Silicon Valley is the area most commonly associated with start-up companies, especially in the technology industry. But Austin has also opened its arms to entrepreneurs, and the Texas capital has done a good job of luring not only technology companies but also innovative players in sectors across the economy.

Austin has a number of attractive features that lend themselves to business development. Texas in general is a lot less expensive than California or western Washington, and the greater availability of open land makes it easier for businesses to grow once they've established themselves in the state. Austin draws an eclectic group of people, magnifying the multicultural mix that the state's geographical proximity to Mexico and status as a gateway to the U.S. from the entire Latin American region bring it. Finally, the presence of the main campus of the University of Texas provides Austin with a steady flow of qualified labor, and that helps give businesses new and old the lifeblood they need to grow and prosper.

Texas flag flying in front of Austin skyline.

Image source: Getty Images.

Top Austin stocks

Stock

Market Cap

1-Year Return

Dell Technologies (NYSE:DVMT)

$54.3 billion

8%

Cirrus Logic (NASDAQ:CRUS)

$2.65 billion

(24%)

National Instruments (NASDAQ:NATI)

$6.47 billion

58%

Parsley Energy (NYSE:PE)

$7.38 billion

(26%)

EZCORP (NASDAQ:EZPW)

$711 million

43%

Chuy's Holdings (NASDAQ:CHUY)

$442 million

(13%)

Data source: Yahoo! Finance.

Building a tech hub

The history of technology in Austin dates a lot further back than the 1980s, but that decade marked an important milestone for the Texas capital's evolution. Michael Dell, a young pre-med student at the University of Texas, founded what would eventually become the Dell computer company. The company capitalized on the growing popularity of the PC and turned what had been highly specialized tech equipment into a commodity that any household could afford. Over time, Dell transformed itself into a manufacturing powerhouse, going public in 1988 and gradually growing to offer desktop, server, and laptop equipment, as well as numerous accessories. The company's Dell.com website was among the first e-commerce-driven distribution models to show immediate success, for its ability to build and deliver quality equipment quickly and efficiently.

Dell went private in 2013, and the stock of Dell Technologies is a tracking stock that mirrors the value of Dell's stake in Silicon Valley's VMware (NYSE:VMW). Yet some believe that Dell itself will come back to the public stock markets in the near future, making Austin's most cherished company available to investors once again.

Dell's success spawned plenty of support industries. Cirrus Logic has been successful specializing in audio chips that now go into many of the latest smartphones, tablets, and other mobile devices. Its fortunes are largely tied to those of the products into which its chips are integrated, especially the many successful iterations of the iPhone that have Cirrus audio products. Competition is fierce in the industries that supply major players in the mobile-electronics space, but Cirrus continues to find ways to defend its turf while seeking new opportunities.

Passing the test

National Instruments is also involved in technology, but its focus is different. The company helps produce testing and measurement systems for engineering and scientific purposes. NI's mix of products includes both software-based and hardware-based equipment, including applications to take data on manufacturing processes and ensure operation within defined parameters, as well as the sensor equipment necessary to collect and transmit that data to its clients. NI serves industries from automotive and aerospace to energy and medical research, and the need to ensure high quality has clients hungry for its products.

Looking for energy

Despite the discovery of shale plays across the nation, Texas remains the hub of the energy industry in the U.S. Most major companies have their headquarters in Houston, but Austin is home to some smaller players in the oil patch. Parsley Energy isn't a household name, and you won't see gas stations with its name in your neighborhood, but the oil and gas exploration and production company has an impressive set of positions in various parts of the Permian Basin in West Texas, including substantial acreage in the Midland and Delaware Basin subregions.

Parsley made a name for itself when it aggressively bought up land during the oil slump over the past couple of years, including the huge $2.8 billion purchase of Double Eagle Energy about a year ago. Now, some believe that the departure of company founder Bryan Sheffield could prompt Parsley to put itself up for sale, potentially inviting attractive bids from companies that want to jump-start their asset holdings with exposure to the Permian.

Beef and chicken fajitas with tortillas, cheese, guacamole, salsa, and sour cream.

Image source: Chuy's Holdings.

Hungry for cash and queso

Austin's mix of businesses is just as eclectic as its mix of people. EZCORP is best known for its EZPawn pawn shops, which extend loans and sell goods through a network of hundreds of stores not only in the U.S. but also in Mexico and throughout Central America. Despite pressure on payday-loan services, EZCORP has found ways to hold its own.

Austin is also the heart of Tex-Mex cuisine, and Chuy's Holdings got its start in the Austin market. From its humble beginnings as a favorite among UT students, Chuy's now sports dozens of locations throughout the country -- from Chicago and Denver to the greater Washington, D.C., area and Florida. Challenging times for restaurants have held back Chuy's stock lately, but the network of restaurants continues to grow, bringing authentic food to non-Texans everywhere.

Austin has come a long way in recent decades, but the quirky Texas capital refuses to forget its roots. With a unique mix of culture, resources, and innovation, the companies that call Austin home promise to keep making waves in their respective industries for years to come.

Dan Caplinger owns shares of Chuy's Holdings. The Motley Fool owns shares of and recommends Chuy's Holdings. The Motley Fool recommends Cirrus Logic, National Instruments, and VMware. The Motley Fool has a disclosure policy.