Texas has quietly transformed into one of America’s most vibrant venture capital ecosystems. While Silicon Valley still dominates the headlines, savvy founders and investors are increasingly looking to the Lone Star State for opportunities with less competition and more reasonable valuations.
From Austin’s established tech scene to emerging hubs in Dallas and Houston, the state offers a compelling mix of talent, affordability, and business-friendly policies that continue to attract entrepreneurs and investors alike.
In this comprehensive guide, I’ll walk you through the most influential venture capital firms operating in Texas in 2025, what makes them unique, and the trends shaping the future of Texas VC.
Texas VC Landscape in 2025
The Texas venture capital scene has evolved dramatically in recent years. What was once primarily concentrated in Austin has expanded into a statewide ecosystem with distinct regional strengths. Austin continues to focus on software and consumer tech, while Dallas leverages its enterprise and telecom expertise. Houston, with its energy and medical roots, has developed notable specializations in cleantech and healthcare innovation.
Texas VC activity reached new heights in 2024, with over $6.2 billion invested across more than 450 deals statewide. While this represents a slight cooling from the frenzied pace of 2021-2022, it demonstrates the resilience and continued maturation of the Texas startup ecosystem.
What’s particularly noteworthy is how Texas has maintained momentum while other markets experienced more significant contractions. This stability speaks to the state’s economic fundamentals and the quality of startups being funded.
Top Texas VC Firms
| Firm Name | Location | Focus Areas | Investment Stage |
|---|---|---|---|
| Live Oak Venture Partners | Austin | Enterprise software, fintech, healthcare IT | Early to growth |
| Capital Factory | Austin | Tech startups across sectors | Pre-seed to Series A |
| S3 Ventures | Austin | Business tech, digital experiences, healthcare | Series A and B |
| Next Coast Ventures | Austin | Tech-enabled services, digital natives | Early stage |
| Perot Jain | Dallas | AI, ML, IoT, cybersecurity | Seed to Series B |
| Naya Ventures | Dallas | Mobile, AI, SaaS, cloud | Early stage |
| Cypress Growth Capital | Dallas | B2B software, tech-enabled services | Growth stage |
| Mercury Fund | Houston | SaaS, cloud, industrial AI/ML | Early stage |
| Energy Transition Ventures | Houston | Cleantech, sustainability | Early to growth |
| The Artemis Fund | Houston | Women-led enterprises | Seed and Series A |
| Silverton Partners | Austin | Enterprise SaaS, marketplaces | Seed to Series B |
| Sequoia Capital | Austin (office) | Varied tech sectors | All stages |
| Founder Collective | Austin presence | Software, consumer tech | Seed and early |
Austin: Texas’ Venture Capital Powerhouse
Austin remains the undisputed center of Texas venture capital, combining a deep talent pool with a thriving startup culture that continues to draw comparisons to early-stage Silicon Valley—minus the astronomical costs of living and doing business.
Live Oak Venture Partners
Live Oak Venture Partners has established itself as one of Austin’s premier venture capital firms with over $600 million under management. The firm focuses primarily on enterprise software, fintech, and healthcare IT investments, typically supporting companies from early to growth stages.
What distinguishes Live Oak is their founder-friendly approach and patient capital strategy, often maintaining investments for 7+ years. Their portfolio includes notable successes like Jupiter AI, Homeward, and Disco. Live Oak partners are known for taking a hands-on approach with portfolio companies, providing strategic guidance beyond just financial support.
Capital Factory
Capital Factory operates as a hybrid entity within the Texas startup ecosystem—part accelerator, part co-working space, and part investment network. Often described as the “center of gravity” for Austin startups, Capital Factory connects early-stage founders with resources, mentors, and initial capital.
Rather than managing a traditional fund, Capital Factory leverages a network of angel investors and venture partners to deploy capital into promising startups. Their extensive connections throughout the Texas tech scene make them an invaluable resource for entrepreneurs, particularly those new to the ecosystem. Notable portfolio companies include Aceable, Pingboard, and Stoplight.
S3 Ventures
S3 Ventures stands as the largest Texas-focused venture firm with over $900 million under management. The firm specializes in Series A and B investments, typically committing $3-15 million to companies that have achieved product-market fit and are ready to scale.
Led by entrepreneurs with operational experience, S3 brings a founder’s perspective to their investment approach. Their portfolio spans business technology, digital experiences, and healthcare technology, with notable investments including Alkami, Iconixx, and Tango Health. The firm is recognized for its supportive approach through market downturns, often providing bridge financing to portfolio companies during challenging funding environments.
