Here's how COVID-19 has affected Houston startups — and what they need to know moving forward

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Houston's startups and small businesses have a ways to go to truly survive the pandemic, and they should move forward with these things in mind. Emilija Manevska/Getty Images

The effect of COVID-19 on Houston's economy has been unprecedented. While evidence on this impact is only beginning to emerge, it is clear that the economic damage has been particularly severe for startups and small and growing businesses in emerging markets.

Given the importance of startups and small businesses to economic growth and job creation, the survival of these businesses must be a critical part of the global recovery. For example, there are many companies that have seen this pandemic as an opportunity and started providing COVID-19-related services.

Startups are facing financial challenges on multiple fronts

According to a study from Houston Exponential's:

  • Thirty percent of startups reported a loss of revenue due to client uncertainty or delayed contracts. With almost 85 percent of startups identifying as B2B or B2C, many companies are seeing previously guaranteed revenues shrink as enterprise clients cut costs.
  • Twenty-one percent of startups reported paying talent as their biggest talent/hiring challenge. The main concern isn't with finding qualified candidates, it's being able to pay for them. Founders stated that the talent exists, but they can't afford them, or candidates aren't willing to accept a lower salary for equity.
  • Nineteen percent of startups reported a 10 to 20 percent decrease in fundraising valuations. This statistic only includes startups that were raising before and during COVID-19. And 71 percent reported no change in valuations.
  • Fourteen percent of startups reported moving to remote work as their biggest operational challenge. This includes both internal challenges as well as working with clients and prospective customers remotely.

How startups have been using funding amid COVID-19

Post $1 million in funding, the hiring focus shifts to product development.

  • Companies that have raised less than $1 million are looking to drive growth, find sources of revenue and improve their top-line metrics through biz dev, marketing, and sales.
  • Companies that have raised more than $1 million are focusing more on building out and improving their product by hiring engineers and product managers

Note: The median seed round for Houston startups over the past 3 years was $1.9 million and the median angel deal was $610,000, according to Pitchbook.

Tips for surviving the pandemic

The Small Business Continuity Checklist is a diagnostic tool to navigate times of disruption, covering two key areas of management — financial and strategic.

Financial Management Tasks

  • Address future cash shortages, for example, what expenses could be reduced, such as travel and marketing, which operations can be temporarily paused.
  • Consider steps to increase cash coming into the business such as focusing more on product lines/ services that continue to sell well.
  • Explore what grants, subsidies, or loans are available and the eligibility requirements. For example, The Cannon's CERT Program. Here's a list of resources for Houston startups and SMBs.
  • Recycle, re-purpose, or dispose of old or slow-moving stock or inventory. Explore the possibility of sales under special conditions, in order to reduce the projected losses on inventories. Review purchasing policies to prevent overspending on stock/inventory.

Strategic Management Tasks

  • Since user retention is crucial for your future growth, you can provide free subscriptions, contactless delivery, and waive fees to address a larger user base and enhance customer experience. For example, many online learning sites are providing free access to their live and video classes. Similarly, in the healthcare and fitness space, companies can provide for free virtual classes and shift to providing online consultations. Cure.Fit, fitness startup has provided free access to their live classes for 90 days. All hyperlocal delivery companies have rolled out 'contactless delivery' to minimize any contact between the customer and the delivery executive. They have also urged customers to adopt 'digital payments' to again minimize any human contact.
  • Nowadays, most startups and SMBs rely on different kinds of software, web apps, and/or mobile apps. Furthermore, many businesses are dependent on such digital platforms. If you are developing any digital solution then you should consider outsourcing some part of development/design work to app development in Houston to reduce the cost. You can find more local options from sites like Clutch or Upcity.
  • Ensure productivity while working remotely. While fostering collaboration has long been a defined way of working in most modern businesses, proximity is a variable that has always been taken for granted. Don't just limit to video conferencing, also invest in project management tools, time tracking tools, communication tools etc.
  • Build trust, support staff, and understand emotional concerns and the importance of personal well being.

Startups are the engines of progress. Small businesses are the backbone of America. Stay safe. Stay healthy. And keep persevering. No matter how severe and disruptive this crisis is, one thing is for sure, the war on this pandemic will be won.

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Colin Simpson is project manager at BlueKite Apps, which recently started its software development services in Houston.

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Axiom Space officially redomiciles its headquarters in Texas

space city

Axiom Space has claimed Houston as its operational home since 2016. And now it can call Texas its official legal headquarters, too.

The spacetech company, which is developing the first commercial space station, Axiom Station, has officially redomiciled its legal headquarters from Delaware to Texas, Axiom announced this week.

Axiom employs approximately 700 people, the majority of whom are in Texas, according to a news release. Its Assembly Integration and Test Facility was built as an anchor of the Houston Spaceport, and the company is also developing next-generation spacesuits at its Houston-based spacesuit lab.

“Texas has demonstrated, consistently and deliberately, that it wants innovative companies to thrive here and has built the policy and regulatory framework accordingly,” Jonathan Cirtain, CEO and president of Axiom Space, said in the release. “For Axiom Space, establishing Texas as both our operational and legal home puts us squarely in a state that understands our mission, supports our industry, and shares in what we are working to achieve.”

Axiom touts Texas's "financial and infrastructural commitments" to the space economy as reasons for the move, including programs and grants from organizations such as the Texas Space Exploration & Aeronautics Research Fund (SEARF), the Texas Space Commission, and the Texas A&M Space Institute.

Axiom was previously awarded a $5.5 million SEARF grant for the development of its orbital data center capabilities last year.

