3 observations about Houston's innovation ecosystem from out-of-town venture capitalists
You'll go cross-eyed looking at the same puzzle for too long, and sometimes it's better to take a step back and introduce some fresh perspectives and ideas from someone not so connected to the matter at hand.
At the second annual HX Capital Summit hosted by Houston Exponential at Rice University, HX gathered three out-of-town venture capital experts to discuss Houston's innovation ecosystem with Sandy Wallis, managing director at the HX Venture Fund. The fund-of-funds focuses on connecting non-local investors to Houston in order to bring new venture opportunities to town. On the panel, the experts discussed their observations about the Bayou City, which can be summed up as follows.
Community engagement and corporate interest are good signs for Houston
Right off the bat, the panelists agreed that its much more encouraging visiting Houston nowadays than it was in the recent past. Clint Korver, managing director at San Francisco-based Ulu Ventures, has only recently played witness to the city, thanks to his firm's work with HX and the fund of funds.
"I'm just getting to know the Houston community," Korver says. "I'm really intrigued by how much community support there is."
Korver says that, not unlike Houston startups, Bay Area companies find it a challenge getting a foot in the door at major corporations. However, he's observed that Houston-based corporates want a seat at the table of Houston innovation.
"All the corporate attention that's being integrated here is super intriguing," Korver says. "That's our startups' hardest problems."
The other panelists, who are much closer to Houston, echoed Kover's interest in the role corporations play. Venu Shamapant, founding partner at Austin-based LiveOak Venture Partners, and Thomas Ball, founder and managing director at Austin-based Next Coast Ventures, have witnessed Houston evolve into what it is today over the past decade or so.
"We've both been coming to Houston over the past 20 years and been investing in startups, and it's been a dramatically different scene even in just the past five years," Shamapant says.
Houston's ecosystem is going to take time
While the panelists remarked on the evolution the city has and the support that large corporations seem to be willing to provide, Houston has other assets that's setting it up for success. The panelists mention a solid pool for talent, impressive educational institutions, and more.
"When I look at Houston, I think it has every ingredient for success, which is why I want to spend time here," Ball says.
Sure, as Ball says, Houston has the ingredients, but what it now needs is the time to cook.
"To me, it's more of just time that it's going to take. We can't bake this Houston cake by turning the thermostat up to 900 degrees in an hour. It's going to take three hours at 300," Ball says, adding that he doesn't know very much about baking. "It will take time. This won't be an overnight success. We're here for the long haul."
Houston has some challenges yet to overcome
Wrapping up the panel, an audience member asked about the changes Houston still needs to make to really get to the point it needs to be at.
For Korver, the answer was pretty simple. Houston needs a big exit.
"There's this incredible amount of momentum that comes along with a successful company that takes a hold of everyone — the rising tide floats all boats thing," Korver says.
For Ball, particularly comparing Houston to other major innovation-focused cities, the issue is that Houston is so spread out.
"To me the one thing I struggle with in Houston is what I would call a density problem," Ball says. "I think you need density here and you need to concentrate your resources in certain places in this city."