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

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 technologies, digital experiences and health technology companies in Dallas, Austin, Houston and San Antonio since its inception in 2005. The company’s founder is also its managing partner – Brian Smith, who founded Austin. Crossroads Systems in 1994 and led it through five investment rounds and an initial public offering.

In Dallas, the firm’s previous investments included fast-growing digital banking company Alkami Technology. Charlie Plauche, general partner of S3 Ventures, said Alkami was the company’s most successful holding company. In 2021, Alkami went public with a valuation of over $3 billion.

S3 Ventures has also backed NoiseAware, an automated noise monitoring provider, 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) who live and work here and entrepreneurs who come here and build great businesses here,” Smith said. “We see the attractiveness of this growing.”

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

The company invests between $500,000 and $10 million in early growth cycles, with the ability to invest over $20 million over the life cycle of a business. Its assets under management total over $900 million.

“We believe that by 2030, Texas could be the nation’s second-largest tech ecosystem,” Smith said in a statement. “This growth is being driven by long-term demographic shifts and widespread economic strength.”

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