The future of Web3, investing in Houston, and how founders need to be prepared for 2023 — Samantha Lewis of Mercury joins the Houston Innovators Podcast. Photo courtesy of Mercury

Houston investor shares what startup founders need to prioritize in 2023

houston innovators podcast Episode 165

Heading into the new year, startup founders in Houston and beyond need to focus on conserving and raising cash, says Samantha Lewis, principal of Houston-based venture capital firm Mercury.

“We all know it’s turbulent market times. We’re unsure where the market is going, and when there’s uncertainty in the public markets, that puts uncertainty in the private markets,” Lewis says on this week's episode of the Houston Innovators Podcast. “What I’ve been spending the past two quarters doing is working with our portfolio companies to just make sure our balance sheets are bulked up for what’s to come in 2023.”

She says Mercury's startup portfolio has focused on extending each company's runway financially through 2024 — and she recommends all startups to try to do the same. She advises on the show that even if a company raised funding within the past year, open on the same terms and valuation just to bridge the gap.

“In 2023, if things start to look up, great. But if things continue to be volatile, then we need to be prepared for it,” she says. “What we’re advising all of our startups to do is to get as much cash in the door right now as you can.”

She outlined a lot of this analysis in a report for Mercury looking back at the market in 2022. Lewis, who was named a member of the Class 27 of the Kauffman Fellows Program, a group of global innovation investors, factors in what she's experienced through the program at an international level.

Lewis is focused on what she calls the "power theme" at Mercury, which includes fintech, blockchain, web3, and more. She says these industries have been hit in particular within market uncertainty.

"Ultimately the companies that are now getting investment and see capital flow through them within Web3 are the ones that have been building a sustainable business from the beginning," she says. "And thinking about what are the real use cases that blockchain unlocks and how it adds economic value."

When it comes to VC activity, Lewis says 2023 has been plagued with "FOMO investing" — the fear of missing out on a buzzy new technology — and "hype projects." Investors were throwing money into Web3 technology that hadn't yet been vetted in a real way.

Mercury didn't do that, Lewis says. "We've been very disciplined about where we put dollars within Web3. We've done mostly infrastructure Web3, and the only thing we'll continue to do is infrastructure." She cites Topl, a Houston-founded blockchain network company, as an example.

On the podcast, she shares more about the tumultuous ride blockchain has had in 2022, and why she's still bullish on Web3 despite the bad actors within cryptocurrency. She also shares some of the things Mercury has been up to with its Houston-based portfolio and what's next for them.

Listen to the episode below, or wherever you get your podcasts — just search "Houston Innovators Podcast."

Topl's latest fundraising round includes participation from a Houston investor as well as international partners. Image via Getty Images

Houston-founded blockchain startup raises $15M series A to increase international impact

money moves

A blockchain technology company that was founded out of Rice University has closed its latest round of funding.

Founded in 2017, Topl is a blockchain-as-a-service company that's developing a purpose-built blockchain ecosystem to empower impact and sustainability within its userbase of businesses. The company's $15 million series A round was co-led by Houston-based Mercury, Republic Asia, and Malta-based Cryptology Asset Group.

“Topl’s blockchain was purpose built to power the next wave of supply chains and markets, that are more sustainable and inclusive,” says Chris Georgen, founder and managing director of Topl, in a news release. “Every decision we’ve made has been relentlessly focused on this problem and it’s exciting to see this approach yielding results with more than 30 different impact-forward use cases already live or approaching launch. Through this latest fundraise and with the strong network we’ve built, we’re looking to accelerate the growth of our ecosystem and setting a goal of at least 100 applications launched by next year.”

The company, which is now headquartered in Austin but still has a presence in Houston, has raised over $20 million in investment to date. Topl announced its $3 million seed round of funding — also led by Mercury — in 2020.

“Despite broader market dynamics across the Web3 sector, Topl’s strategic and early focus on users allowed the team to build an incredibly strong foundation that can weather cycles by providing an increasingly in-demand service to companies implementing various sustainable initiatives,” says Samantha Lewis, principal at Mercury, in the release. “We are excited to support Topl in this pivotal growth period.”

The round included two new international investors in Topl. Republic Asia is a newly launched arm of private investing platform Republic that is focused on fintech and web3 solutions. Houstonian Youngro Lee leads the division as executive vice president at Republic and head of Republic Asia and will join Topl's board to assist with international expansion.

