How Austin has become a hub for female-led startups
Entrepreneurship can be a lonely venture, particularly for female founders. Fewer than 5% of Fortune 500 CEOs are women, and female-founded startups receive only 2% of venture capital funding in the US. But the city of Austin, Texas, is helping to defy those statistics by carving out a community-minded niche for those entrepreneurial women.
In 2017, founder Ty Haney uprooted the headquarters for Outdoor Voices from New York City to Austin. The athleisure company, which has raised $56.5 million to date, says that its Austin stores now sell more than those in New York City and San Francisco. Social and dating app Bumble and jewelry brand Kendra Scott were founded in Austin in 2014 and 2002 respectively; both are now valued at at least $1 billion.
The success of these companies shows that women are running businesses in ways that can be compatible with their lifestyles and stay competitive. They’re challenging the assumptions of needing to grow a business in Silicon Valley, and, along the way, paving a path for other female leaders.
“More capable, generous female leaders are coming up the ranks in Austin, which I think is a great way forward for other female entrepreneurs who are venturing out on their own,” says Leigh Christie, head of global technology and innovation at Greater Austin’s Chamber of Commerce. The growing presence is motivating women to take more business risks to start their own businesses, she says.
A southern shift
“Women business owners are a powerful economic force, and my goal is to make Texas the most welcoming home for them,” boasted Texas governor Greg Abbott in a 2015 address to the National Association of Women Business Owners.
The state seems to have achieved Abbott’s goal. Women make up nearly half of Texas’ 12.4 million jobs, and the state is ranked second in the nation (after California) in the number of women-owned firms.
A lot of that is concentrated in Austin—32.7% of startups are owned by women, according to a study this year by Seek Capital Business. In the US, 24.5% of the nation’s startups are owned by women. The study also found that Austin has the second highest-percentage of women-owned startups, totaling 1,433 companies.
The state hosts small business forums and networking events in Austin, such Texas Conference for Women, the state’s largest event of any kind. In addition, Austin has a Commission for Women, which provides training on running and financing a business as well as legal aid and employment assistance. (Notably, however, Austin does not guarantee paid family leave (pdf) for female entrepreneurs, as do many other major US cities.)
Resources and earnest support from the city and state governments might not be enough to bring from burgeoning female entrepreneurs to Austin. But the city itself, with its tagline “Keep Austin Weird,” appears to have a deeper connection to Austin’s growing inclusive culture.
Hometown innovation
It’s not a coincidence that Austin is, politically, a blue dot in a red state. What sets the city apart from the rest of Texas is that the city has long been a magnet for innovative leaders. In the 1980s, the city was the birthplace of cutting-edge companies like Whole Foods (1980) and Dell (1984). IBM, which had offices in the city for decades, in 1986 made its Austin campus the center of its microprocessor production.
In 1983, the city launched the computer research consortium called the Microelectronics and Computer Technology Corp (MCC), where a dozen computer companies and electronic-makers joined together to shape the future of computing. The consortium ceased operations in 2000, but it helped pave the way for Austin’s robust technology scene.
Today, Austin is known to some as “Silicon Hills.” Apple, Facebook, Amazon, and Google have established presences there, and University of Texas-Austin is helping fuel the talent pool.
University of Texas-Austin helps fuel Austin’s talent pool.
In a small startup ecosystem, there’s more crossover between different subgroups, people, and industries, according to True Wealth Ventures founding general partner Sara Brand. In other words, a thriving tech scene will bring in more diverse talent and knowledge—a cross-pollination effect. “The more innovation happens at the boundaries of different disciplines just like in R&D,” says Brand. That collaborative and community-focused mentality continues to thrive in Austin.
Community-driven
While the city of Austin has long been a home to creative thinking and inclusivity, creating a welcoming space for women entrepreneurs is a more recent phenomenon. In 2014, serial entrepreneur Jan Ryan, who is now the executive director of entrepreneurship and innovation program at the University of Texas-Austin, founded Women@Austin, an organization that helps nurture women-led businesses and offers events such as dinners and and office hours with local venture capitalists and entrepreneurs.