Next Coast Ventures
Next Coast Ventures manages approximately $310 million across multiple funds focused on early-stage companies in tech-enabled services, digital natives, and future of work sectors. Founded in 2016 by former entrepreneurs, the firm targets startups outside traditional coastal tech hubs.
Next Coast has developed a reputation for identifying companies using technology to transform traditional industries. Their portfolio includes Tenfold, Everly Health (formerly Everlywell), and AlertMedia. The firm was an early believer in distributed teams and remote work, positioning them well as these trends accelerated in recent years.
Dallas: The Enterprise-Focused VC Hub
Dallas has emerged as Texas’ second-largest venture hub, leveraging its strengths in telecommunications, enterprise software, and corporate headquarters to build a distinct ecosystem that complements Austin rather than mimicking it.
Perot Jain
Perot Jain operates as a family office venture capital firm founded by Ross Perot Jr. and Anurag Jain. The firm invests in emerging technologies including AI, machine learning, IoT, and cybersecurity, with typical investments ranging from $1-5 million in seed to Series B rounds.
A key advantage for portfolio companies is the firm’s extensive network of corporate connections, providing startups with potential enterprise customers and partners. This access to strategic relationships is particularly valuable for B2B startups. Notable investments include Hypergiant, ParkHub, and Spacee.
Naya Ventures
Naya Ventures manages over $150 million focused on early-stage investments in mobile, AI, SaaS, and cloud infrastructure startups. The firm has established itself as a bridge between U.S. and international tech ecosystems, particularly with connections to India’s technology sector.
This cross-border approach offers portfolio companies access to global talent while supporting their growth in U.S. markets. Naya typically invests $1-3 million in early-stage rounds and works closely with founding teams on product strategy and market expansion. Portfolio companies include HyperVerge, Altia Systems, and CoreStack.
Cypress Growth Capital
Cypress Growth Capital offers a distinctive financing approach through royalty-based funding rather than traditional equity investment. The firm provides growth capital to established B2B software and technology-enabled service companies without the ownership dilution associated with conventional venture capital.
Under their model, companies receive $1-7 million and repay it through a percentage of monthly revenues. This structure aligns with revenue growth rather than exit timelines, appealing to founders building sustainable businesses outside the typical venture-backed hypergrowth trajectory. Cypress has carved out a valuable niche in the Texas funding landscape for companies with predictable revenue streams.
Houston: Energy Tech and Innovation
Houston has leveraged its energy and medical expertise to develop a specialized venture ecosystem focusing on industrial technology, cleantech, and health innovation. While smaller than Austin’s scene, Houston’s VC community has grown significantly over the past five years.
Mercury Fund
Mercury Fund stands as Houston’s largest venture capital firm with over $300 million under management, focusing on early-stage investments in SaaS, cloud, and AI/ML startups serving industrial markets. The firm typically deploys $1-3 million in initial rounds, often as the first institutional investor.
Mercury’s strategic advantage comes from deep connections to Houston’s energy, manufacturing, and healthcare sectors, providing portfolio companies with industry expertise and customer introductions. This sector focus enables them to evaluate complex technical startups with greater insight. Notable investments include Levelset, Graylog, and Sight Machine.
Energy Transition Ventures
Energy Transition Ventures manages over $150 million dedicated to technologies enabling the shift to a lower-carbon economy. Based in Houston—the world’s energy capital—the firm invests in early and growth-stage companies across renewable energy, energy storage, grid modernization, and industrial decarbonization.
The founding team brings combined experience from both traditional energy and renewable sectors, offering portfolio companies nuanced industry knowledge and strategic connections. This specialized focus positions them to identify opportunities at the intersection of conventional energy infrastructure and emerging clean technologies. Notable investments include Resilient Power and Cemvita Factory.
The Artemis Fund
The Artemis Fund manages over $100 million focused exclusively on women-led startups across various sectors, with particular strength in fintech, healthtech, and consumer businesses. Founded by three women with backgrounds in law, finance, and entrepreneurship, the firm brings valuable perspective to the traditionally male-dominated venture capital industry.
Artemis typically invests $500,000 to $2 million in seed and Series A rounds, often serving as a trusted advisor to first-time founders navigating the fundraising process. Their thesis centers on women-led startups representing an undervalued market segment with strong return potential. Portfolio companies include Upgrade, Fig Loans, and Paladin.
National Firms with Texas Footprints
Texas’ growing startup ecosystem has attracted increased attention from established coastal firms, several of which have established local offices or dedicated significant resources to the region.
Sequoia Capital in Austin
Sequoia Capital, one of Silicon Valley’s most prestigious venture firms, established an Austin office in 2023—a significant milestone for the Texas tech ecosystem. This expansion signals Texas’ growing importance in the national venture landscape and provides local startups with access to the firm’s extensive resources and network.