“Sustainability and climate considerations are no longer mere luxuries, but an absolute necessity for companies to contribute to global finance and commerce,” Lee says in the release. “Topl will make it easier than ever for any organization around the world to harness the power of blockchain to track and monetize their positive environmental impact.”

Cryptology, with its European operations, also brings Topl key international presence.

"It's been an honor to see Topl progress from when it first entered Iconic Lab's accelerator program back in 2018 to where it is today," says Patrick Lowry, CEO of Cryptology, in the release. "Cryptology is hyper-focused on driving crypto adoption in an impact-focused, sustainable manner. We are proud to add Topl to our portfolio of companies and excitedly await Topl's network decentralization."

In addition to increasing its international impact, Topl will reportedly continue to build out its blockchain and technology. Per the release, Topl expects to launch a traceability platform for ethically and sustainably sourced products later this year.

Topl, which launched a grant program to fund Web3 startups and developers with inclusive and sustainable solutions, plans to announce its first 20 grant awards early next year. The grant recipients will also receive development, go-to-market, and fundraising support from Topl's team and network.

Blockchain growth and funds reaching new groups of people — this Houston investor has VC trends for 2022. Image via Getty Images

Houston expert shares 3 venture capital predictions for 2022

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New Year’s resolutions are all well and good, but this year, in true VC fashion, I’m making some New Year’s predictions, too. Though I’m not an oracle, I am an investor, which means I use what I learned in the past to guide my decisions in the present. With that in mind, here are three predictions for 2022.

Blockchain’s gaining ground and will be used to solve some of the world’s toughest problems.

This year, expect to see more corporates adopting blockchain. Blockchain is the digital recordkeeping technology that cryptocurrencies depend on, but its impact goes far beyond powering Bitcoin and giving speculative traders something to do. It allows corporations to do everything from transferring data more securely, to tackling supply chain issues (a problem we became all too familiar with last year), to eradicating the double spending problem in carbon credit markets and helping businesses prove their ESG claims.

When it comes to environmental, social, and governance (ESG) investing, blockchain will be a major part of the solution to a myriad of pressing issues, from climate change to social unrest.

On the environmental front, expect blockchain to be an essential tool in our quest to get to net zero: the technology allows companies to better track and trace their carbon footprint, and will lead to greater accountability across industries. It also has the potential to bring much-needed transparency to the global food supply chain, so that consumers can make informed decisions about the products they’re buying.

So much of the social unrest we are experiencing today is the result of power concentrated in too few hands and the lack of access to financial services. Blockchain is already being used to help the unbanked to improve their credit scores through microloans and to provide farmers with crop insurance. In 2022, blockchain will continue to democratize access to capital and unlock opportunities for retail investors to build wealth on their own terms.

As of last fall, 85 percent of the market cap of digital assets was driven by retail investor interest. In the first half of 2021 we saw a 100 percent increase in crypto users and a 700 percent growth in the DeFi token market cap. And there’s no signs of a slowdown. In December, Visa announced they were launching a “crypto advisory practice” to help their clients understand this next frontier. Visa’s announcement is just one of many announcements from major firms embracing the notion that digital assets will soon be a vital thread in the broader financial ecosystem.

If you let 2021 pass without getting educated on blockchain, 2022 is the time to dive deep.

The tech industry knows entrepreneurs can build from anywhere, and they’re doubling down on geographic diversity.

Until a few years ago, the conventional wisdom was that you couldn’t build a successful startup from anywhere but Silicon Valley. In 2022, entrepreneurs will build — and build successfully — in cities across the country, basing themselves in communities that best align with not only their industries, but their interests.

Rising innovation hubs will succeed based on how well they distinguish themselves from their counterparts. Want to build in a vibrant metropolitan area which is also the most diverse city in America and has built an inclusive startup ecosystem? Join us in Houston. Want to join a thriving ecosystem that is close to nature activities and still (somewhat) affordable? Move to Austin.

Though this geographic diversification started pre-pandemic, COVID-19 sped it up. In 2021, for the first time in more than 10 years, the percentage of seed capital going to Bay Area startups fell under 30 percent. The possibility of building an innovation community anywhere is finally becoming a reality as the pandemic years forced digital adoption and innovative thinking.