Austin’s community of female entrepreneurs is small and tight-knit, and there’s a strong “give-back” mentality. Female entrepreneurs say the growing number of accelerators, co-working spaces, networking events, and communities such as DivInc (which focuses on the growth of entrepreneurs who are people of color and women) and Women@Austin that provide women space to share information and to learn from one another, as well as the confidence to show them what’s possible. (There are at least 27 female mentorship and networking groups in the state of Texas.) To better integrate with the community of entrepreneurs, tech giants will sponsor networking dinners and events, particularly for underrepresented groups. Entrepreneurs say it’s not uncommon to reach out to a VC and just ask to grab coffee, or to suggest names of executives to speak with.
DivInc networking happy hour.
That inclusivity sets Austin apart from hyper-competitive Silicon Valley. Julia Cheek, who founded healthcare startup EverlyWell, says that, as a first-time, female, and non-technical founder, she felt had a “better chance of success” if she grew her company in Austin rather than in the Bay Area, where it’s more competitive to find talent and the cost of living is high.
“I would be raising money in a space that I didn’t have experience in and I needed to be able to sell my mission and vision and be able to hire the best people,” she says. But she adds, “I don’t know that I should have been [concerned about my ability to run a business in San Francisco].” Her company has raised $50 million, according to Crunchbase, from a mix of Austin-based and Silicon Valley-based VCs.
In Austin, “everyone took me seriously despite the fact that we were pre-market and they didn’t have to, there was no attitude or ‘who knows what you’re doing,’ ‘you’re unproven first time female fabric,’ et cetera,” says Cheek.
Away from the coastal cities, which are dominated by male CEOs and founders, female entrepreneurs are able to grow businesses their own way. Bumble’s chief of staff and first hire Caroline Ellis Roche said that being in Austin helped its early staff stay “hyper-focused on building the company” and that there was “less competition” in terms of startup resources and talent.
Similarly, for Outdoor Voices’ Haney, moving to Austin allowed her to focus on building the right company to differentiate from the saturated market of direct-to-consumer startups in New York City and be in a city that embodies the recreational ethos. “We decided to move to Austin for many reasons, but one of the most important was to put blinders on to what everyone else was doing, follow our creative direction, and create the rules to our own game,” Haney tells Quartz in an email.
In addition, Austin’s laid-back culture is helping women balance family and work, particularly as millennial women become parents. “This whole stereotype of this startup entrepreneur or bro that like works 24 hours a day and lives on someone’s couch or in a garage—it’s just not what I’m seeing in real life,” says Jessica Gaffney, CEO of female-focused organization Women@Austin and mother of two kids. “I’m seeing women who have family priorities and responsibilities.”
The money follows
Austin has attracted an impressive amount of VC funding despite its small ecosystem. Funding for women-led businesses, particularly in the early stages, is growing faster in Austin than in major coastal cities, according to data from research firm PitchBook. Angel and seed funding for businesses with at least one female founder in Austin rose from $70 million in 2014 to 2016 to $95 million in 2017 to 2019, up 35%. Meanwhile, in San Francisco, funding rose 32%; New York, 22%; and Los Angeles, 21%.
That may be because several Austin-based VC firms have at least one female partner. True Wealth Ventures, an Austin-based venture capital firm, was set up specifically to invest in women-led startups with a focus on health or sustainability products or technologies.
Still, access to capital is one of the greatest barriers for women—particularly minority women—to grow businesses. As of March 2018, women in Texas owned 30% of small businesses but only received 7% of venture funds.
An open-minded culture pushed forward by innovation and bolstered by government support has clearly created the right environment for female entrepreneurs to thrive. But many see this as just the beginning of Austin’s entrepreneurial scene.
That brings up the question of whether Austin, which has one of the fastest-growing populations in the US, will be able to keep the community-minded focus as the entrepreneurial hub continues to expand?
Milly Fotso, a former Facebook employee and the founder of lifestyle brand Peace of Home says, rather cautiously, that while Austin continues to grow, she hopes it doesn’t “become another Silicon Valley.”
“I think for us, what’s going to be really important is keeping that essence of community even as we expand,” she says. “I fear that as we expand, we’re going to be looking at Silicon Valley for what to do and we’re going to lose a lot of that.”
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