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MoneyTree: Energy Investment Falling, While Biotech Climbs in Texas

Xconomy Texas — 

Low oil prices have taken a hit on the energy innovation scene.

According to MoneyTree, investment in energy and industrial deals in Texas for the third quarter of the year have dropped sharply, pointing to year-end numbers for 2015 that would be a fourth of the nearly $400 million invested last year.

So far this year, there has been $67.9 million invested in the energy sector in the state. In 2014, for the full year, that number was $399.3 million. On Thursday, oil prices dropped to $46.78, a sharp decline from highs just of $107.26 a little over a year ago.

“We are now in a down cycle and VCs who know little about the industry, unlike lemmings, don’t want to run off a cliff,” says Pradeep Anand, president of Seeta Resources in Houston.

Still, he adds, there are opportunities in energy for savvy investors. “The upstream energy space should now be attractive to private equity, who have the opportunity and the talent to clean up balance sheets and pump up income statements—especially in the unconventional segment, which is loaded with wasteful practices,” Anand says.

The investment data is in the latest MoneyTree Report, which is prepared each quarter by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. The data detail total amounts of venture capital investment, as well as sorting investments by sector and number of deals.

(My colleague Bruce Bigelow writes today about investments from the national view.)

Overall, software investments continued to be the target of most capital in Texas. Investors plowed $196.4 million into the sector during the third quarter, a nearly 60 percent jump to the $78.8 million in the period a year ago. This category has lured the most investment dollars for the last three years—$195.6 million in 2014 alone.

In 2012, biotech companies received the most funding with $385.7 million. For this year to date, MoneyTree reports about $225.3 million has been invested in biotech in Texas.

For the third quarter, MoneyTree reports that the state’s top 10 deals are:

Avexis (Dallas), Biotech, $65 million
Civitas Learning (Austin, TX), Software, $60 million
—Vroom, (Irving, TX), Retail Tech, $54.2 million
—Tango Management Consulting (Irving, TX), Software, $30.2 million
—Tango Analytics (Irving), Software, $30 million
—Main Street Hub, (Austin), Software, $25 million
—Ziften Technologies (Austin), Software, $24.5 million
—Continuum Analytics (Austin), Software, $24 million
—Sierra Auto Finance (Dallas), Software, $20 million
—WellAware Holdings (San Antonio, TX), Software, $16.4 million