While Sequoia hasn’t disclosed a specific allocation for Texas investments, their regional activity has increased substantially with several Austin-based deals announced in 2024. The firm’s presence gives Texas startups a pathway to one of the industry’s most respected investors without relocating to the coasts.
Founder Collective’s Texas Activity
Founder Collective has become increasingly active in the Texas startup ecosystem without establishing a formal office in the state. The seed-stage firm is known for its founder-friendly terms and commitment to early-stage investing, typically deploying $500,000 to $2 million in initial funding rounds.
The firm has developed a reputation as a valuable partner for Texas startups seeking their first institutional capital, often serving as a bridge to coastal investors for later rounds. Their investment approach avoids the “signaling risk” of selectively participating in later rounds, providing founders with greater flexibility when raising subsequent capital.
Emerging Trends in Texas VC
The Texas venture capital landscape continues to evolve, with several notable trends shaping its development in 2025:
Geographic Diversification
While Austin remains the center of Texas venture activity, investment is increasingly spreading to other cities. Dallas and Houston have developed robust ecosystems, while emerging hubs in San Antonio, El Paso, and the Rio Grande Valley are attracting attention for specialized sectors.
This geographic diversification reflects both the maturation of the Texas startup ecosystem and the impact of remote work, which has made it easier for startups to access capital regardless of location.
Industry Specialization
Texas VC firms are increasingly focusing on specific sectors rather than generalist strategies. This specialization allows firms to develop deeper expertise and networks in particular industries, providing more value to portfolio companies beyond capital.
Energy and climate tech have emerged as particularly strong areas for Texas VCs, leveraging the state’s traditional energy expertise while focusing on next-generation technologies. Healthcare innovation, supported by Texas’ world-class medical centers, has also attracted specialized investors.
Alternative Funding Models
Beyond traditional equity venture capital, Texas has seen growth in alternative funding models. Revenue-based financing, offered by firms like Cypress Growth Capital, has gained traction among profitable companies seeking growth capital without dilution.
These alternatives have expanded the funding options available to Texas startups, particularly those that may not fit the traditional venture model of rapid scaling and exit.
Cross-Border Investment
Texas’ position as a gateway to Latin America has supported increased cross-border investment activity. Several Texas VCs have established dedicated programs for Mexican and Latin American startups looking to enter the U.S. market, while others have raised specific funds focused on the region.
This cross-border focus capitalizes on Texas’ geographic and cultural connections to Latin America, positioning the state as a natural bridge between these growing tech ecosystems.
How to Approach Texas VCs in 2025?
Based on conversations with dozens of Texas investors, here are some practical tips for entrepreneurs seeking venture funding in the state:
- Leverage warm introductions: Despite the growth of the Texas VC ecosystem, it remains relationship-driven. Warm introductions from trusted sources significantly increase your chances of getting a meeting.
- Understand regional differences: Each Texas tech hub has its own specialties and investment preferences. Research firms thoroughly to understand if your startup aligns with their thesis.
- Demonstrate capital efficiency: Texas investors typically place higher value on capital efficiency than their coastal counterparts. Be prepared to discuss your burn rate and path to profitability.
- Build local connections: Engage with the local startup ecosystem before seeking funding. Organizations like Capital Factory in Austin, The DEC in Dallas, and Houston Exponential provide valuable entry points.
- Consider strategic fit: Look beyond the check size to evaluate how a VC’s expertise, network, and portfolio align with your needs. The right strategic partner can provide value far beyond capital.
Future of Texas Venture Capital
Looking ahead, Texas venture capital appears poised for continued growth and evolution. The state’s combination of talent, affordability, and business-friendly policies continues to attract entrepreneurs, while its growing base of successful startups is creating experienced founders and operators who often become investors themselves.
As the ecosystem matures, we’re likely to see more specialized funds emerge, focusing on specific sectors or stages where Texas has competitive advantages. The growing presence of national firms will increase the capital available while also creating more competition for deals, potentially driving valuations higher.
What remains consistent is the distinct character of Texas venture capital—combining the ambition and innovation of coastal hubs with a practical, capital-efficient approach reflecting the state’s business culture. This blend continues to produce companies that may not grab headlines for massive funding rounds but often build sustainable businesses generating real value.
For founders looking beyond Silicon Valley, Texas offers a compelling alternative—access to capital and talent without the extreme costs and competition. And for investors, the state represents a market where reasonable valuations and a growing ecosystem create opportunities for strong returns.
The Texas venture capital story is still being written, but its trajectory suggests it will play an increasingly important role in the national funding landscape in the years ahead.
Further Reading
Texas Startup Funding Landscape
50 Top Startup Accelerators in Texas
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