Money moves

Houston sees massive growth in startup venture capital investments

The most exciting part of this Texas startup funding roundup is that Houston brought in more dollars than Dallas. Getty Images

When it comes to startup funding, Texas saw only a small jump in startup investments made, according to Crunchbase. However, when you look at funds coming into Houston companies, the Bayou City's numbers soared.

Houston raked in $251 million of the state's total $817.9 million for the second quarter. Last quarter, the city posted a mere $44.7 million of investment into local startups, which was previously a huge drop from the $121.4 million reported in Q4 2018, according to Crunchbase.

The state's VC activity only increased by less than $10 million, with both Austin and Dallas taking huge hits following their strong starts in Q1. VCs invested $411.11 million into Austin startups in Q2, which is a 19 percent drop from Q1's $493.18 million, Crunchbase's Mary Ann Azevedo reports. Dallas also saw a drop of around $100 million in investments between quarters. Dallas startups only brought in $148.5 million in Q2 compared to $245.4 million in Q1.

Chart via news.crunchbase.com

Houston's biggest deal for the quarter was AlloVir's $120 million Series B, which closed in May. The biotech company founded at Baylor's Center for Cell and Gene Therapy is currently in clinical trials for its immunotherapy technology and also announced with the round closing that it joined the ElevateBio — a Boston-based organization that combines a group of cell and gene therapy companies — portfolio.

Here are some other Houston startup deals that closed in Q2. (Note: Not all of these deals are necessarily included in Crunchbase's report.)

Houston VC deals in April:

  • Innovapptive, a software-as-a-service company with clients in industrial industries, closed on a $16.3 million Series A investment. Read more.
  • OAG Analytics, which uses artificial intelligence in the oil and gas industry, has closed its second round of strategic funding. The exact amount of the raise was not disclosed by OAG, but according to a Form D filing, the company expressed that it was raising $8.72 million in this round. Read more.

Houston VC deals in May:

  • Data Gumbo Corp., a blockchain-as-a-service company, closed on a $6 million Series A round. Read more.
  • Information technology automation and management company, Liongard, closed its Series A round at $4.5 million. Read more.
  • Tachyus, the data-driven software company has closed its Series B fundraising round at $15 million. Read more.
  • Fast-growing chemicals manufacturer, Solugen Inc., the only producer of bio-based peroxide solutions, announced that its $32 million Series B funding round has closed. Read more.

Houston VC deals in June: 

  • Following a $20 million commitment from Sanford Health, regenerative medicine and cell therapy company, InGeneron Inc., has extended its Series D round to $43 million. Read more.
  • Iownit Capital and Markets Inc. announced that it closed a $4.5 Seed round of funding. Read more.


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Building Houston

 
 

Gathering the right info was vital. Photo by Krisanapong Detraphiphat/Getty

It's there in their name, but how often does a human resources company actually put emphasis on the "human" part? If it's HR&P, the answer is "especially when it matters most."

Following the COVID-19 pandemic announcement, small businesses scrambled to get their Paycheck Protection Program applications and documents in order. Up for grabs was a government-funded $349 billion in forgivable loans to help pay salaries, utilities, and other necessary expenses while businesses weathered the medical and economic storm. And if a business didn't have a company like HR&P on its side, its chances at obtaining a PPP loan weren't nearly as high.

"The PPP loan process required a great deal of HR information, and the requirements seemed to keep changing," says David Gow, CEO of Gow Media (the parent company of InnovationMap). "So we reached out to HR&P a number of times with requests, questions, etc. And each time HR&P assembled a full team to help us. I eventually started calling them 'the dream team,' because the team at HR&P had all the answers."

"As soon as the banks got set up to process these loans, the funds were gone. Every second mattered," says Kris Osterman, HR&P's CFO. "The CARES act is over 800 pages long — our team divided it in sections, and quickly went through it to find the parts that mattered to our clients. We had to make sure we had what we thought the banks needed — the information coming from the treasury was vague at the start — we had to make interpretations and apply our technical knowledge to gather what was ultimately needed for each client. A rapid response was critical."

Working (often remotely) around the clock, through that first weekend, and then several others, HR&P's team was in constant communication with its clients and their SBA lenders. At the end of the day, it was the community-based companies like HR&P that shined over their larger, more bureaucratic counterparts. The blitz of ambiguous COVID-19 relief legislation was an incubator for chaos in the financial and human resource communities. Most payroll companies simply could not respond with a level of intimacy required to support a company's specific needs. HR&P had the agility to navigate these moving targets and swiftly personalize service for their clients.

"Everyone had a different interpretation of the legislation, and there were inconsistencies in what was being requested from each financial institution. Corroborating the requests and staying in constant communication with the client was imperative," says HR&P's VP of client relations, Kevin Roblyer. "They could literally get ahold of us on a Sunday, where other providers were not available or couldn't provide that localized presence."

"All the lenders and financial institutions were asking for different information," says John McKay, HR&P VP of operations. "HR&P is entirely customizable. Our development team can quickly create functionality and generate reporting capabilities for each individual client and their bank's needs."

More importantly, "being able to speak to a designated HR&P representative was very important to limit client anxiety," says Chris Fisher, HR&P's VP of sales.

Thanks to years of expertise and a deep knowledge of its clients, HR&P played a critical role in securing vital PPP funds for many small and mid-sized businesses.

"It took a lot of creativity," says Fisher. "And everything changed with the second round of funding in April. Because of our high touch service model, our clients were prepared and more equipped to succeed."

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