The upshot: if you’re a founder looking to lay roots, you can find the soil that’s best for your growth.

For women, Black and Latinx founders, the needle is moving in 2022.

For years now, a few in the tech industry have been working hard to diversify capital allocation, planting seeds aimed at getting more capital into the hands of women, Black and Latinx founders. In 2022, those seeds will sprout.

Two years ago, only 5.6 percent of VC firms in the U.S. were women-led, and of those 73 percent had been founded in the previous five years. But venture is a long game so investing initiatives can take years. When women are writing the checks, they tend to fund more diverse teams, which, in turn, routinely outperform teams with no women or people of color.

The work, in short, is paying off. In 2021, venture firms founded by women were on pace to bring in over 7 billion dollars, nearly one billion dollars over the previous high, from 2019. Expect the trend to continue into this year.

In summary, expect 2022 to be a blockbuster year for blockchain utility, and enjoy the increased capital deployed into previously underrepresented founders living all across America. We’ll check back in 2023 to see how I did.

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Samantha Lewis is principal at Houston-based venture capital firm, Mercury Fund.

These two innovators have linked up for a new ESG offering. Photos courtesy

2 Houston blockchain companies connect on ESG initiative

team work

Two Houston-based startups specializing in blockchain technology have announced a collaborative within the Environmental, Social and Governance, or ESG, space.

Data Gumbo and Topl have partnered up to offer companies a private-public blockchain solution for ESG reporting. The collaborative solution, according to a news release, allows for public-facing, accurate, and immutable ESG progress reports that are accessible to outside audiences and stakeholders, including public analysts, investors, governments, and more.

"As companies today face mounting pressure to report timely and accurate ESG data, including performance and progress, they need the right tools to collect, standardize and automate reporting while preserving security for sensitive data," says Andrew Bruce, CEO and founder of Data Gumbo, in the release. "For the first time, this partnership offers companies total control of their accurate ESG data, allowing them to publish and report metrics in whatever manner best suits them satisfying investors', regulator agencies' and other stakeholders' desires."

The tool will gather business operation and transaction data and compare it to defined standards. This enables the complete review and certification of ESG metrics by auditors using GumboNet ESG. Once the environmental impact is determined, the company can easily share data recorded on Topl's public-facing blockchain.

"Companies can now comprehensively collect ESG data and report to private entities and public audiences," says Kim Raath, founder and CEO of Topl. "This partnership combines the power of our two complementary solutions to support a new level of transparency for companies that desire to showcase their fully verifiable progress on crucial ESG metrics."

Both companies have been players within the ESG space. Data Gumbo launched GumboNet ESG, a sustainability measurement solution that can pull together a company's operational data to ESG standards reporting, in March. Topl's blockchain-as-a-service offering rolled out just a few weeks later.

Siloed data, lack of consistency, and confusing regulations are all challenges blockchain can address. Photo via Getty Images

Houston expert: Blockchain is the key to unlocking transparency in the energy industry

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Houston has earned its title as the Energy Transition Capital of the world, and now it has an opportunity to be a global leader of technology innovation when it comes to carbon emissions reporting. The oil and gas industry has set ambitious goals to reduce its carbon footprint, but the need for trustworthy emissions data to demonstrate progress is growing more apparent — and blockchain may hold the keys to enhanced transparency.

Despite oil and gas companies' eagerness to lower carbon dioxide emissions, current means of recording emissions cannot keep pace with goals for the future. Right now, the methods of tracking carbon emissions are inefficient, hugely expensive, and inaccurate. There is a critical need for oil and gas companies to understand and report their emission data, but the complexity of this endeavor presents a huge challenge, driven by several important factors.

Firstly, the supply chain is congested with many different data sources. This puts tracking initiatives into many different silos, making it a challenge for businesses to effectively organize their data. Secondly, the means of calculating, modeling, and measuring carbon emissions varies across the industry. This lack of consistency leaves companies struggling to standardize their outputs, complicating the record-keeping process. Finally, the regional patchwork of regulations and compliance standards is confusing and hard to manage, resulting in potential fines and the headaches associated with being found noncompliant.

