Austin venture capital firm looks to back Texas-based startups with $250 million in hand

On Mar 9, 2022

An Austin-based venture capital firm has raised $250 million from investors for its seventh growth capital fund targeting Texas startups.

S3 Ventures has focused on early-stage business technology, digital experiences and health care technology companies in Dallas, Austin, Houston and San Antonio since it began in 2005. The firm’s founder is also its managing partner — Brian Smith, who started Austin-based Crossroads Systems in 1994 and led it through five investment rounds and an initial public offering.

In Dallas, the firm’s previous investments included the fast-growing digital banking firm Alkami Technology. S3 Ventures general partner Charlie Plauche said Alkami is the firm’s most successful portfolio company. In 2021, Alkami went public at a value of more than $3 billion.

S3 Ventures also backed NoiseAware, a provider of automated noise monitoring, and IFM Restoration, an online marketplace that connects contractors with owners of single-family rental homes.

Smith said he likes what he sees in Texas.

Texas has people “living and working here and entrepreneurs who are coming here and building great businesses here,” Smith said. “We see the attractiveness of that growing.”

S3 Ventures has made more than 50 investments to date, with over 25 active portfolio companies and more than 20 exits. The firm’s portfolio companies have raised nearly $2 billion in total financing.

The firm invests $500,000 to $10 million in early growth rounds, with capacity to invest over $20 million over a company’s life cycle. Its assets under management total more than $900 million.

“We believe that by 2030, Texas could be the second-largest technology ecosystem in the country,” Smith said in a statement. “That growth is being driven by long-term demographic shifts and broad-based economic strength.”