For Jim Breyer, the mantra, “Silicon Valley is a state of mind” has always been behind Breyer Capital, his personal investment fund.
While many of his investments and board seats (which have included Facebook, Blackstone, 21st Century Fox, Dell, Etsy, Marvel Entertainment and Walmart) backed that thesis, Breyer had never established an office for his personal fund outside of the Valley. Until now.
Earlier this year, in the middle of a pandemic, he set up a second home for his personal fund in Austin, Texas. The move is a sign of Austin’s growing clout as a technology hub and another indication that Silicon Valley, New York and Boston may have more competition from a growing collection of cities for tech talent and national attention.
Breyer has always had an eye on markets outside the Valley, but typically those endeavors meant international expansion through IDG Breyer (a vehicle for investment into China) or planned forays to deploy capital in the Middle East or other international tech hotspots.
“The new Austin effort comes after several years of thinking through where would be the most interesting place to expand Breyer Capital outside of Silicon Valley,” he said in an interview.
Breyer has several investments in Los Angeles, New York and other cities beyond the Bay Area, but a close relationship with Michael Dell and a seat on the Dell board left him with a hankering for more than just barbecue and personal computers.
“Through Michael [Dell] and his executives and spending a lot of time, I grew to love Austin both personally and professionally,” said Breyer. “As I think where there are investment opportunities outside of the major Silicon Valley and Northeast geographies, Austin was compelling and remains very compelling as I think through the next generation of investments.”
Breyer isn’t alone in his thinking. According to data from PitchBook, Austin startups raised roughly $2 billion in 2019, the most capital committed to the region since the early 2000s dot-com bubble.
Even amidst the pandemic, Austin startups still managed to haul in more than $466 million in venture funding. A report from Crunchbase even labeled Austin the king of the regional tech hubs in what the industry tracker is calling the “Mighty Middle.”
“Largely through Steve Case and ‘The Rise of the Rest’ … I’ve come to appreciate how much entrepreneurial activity exists between the two coasts,” Breyer said.
Now, he’ll be redoubling his efforts on backing companies in the region. Breyer said he thinks that venture capital still remains a local business, so his new focus will be on his own backyard.
“Most of the investments this calendar year and the next will be in Austin, Dallas and Houston. At the same time, I’m seeing very compelling health care service opportunities in Nashville, and Austin will serve as a base for those geographic opportunities as well,” said Breyer.
Entrepreneurs, investors and industry watchers can expect to see Texas startups occupying an increasingly large stake in Breyer’s overall holdings; half of his investments will be in Silicon Valley, Boston or New York, but the remainder will come from the Texas area.
That kind of capital commitment can be a huge boost for a region, especially from a person whose personal net worth hovers at around $2.5 billion. Meanwhile, the IDG Breyer fund in China — which operates as a traditional venture fund — now has over $10 billion in assets under management, Breyer said.
Preserving that net worth may be another important reason for the move to Texas. Some have speculated that the relative tax disparity between Texas and California may play a role in who is eyeing setting up shop in the state. And some industry watchers suspect that Breyer could be a harbinger for more investors setting up shop in Texas.
Breyer said he’s excited about health care opportunities coming from spinouts from the MD Anderson Center and expects to see more startups emerge as Facebook, Google, Apple, Tesla and SpaceX all expand their presence in Texas.
Ultimately, good investors operate locally because there has to be an ability to source and network — even in a pandemic when everyone is working from home, said Breyer.
“It can’t just be fully remote,” he said. “Others might view it differently, but it’s a characteristic of investing that I feel really works for Breyer Capital. So much of it also comes down to where are the best deals going to come from in this decade coming up … I see the universities in the U.S. continue to be the sources of the very best next generation opportunities.”
Those opportunities now include the University of Texas and the greater Austin community it supports, Breyer said.
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