Better tracking through blockchain

When it comes to tracking carbon emissions, the potential for blockchain is unmatched. Blockchain is an immutable ledger, that allows multiple parties to securely and transparently share data in near real time across the supply chain. Blockchain solutions could be there at every step of operations, helping businesses report their true emissions numbers in an accurate, secure way.

Oil and gas companies are ready to make these changes. Up to now, they've been using outdated practices, including manually entering data into spreadsheets. With operations spread across the world, there is simply no way to ensure that numbers have been accurately recorded at each and every point of action if everything is done manually. Any errors, even if they're accidental, are subject to pricey fines from regulatory agencies. This forces businesses into the costly position of overestimating their carbon emissions. Instead of risking fines, energy companies choose to deflate their carbon accomplishments, missing out on valuable remediation credits in the process. In addition, executives are forced to make decisions based on this distorted data which leaves projects with great potential to cut carbon emissions either underfunded or abandoned entirely.

In conversations with the super majors, they've reported that they have cut emission reduction estimates by as much as 50% to avoid over-reporting. This is anecdotal, but demonstrates a real problem that results in slower rates to meet targets, missed opportunities, and unnecessary expenditures.

There are so many opportunities to integrate blockchain into the energy industry but tackling the carbon output data crisis should come first. Emissions data is becoming more and more important, and oil and gas companies need effective ways to track their progress to drive success. It's essential to start at the bottom and manage this dilemma at the source. Using blockchain solutions would streamline this process, making data collection more reliable and efficient than ever before.

Houston is on the right track to lead the world in energy innovation — local businesses have made impressive, action-driven efforts to make sure that our community can rightfully be called the Energy Capital of the World. The city is in a great position to drive net-zero carbon initiatives worldwide, especially as sustainability becomes more and more important to our bottom lines. Still, to maintain this command, we need to continue to look forward. Making sure we have the best data is critical as the energy world transitions into the future. If Houston wants to continue to be a leader in energy innovation, we need to look at blockchain solutions to tackle the data problem head on.

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John Chappell is the director of energy business development at BlockApps.

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Houston health orgs lost $58M in canceled, stalled NIH grants, new report shows

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Seven institutions in the Houston area have lost nearly $60 million in grants from the National Institutes of Health (NIH) that were aimed at funding health research.

The Science & Community Impacts Mapping Project identified 37 cancelled or frozen NIH grants worth $58.7 million that were awarded to seven Houston-area institutions. The University of Texas Medical Branch at Galveston suffered the biggest loss — five grants totaling nearly $44.8 million.

The Harvard University T.H. Chan School of Public Health reported in May that over the previous several months across the U.S., the federal government had terminated roughly 2,100 NIH research grants worth around $9.5 billion.

In August, the U.S. Supreme Court derailed researchers’ efforts to reinstate almost $2 billion in research grants issued by NIH, according to Nature.com.

“Make no mistake: This was a decision critical to the future of the nation, and the Supreme Court made the wrong choice. History will look upon these mass National Institutes of Health (NIH) research grant terminations with shame,” the American Association of Medical Colleges said in a statement. “The Court has turned a blind eye to this grievous attack on science and medicine, and we call upon Congress to take action to restore the rule of law at NIH.”

Texas health researchers rely heavily on NIH grants and contracts. During the federal government’s 2024 budget year, NIH awarded $1.9 billion in grants and contracts that directly supported 30,553 jobs and more than $6.1 billion in economic activity in Texas, according to the United for Medical Research coalition.

Here’s a rundown of the cancelled and frozen NIH grants in the Houston area.

University of Texas Medical Branch at Galveston: Five cancelled or frozen grants, totalling approximately $44.8 million in funding lost.
Baylor College of Medicine: 17 grants cancelled or frozen, totalling approximately $8 million in funding lost
University of Houston. Five cancelled or frozen grants, totalling approximately $3.7 million in funding lost
University of Texas Health Science Center Houston: Five grants cancelled or frozen, totaling approximately $1.1 million in funding lost.
University of Texas MD Anderson Cancer Center: Two grants cancelled or frozen, totalling $831,581 in funding
Rice University. Two grants cancelled or frozen, totaling $254,645 in funding lost
Prairie View A&M University: One grant cancelled or frozen, totalling $31,771 in funding lost

Magnolia milkshake shop blends up a sweet partnership with Comcast Business

Treat Takeover

Comcast Business (CB) powers businesses of every size with fast and reliable phone, mobile, internet, cybersecurity, and television services. Houston’s local CB team also stands behind entrepreneurs and small businesses, knowing they’re the heart of thriving communities: driving growth, sparking innovation, and creating jobs close to home.