The news comes as energy giant ExxonMobil also announced concrete plans to redomicile its legal headquarters in Texas. Exxon's board of directors unanimously recommended redomiciling in the Lone Star State in March. The company announced this week that the move would become official July 1. The company's operational headquarters is based in Spring, Texas, a Houston-area suburb.

Houston cleantech, space startups named to World Economic Forum cohort

top honor

Two Houston-based startups have been selected to join the World Economic Forum's Technology Pioneers community.

The two-year program aims to help mission-driven, early-stage start-ups scale their innovations through multi-stakeholder initiatives, co-creating partnerships and other gatherings for community members. One-hundred startups are selected each year from around the globe, this year hailing from 23 countries and working in AI, energy, space, biotech markets and more.

Cleantech startup Vaulted Deep was one of 11 energy and climate companies to be named to the cohort. Julia Reichelstein and Omar Abou-Sayed founded the company in 2023. Its technology injects excess organic waste underground to remove carbon dioxide from the atmosphere.

Last year, Vaulted Deep inked a 12-year deal with Microsoft to remove up to 4.9 million metric tons of carbon dioxide from the environment.

The startup has earned several accolades in recent years, including a No. 3 spot on Fast Company’s list of the World’s Most Innovative Companies of 2026. It was also recently named to market intelligence and advisory firm Cleantech Group's annual Global Cleantech 100 list for a second year in a row.

"Waste management is one of the world's great invisible infrastructure systems ... The need for new infrastructure is growing as disposal challenges become more complex and regulations evolve. Vaulted is building the first new disposal pathway for organic waste in decades by putting it deep underground, permanently," the company shared in a LinkedIn post. "This year, we're joining the World Economic Forum's 2026 Tech Pioneers alongside innovators working on the many interconnected challenges shaping our future."

Houston-based Venus Aerospace was also selected to join the cohort, along with six other spacetech companies. The company was founded in 2020 by Sassie and Andrew Duggleby.

The startup specializes in next-generation rocket engine propulsion as a cleaner alternative to traditional combustion engines. The company's rotating detonation rocket engine (RDRE) burns fuel more efficiently and completed a successful high-thrust test flight last year. Venus says it’s the only company in the world that makes a flight-proven, high-thrust RDRE with a “clear path to scaled production.”

"Frontier technologies matter most when they expand what people, industries, and nations can do," Sassie Duggleby, co-founder and CEO of Venus, said in a news release. "For Venus, RDRE does not just represent a more efficient engine. It is a foundation for faster movement, more capable space systems, and new forms of connectivity across the planet. Being named a Technology Pioneer validates the potential of this technology to help shape a future where distance is less limiting."

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This article originally appeared on our sister site, EnergyCapitalHTX.com.

Houston Methodist receives record $110M gift, names future tower

historic gift

Houston Methodist has received the largest gift in the health system's history to establish new funds for neurological, neuroscience, and women’s health research and treatment.

The $110 million gift comes from Houston-based The Brockman Medical Research Foundation, which supports education and research in the science, medicine and healthcare fields. In response, Houston Methodist announced that it will name its forthcoming 26-story hospital facility the Brockman Centennial Tower.

The tower’s entrance will be named the Anna Margaret Bellows Centennial Hall to honor Anna Margaret Bellows, a young camper who died during the Camp Mystic flooding last summer.

“This extraordinary gift accelerates discovery and transforms how care is delivered,” Dr. Marc Boom, president and CEO of Houston Methodist, said in a news release. “We are grateful to The Brockman Medical Research Foundation for its incredible generosity and vision that will help change the lives of generations of patients. Naming Centennial Tower in recognition of this gift reflects the scale of this commitment and its impact on the future of neuroscience, neurological care and women’s health.”

The gift will be divided into two parts:

  • $100 million will go toward creating an innovation fund within the Houston Methodist Academic Institute and the Houston Methodist Neurological Institute
  • $10 million will be devoted to Houston Methodist's Department of Obstetrics and Gynecology

“This tremendous gift will accelerate translational research that broadens our understanding of neurological and other diseases,” Dr. Jenny Chang, president and CEO of the Houston Methodist Academic Institute, added in the release. “It will allow us to leverage state-of-the-art platforms to detect, diagnose and deliver therapeutics, keeping patient care at the center of our mission.”

The Brockman Centennial Tower is expected to open next year in the Texas Medical Center. Spanning more than 1 million square feet, it will house 400 patient beds, an expanded emergency department, new operating rooms and a rooftop garden. It will be connected to Houston Methodist's flagship Paula and Joseph C. “Rusty” Walter III Tower, which opened in 2018. The Centennial Tower was estimated to cost $1.4 billion when announced in 2022.

In addition to the news of the Brockman gift, Houston Methodist also announced this month that it has launched the Houston Methodist Center for Cell and Gene Therapy and tapped an internationally recognized scientist as its leader.

The new center is focused on discovering and developing innovative and cost-effective therapies for a variety of congenital and acquired diseases, including cancer, HIV and cardiovascular disease.

Dr. Malcolm Brenner has been named as the center's inaugural leader and will assume the role starting in October. He will work alongside scientists and support staff from Baylor College of Medicine and Texas Children's Hospital.

Brenner is a professor of pediatrics, medicine, molecular and human genetics and translational biology at Baylor College of Medicine. He is known for making early advances in using bone marrow transplantation as a form of cell therapy and in engineered immune-cell treatments for cancer and infections, according to a release from Houston Methodist.

“Malcolm Brenner is a pioneer in the field of cell and gene therapy and is uniquely qualified to lead Houston Methodist’s research efforts in this field,” Chang added. “His vision and leadership will play a pivotal role in advancing our work in this space.”

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