show me the money

Report finds Houston is 3rd fastest growing tech ecosystem

Houston Exponential released a new report on venture capital activity in the Bayou City. Sky Noir Photography by Bill Dickinson/Getty Images

In the startup world, small funding deals are a big deal in Houston.

A new Houston Exponential analysis based on data from PitchBook shows early-stage and angel rounds accounted for 151 venture capital deals under $5 million last year. Nearly two-thirds of those VC deals were less than $1 million.

Thanks to that robust activity, Houston now ranks as the third-fastest-growing tech ecosystem for early-stage companies in the country, according to the analysis.

Meanwhile, last year’s overall VC deal count exceeded 200 for the first time, “a harbinger of future growth potential as new company creation continues to explode,” the analysis says.

Texas Medical Center is contributing to that explosion. It recently raised the size of its TMC Venture Fund to $50 million. TMC says the fund now will be able to back a wider range of early-stage startups.

“When we launched the TMC Venture Fund, our goal was to drive collaboration and entrepreneurship, and establish Texas as a life science hub,” William McKeon, president and CEO of TMC, says in a news release. “Our initial investment was extremely successful, and this influx of capital creates a unique opportunity for TMC to invest in companies in the earliest stages of commercialization, further bolstering Houston’s thriving life science community.”

Although Houston’s average early-stage deal size of $18 million remains shy of the national average of $21 million, that still represents a 68 percent growth rate since 2019, according to the analysis from Houston Exponential, an entrepreneurship hub. Compared with the national growth rate of 23 percent, “this demonstrates the broader expansion and maturities within the Houston ecosystem,” the analysis says.

The size of deals at the Series A and Series B levels also is on the rise. According to the analysis, the median Series A round in Houston grew from less than $3.2 million in 2020 to more than $10 million in 2021. The size of Series B rounds rose 35 percent, from a median of $13.6 million in 2020 to $21 million in 2021.

While those numbers are impressive, mega-deals stole the spotlight in 2021. Six Houston companies raised at least $100 million last year, with three of those deals surpassing $300 million. Collectively, Axiom Space, Cart.com (now based in Austin), HighRadius, Lancium, Solugen, and Vyripharm Biopharmaceuticals raised $1.3 billion last year.

Last year’s mega-deals brought the number of Houston unicorns, including Cart.com, to five. Unicorns are startups valued at $1 billion or more. In Houston, the newest members of that club are Solugen, with a $357 million Series C round in 2021, and Cart.com, with a $240 million Series B1 round last year.

“That VC-backed companies were able to generate such enormous value in 2021 during a time characterized by great uncertainty and extraordinary circumstances highlights the continued importance of VC-backed companies to the resilience of Houston’s economy,” says Serafina Lalany, executive director of Houston Exponential.

Trending News

Building Houston

 
 

EnergyCapitalHTX is now live and reporting on Houston's role in the energy transition. Photo via Getty Images

Houston's newest media platform has officially gone live.

EnergyCapitalHTX.com, originally announced in March, is now up and running. Houston-based Gow Media, a multi-platform media company and the parent company of InnovationMap, CultureMap, SportsMap, and ESPN Radio 97.5FM and 92.5FM, launched the site tonight at an event at Gow Media's office.

“We are excited to roll out our new outlet, EnergyCapitalHTX.com. We have been very impressed by Houston’s efforts to lead the global transition of energy and to address the 'dual challenge' of meeting the world’s growing demand for energy while at the same time reducing carbon emissions,” says David Gow, CEO of Gow Media.

“On our new site, we plan to provide informative, unbiased coverage of the Houston-based initiatives, spanning big corporations and startups," he continues. "We hope that a site dedicated to the transition will bring visibility to the city’s substantive progress and to the path forward.”

The site will cover Houston's energy transition ecosystem — the people, companies, capital sources, and numerous initiatives in Houston. Lindsey Ferrell serves as the inaugural editor of the site.

The site’s inaugural sponsor is HETI, which launched in 2021. Led by Executive Director Jane Stricker, HETI was founded to drive economic growth in the Houston area within the energy transition toward a lower carbon future.

“We are excited to support Gow Media with the launch EnergyCapitalHTX.com,” Stricker says in an earlier news release. "There is so much innovative and exciting activity in our ecosystem. Houston is the Energy Capital of the World, and this platform will amplify the energy leadership that is already happening here.”

Trending News