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Overheard: Local innovation leaders share what they see has changed in Houston for venture investing

"There's something magical happening in Houston, and [VCs] want a piece of it." Photo via Getty Images

Houston's seen a growth in startup and venture investment — even amid the pandemic — and a group of Houston innovators sat down for a virtual event to discuss what's lead to this evolution.

The Greater Houston Partnership hosted an installment of its Houston Industry Series focused on Digital Tech on Thursday, September 24. The panel of experts, moderated by Krisha Tracy of Google Cloud, discussed how they've observed the paradigm shift that's occurred in Houston over the past few years — and why.

Missed the discussion? Here are some significant overheard moments from the virtual event.

“I think there really is an interest for venture capital here, both locally and also welcoming it from outside of Houston. … There’s something magical happening in Houston, and [VCs] want a piece of it. I think that magical piece is a renewed interest in collaborating.”

Stephanie Campbell, managing director of Houston Angel Network and co-founder of The Artemis Fund. "I think a lot [of this progress] is due to the GHP, Houston Exponential, and the founding of the HX Venture Fund to bring those venture funds to Houston to say, 'what's happening here?'" Campbell adds, saying that this connectivity and collaboration that's happening in Houston VC is unique.

“I think there’s a misconception around all we do is oil and gas and life science in Houston, but when you think about what VC-backable companies look like, they’re tech, they’re B2B SaaS, they’re highly scalable, and they don’t tend to be capital-intensive types of things we see corporate venture backing.”

Campbell says, adding "the connectivity and the interest in VC is really taking off. It's an exciting time to be in Houston and Texas in general."

“Plug and Play’s ventures team is based in Silicon Valley and one thing they enjoy about meeting Houston-based founders is valuations tend to be more reasonable than in the Bay Area."

Payal Patel, director of Plug and Play Tech Center in Houston. "There are gems to be found," she adds.

“I don’t know what it is — if it’s something in the water or just Texans being very friendly, but the investors here share deal flow. It takes a village, and I think we all understand a rising tide lifts all boats."

Patel says on the collaborative nature of Houston. "It's really magical."

“What you’re witnessing is a city that has been waiting for industrial innovation to reach the point where it can be adopted at a really high scale, and that happened around 2017.”

Jon Nordby, managing director at MassChallenge Texas in Houston. Nordby adds that MassChallenge in Houston hasn't been keen on consumer tech, or the "grilled cheese delivery apps," as he describes. "We like companies that are in love with problems, not so much in love with solutions. … We build really meaningful tech."

“Over the last year or two, we’ve seen that sleeping giant get awoken. Open and external innovation is newly adopted by more legacy industries where it wasn’t before — and that’s just created a mountain of opportunities for startups and investors alike.”

Nordby says on the shift toward this meaningful, problem-solving technology, which Houston is full of, as he observes.

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Building Houston

 
 

A new program is launching to support the next generation of energy innovators. Photo via greentownlabs.com

The country's largest climatetech startup incubator and several schools are teaming up to prepare the next generation of clean energy innovators.

Greentown Labs, based in Boston and Houston, announced its new Texas Entrepreneurship Exchange for Energy (TEX-E) this week. The collaborative initiative aims to strengthen the student-driven entrepreneurship ecosystem in Houston, according to a news release, to focus on energy innovation. Greentown Labs, MIT’s Martin Trust Center for Entrepreneurship, and universities across Texas — including The founding institutions of TEX-E are Rice University, Texas A&M University, Prairie View A&M University, University of Houston, and The University of Texas at Austin — are collaborating on the project.

“Houston has long been known as the energy capital of the world, but to lead the world’s energy transition, the city must create a strong, vibrant innovation ecosystem to support the next generation of entrepreneurs and energy companies,” says Lara Cottingham, chief of staff at Greentown Labs, in the news release. “TEX-E will build upon Texas universities’ deep and long-standing connections to the energy industry by helping to attract and retain the world-class talent needed to supercharge Houston’s innovation ecosystem.”

The program, though based in Texas, will integrate both Greentown Labs locations, providing students with access to mentorship with incubator startups, networking events, career opportunities, and cross-learning with MIT.

“Boston and Houston might seem like an odd pairing, but they complement one another beautifully,” says Ben Soltoff, ecosystem builder and entrepreneur in residence at the Martin Trust Center for MIT Entrepreneurship, in the release. “The Boston area has a strong community-driven ecosystem around climate innovation, including MIT’s pioneering Climate and Energy Ventures Course in Cambridge, which has spawned over 30 companies. But often when MIT startups need to scale up, they look towards Texas, where they can find talent, space, and industry knowhow in spades.

"Together, these two regions are unstoppable,” he adds.

The five schools are just the beginning for the program, which plans to expand the collaboration over time. Locally, Houston area schools have collaborated with Greentown Houston since its opening over a year ago.

“The TEX-E collaboration will provide valuable opportunities to our students, and Houston is a natural location to create such an ecosystem,” says Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, in the release. “Training new talent and supporting their pursuit of innovative ideas are vital in addressing the growing global need for affordable, reliable, and environmentally sustainable energy.”

For more information, students and educators should sign up for the TEX-E newsletter and attend an upcoming event at Greentown Houston. The next event at the incubator is the Climatetech Summit on November 2.

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