Commentary: The Flood of Liquidity Raises All Austin Boats

Story by Bryan Menell


Editor's note: this guest article, from AustinStartup's Bryan Menell, was originally posted on his blog. Bryan gave us permission to reprint it here.

Austin is about to witness a wave of financial liquidity in the technology community not seen since 1999. Please join me in wishing and hoping that unforeseen circumstances donít disrupt a hallmark in the chapter of Austin history.

Back in 2006 and early 2007 Austin had seen a positive upswing in investment, consumer spending, and a generally healthy economy since about 2004. Just enough time to get sales up, profits up, growth rates back in line, and find a deal. And by ďdealĒ I mean either a profitable sale or an IPO. An exit. A liquidity event for investors.

This isnít just a case of the rich getting richer. Certainly the venture investors would make great returns when HomeAway or would go public. But more importantly, early employees, executives, and the entrepreneurs would see a wave of financial success. That liquidity is what begins the next cycle of innovation.

Itís the VP-level people at a Vignette, Tivoli, Trilogy, Motive, Dell, etc, that pocket a few million dollars and suddenly want to strike out and do their own thing. Chase their own dream. Solve a problem thatís needed solving for a long time.

In the crash of 2007 we missed out on that. We had a handful of companies that were about to get liquid, but the financial markets crashed so hard and so fast that they couldnít get a deal done. In turn, that left a black hole of startup tech innovation in Austin that lasted for about 3 years. During those years we didnít have executives that got liquid and began the entrepreneurship cycle all over again.

Well my friends, we are about to see the window open again for Austin. If we can get some deals done in this town, weíll see a follow-on explosion in tech entrepreneurial activity.

Bryan Menell is the Managing Editor of AustinStartup, and the Director of the Collaboratory at Dachis Group. He is also a co-founder and active mentor at Capital Factory, and serves on the board of directors of Texchange. This was originally posted on his blog, and was republished with permission.


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