money moves

Houston tech companies have raised over $466M so far this year, new report finds

Houston Exponential has a released a report that found that Houston tech companies have seen a 7 percent year-over-year increase in venture capital investments so far in 2020. Getty Images

This year might be a wash for a lot of things, but according to a new fundraising report from Houston Exponential, the Bayou City has seen an increase in funding this year compared to 2019.

The HTX Funding Review found that Houston startups raised $466.33 million across 46 deals between January and July — compared to $437 in the same time frame last year. While the increase seems marginal, it's important to consider the effect of the pandemic and the few months of troubles for the oil and gas industry.

The 7 percent increase in funding is impressive compared to the national average of 2.5 percent, according to the report, which was organized by Serafina Lalany, HX chief of staff. Eighteen later stage deals made up for 76 percent of the total money raised, indicating key growth for the ecosystem.

"This expansion in Houston's relatively new and booming tech innovation ecosystem shows a strength and resilience that is really exciting," says Harvin Moore, president of HX, in the report. "We are seeing a maturation of our very young ecosystem, as rapidly growing tech companies increasingly access later stage venture capital, which often comes from outside the local area."

The report calls out 11 deals — ranging from angel to late stage — that have occured in Houston to date in 2020:

  • Preventice Solutions, a medical device company, raised a $137 million series B led by Palo Alto-based Vivo Capital along with support from existing investors, including Merck Global Health Innovation Fund, Boston Scientific, and the Samsung Catalyst Fund.
  • Fintech and software-as-a-service company HighRadius raised a $125 million series B led by ICONIQ Capital, with participation from existing investors Susquehanna Growth Equity and Citi Ventures.
  • Liongard, a SaaS company, raised a $17 million series B led by TDF Ventures, Integr8d Capital, and private investors.
  • Base Hologram, a provider of hologram concert experience, raised $15.4 million in an outsized angel round this past May.
  • ThoughtTrace, another SaaS company, raised $10 million in a series B led by McRock Capital and existing investors, as well as Chevron Technology Ventures.
  • Renewable energy company Quidnet also raised a $10 million series B. Bill Gates-backed Breakthrough Energy Ventures and Canada-based Evok Innovations, which both previously invested in the company, contributed to the round.
  • SmartAC.com emerged from stealth mode with a $10 million series A fundraising announcement.
  • Retina AI, an AI company focused on diagnostics for diseases such as diabetic retinopathy from pictures of the retina, raised $4.1 million in an angel round which closed mid-July.
  • E-commerce platform Goodfair raised $3.67 million from but the round was led by Imaginary, with support from MaC Venture Capital, Global Founders Capital, Willow Ventures, Watertower, Amplify.LA, Capital Factory, and Texas Ventures.
  • SecurityGate, a cybersecurity platform, raised funds from Houston Ventures in June, but wouldn't disclose how much.
  • Oil and gas software company, M1neral, raised $1.6 million pre-seed co-led by Amnis Ventures and Pheasant Energy, among a few other select investors and strategic partners.

While the pandemic has made funding and vetting new portfolio companies, Blair Garrou, managing director of Houston-based Mercury Fund, says venture capital firms are committed to backing the strongest startups already in their portfolio.

"We've seen many VCs focus on a 'flight to quality,'" Garrou says. "Specifically, VCs are focused more on making sure their best performing portfolio companies have cash, especially at the later stages, as well as investing in the later rounds of new deals that are clear over-performers during COVID."

Looking forward, the HX report predicts that fundraising growth will continue throughout the rest of the year.

"There are several very large local deals in final term sheet stage, and we expect full year 2020 to be the highest ever for venture capital in Houston; our ecosystem is really thriving," says Moore in the report.

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Building Houston

 
 

Capital Factory's Houston HQ will be in The Ion. Photo courtesy of The Ion

A company that supports entrepreneurship and startups across the Lone Star State with mentorship and funding has announced its new homebase in Houston.

Capital Factory has revealed a new programming partnership with The Ion. Through the collaboration, Capital Factory will host programming, events, and resources within the innovation hub to grow, educate, and support Houston-based startups and entrepreneurs.

"Capital Factory's presence at The Ion will further expand the opportunities for startups and innovators in the Houston region, while strengthening an important pillar of the Texas Startup Manifesto," says Joshua Baer, founder and CEO of Capital Factory, in a news release.

Capital Factory was founded in Austin in 2009 and boosts on being the most active investor in Texas, deploying smaller investments to a multitude of early-stage startups. According to Crunchbase's data, the entity has invested in over 160 companies with 20 exits. Capital Factory officially entered the Houston market in 2019 and doubled down its presence last year when it merged with Station Houston.

Now, with its Houston headquarters moving into The Ion, the two innovation partners will take an inclusive approach to creating connections between innovators, mentors, investors, and markets, per the release.

"We are thrilled to have Capital Factory as a programming partner at The Ion" says Jan E. Odegard, executive director of The Ion, in the release. "The Ion seeks to work with key partners and established brands to help build a rich and inclusive set of startup services that can support all innovators and startups wherever they are in their entrepreneurial journey. Capital Factory brings a proven track record for providing entrepreneurs with services and investments that brings great value not only to The Ion ecosystem, but also to the entire Houston innovation ecosystem."

Capital Factory's first event at The Ion will be Open Coffee on November 16th followed by Open Coworking all day, Baer adds in his statement.

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