Austin: Texan state capital boasts a business friendly attitude

Start-ups raising money in 2014 115
Total funds raised $993m
Start-ups acquired 31
(source: Built In Austin)

They take their own sweet time in Texas. About a quarter of a century after Michael Dell floated the Dell Computer Corporation and the company became a global name, its home town has become a magnet for technology start-ups. For the past four years, the capital of Texas has been identified by Forbes magazine as the fastest-growing city in the US.

The case for: Part of the attraction is the state’s business friendly environment, says Chelsea McCullough, executive director of Texans for Economic Progress, a statewide technology advocacy group. Very low levels of business regulation and light taxes reduce business and decision-making friction. Ms McCullough also cites healthy competition between high speed internet access providers.

The cost of recruitment and retention, especially for software developers is low compared to Silicon Valley and San Francisco.

The 50,000-student University of Texas in north Austin generates a talent pool of computer scientists and engineers. Texas A & M University is also nearby and adds to the stock of graduates.

The SXSW Festival every March brings tens of thousands of entrepreneurs, investors and media to the city. Many stay.

The case against: Austin’s rapid growth could be held back by the pressure to find housing, which although relatively low priced compared to other start-up hubs is increasingly scarce. The expanding city also has a growing traffic problem, although not, perhaps, by the standards of those who come from London, say, or New York.

For those who want broader cultural fare than live rock, country music, and (legendary) barbecues, the odd road trip or plane ride will be required.

Local heroes: WP Engine is one of the world’s leading hosting and management providers for the ubiquitous WordPress platform, which powers many of the world’s websites. This March it announced a $23m funding round, which more than doubles total funding in the business to $41.2m.

Neither a tech company nor a start-up, Whole Foods Market, the organic and healthfoods grocery chain, is a fast-growing Austin native.

More traditional IT companies with significant growth behind them include SolarWinds, an IT infrastructure management software company with turnover of more than $400m; and HomeAway, a vacations rental marketplace founded in 2005, which also had revenues in excess of $400m in 2014. Others include Trilogy, the automotive commerce software company.

Support for start-ups: There are meetups every night of the week in Austin as the growing number of co-founders and staff, most of whom are new to the city, furiously network. Foremost among the accelerators is the Capital Factory, a co-working space, incubator and accelerator. Austin also hosts a Techstars accelerator programme.

Getting there: San Francisco and New York are about four hours away. BA flies direct from London to Austin.