tech, Enviorntment, Electronics, healthcare and Business devisions.

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