Magnolia hometown favorite Chill Milkshake and Waffle Bar was the site of Comcast Business’ latest road trip to treat customers to a cool and refreshingly free treat, picking up the tab for several hours for nearly 200 customers.

Chill Milkshake and Waffle Bar, Magnolia Surprise! Your order is free.Photo courtesy of Comcast Business

“We aren’t just about products and services, we are about building partnerships in our community and playing a supporting role, it means the world to us,” says Heather Orrico, vice president of Comcast Business in Texas.

Chill Milkshakes and Waffle Bar, located at 6606 FM 1488 Rd., Suite 110 in Magnolia, opened in December 2020 and has been a Comcast Business customer for the last two years.

Who would’ve thought you’d need WiFi to serve milkshakes and waffles? Technology runs almost every part of the business.

“In a world where people rarely carry cash anymore, we have to be able to process payments electronically and promptly. Otherwise, the day stops. Nobody wants that,” says owner Jeanie Rosett. “We count on WiFi to efficiently complete transactions and guest payments, process online orders, and keep our music lively.”

It's no surprise that Chill’s array of flavors and dedication to making the perfect milkshake (along with waffles and sandwiches) have earned them the title of best milkshake in Texas by USA Today, followed by ranking sixth-best milkshake in the nation by Travel + Leisure.

Chill’s family environment creates a space where everybody can hang out, or the kids can come on their own and parents feel they are safe. “Good WiFi keeps them connected,” says store manager Laura Mabery. “We also have people who stop in with their laptop, have a hotdog and a shake while continuing to work. We live in a world that needs to be connected! You can do that at Chill-Magnolia.”

A sticker in the window lets everyone know.Photo courtesy of Comcast Business

While Mabery and Rosett appreciate the upgrade in customer service and reliability that was missing from their previous service provider, they were honored and pleasantly surprised to be selected for the recent Comcast Business “take over.”

“It's reassuring to know that our internet needs are taken care of, but that Comcast Business also supports us as a hometown commodity,” says Mabery. “And a free Chill milkshake...what's not to love about that?"

Houston robotics co. unveils new robot that can handle extreme temperatures

Hot New Robot

Houston- and Boston-based Square Robot Inc.'s newest tank inspection robot is commercially available and certified to operate at extreme temperatures.

The new robot, known as the SR-3HT, can operate from 14°F to 131°F, representing a broader temperature range than previous models in the company's portfolio. According to the company, its previous temperature range reached 32°F to 104°F.

The new robot has received the NEC/CEC Class I Division 2 (C1D2) certification from FM Approvals, allowing it to operate safely in hazardous locations and to perform on-stream inspections of aboveground storage tanks containing products stored at elevated temperatures.

“Our engineering team developed the SR-3HT in response to significant client demand in both the U.S. and international markets. We frequently encounter higher temperatures due to both elevated process temperatures and high ambient temperatures, especially in the hotter regions of the world, such as the Middle East," David Lamont, CEO of Square Robot, said in a news release. "The SR-3HT employs both active and passive cooling technology, greatly expanding our operating envelope. A great job done (again) by our engineers delivering world-leading technology in record time.”

The company's SR-3 submersible robot and Side Launcher received certifications earlier this year. They became commercially available in 2023, after completing initial milestone testing in partnership with ExxonMobil, according to Square Robot.

The company closed a $13 million series B round in December, which it said it would put toward international expansion in Europe and the Middle East.

Square Robot launched its Houston office in 2019. Its autonomous, submersible robots are used for storage tank inspections and eliminate the need for humans to enter dangerous and toxic environments.

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This article originally appeared on EnergyCapitalHTX.com.

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houston innovators podcast Episode 165

money moves

guest column

Blockchain’s gaining ground and will be used to solve some of the world’s toughest problems.

The tech industry knows entrepreneurs can build from anywhere, and they’re doubling down on geographic diversity.

For women, Black and Latinx founders, the needle is moving in 2022.

team work

guest column

Better tracking through blockchain

CultureMap Emails are Awesome

research cuts

Treat Takeover

Hot New Robot