Here's what startups can learn from Houston exits

Success stories

At Houston Exponential's second annual HX Capital Summit, four Houston entrepreneurs turned investors discussed their lessons learned. Getty Images

One way to evaluate a city's innovation ecosystem is by the number of successful exits they've had. From startups being acquired by big companies to bringing in a private equity partner, exits can put a city on the map.

Houston has quite a few exits under its belt, and some of those entrepreneurs have stayed in town to fund future success stories. At Houston Exponential's second annual HX Capital Summit, four entrepreneurs discussed their exits, providing key lessons learned for entrepreneurs.

Houston has some perks. 

One thing moderator Samantha Lewis, director at the GOOSE Society of Texas, asked each panelist was what made each entrepreneur start their companies in Houston — and furthermore, what made them stay here after their successful exit.

Panelist Ashok Gowda co-founded and served as COO at Visualase Inc., a real-time tissue monitoring system that exited to Medtronic for over $100 million. He now leads Biotex, a Houston-based medical technology investment firm and accelerator, as president and CEO.

For Gowda, Houston was obviously a key market for med tech, but it provided something even more once he reached the commercialization phase of a product.

"From a commercial standpoint, once the technology became commercial, it was an ideal location," Gowda says. "We were traveling all across the US, and it was a nice hub. We're right in the center of the country, and you can get to either coast very quickly."

The panel also agreed that the quality of life in Houston played a major role in settling down.

You might need to rethink your executive team. 

The panel full of venture capitalists of course touched on the ability to fundraise in Houston, as each panelist had been on both sides of the table. For Gowda, it's pretty simple.

"If you're struggling to raise money, you either have a bad idea or the wrong team," he says, adding that if you really believe in your idea, take a good hard look at who's at the leadership level of your team.

Talent is still a challenge in Houston.

Of course, if you do identify a problem within your team, finding the right leader for your technology might be difficult in Houston.

Keith Kreuer, who was also on the panel, is principal at RedHouse Associates, a group of angel investors that invest like a find would, but without having a fund. Between Kreuer and his team, they were involved in 10 startups before forming the investment group.

"We could find developer and sales talent here, but to get to that higher executive talent, we had to go out to other places," Kreuer says.

However, not all of the panelists agreed that talent was a major challenge they faced. Some noted that they got lucky with the talent they found.

Don Kendall, CEO of Kenmont Capital Partners, came to Houston to run a power company and family office. He turned $100,000 into $1.6 billion and now is a member of GOOSE.

"We had no problem getting the engineering talent," Kendall says. "We really found Houston to be a good environment, and it's only just continued to improve."

Playing to Houston's strengths might be key to success.

For Gray Hall, managing director at Austin-based BuildGroup, which focuses on writing big checks to a small amount of software startups, he knew how to play to his company's and Houston's strengths.

Hall previously served as CEO of AlertLogic, which had a private equity exit in 2013, and Hall stayed on until 2018 as the company continued to grow. He also co-founded Veracenter, which had a strategic exit after growing to $80 million in annual revenue.

"The common theme across both companies and why we were able to grow is real simple: Customer and people," Hall says.

Houston might be one of the country's best kept secrets when it comes to midmarket activity, Hall notes — midmarket companies being defined as those with $50 million to $1 billion in revenue.

"What Houston doesn't get enough credit for is the midmarket in Houston, which I think is tremendous," Hall says. "It's as strong as anywhere else in the country."

AlertLogic was able to tap into this midmarket to quickly grow its client base.

Something else that differentiates Houston from other cities is its culture, which is less focused on the glitz and glam and more focused on hard work.

"Engage with people that have a credible story and a credible plan to solve a problem," he says.

Houston is growing. 

One thing each of the entrepreneurs agreed on is that the city is only growing its resources and quality of startups.

"I see Houston as sort of a startup in the startup world," Kreuer says. "And, what we're trying to do is grow and catch up to the West Coast and the East Coast, but I think Texas as a whole is going to be pretty powerful, and Houston is going to be a central part of that mainly because we have the markets here, and the people in the area and the talent to do that."

As Houston's success stories become more frequent, this provides an avenue for more entrepreneurs turned investors.

"When you've done it before, you've learned the lessons, and you feel like you can do it again and again," Gowda says. "That's what we're trying to do. You see all the possibilities here."

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

New ERCOT dashboards let Houstonians check energy supply in real-time

power check

With winter temperatures and last year's freeze still top of mind for many Texans, the Electric Reliability Council of Texas, or ERCOT, has rolled out new dashboards to help you keep tabs on the energy supply in real-time.

Local may not have heard of ERCOT until the winter storm in February 2021 that would go on to take the lives of 246 people after the freeze overwhelmed the power grid and left millions freezing in the dark.

Since that storm, anxiety has been high. But these dashboards may help Texans get a gauge on what we're dealing with at any given moment.

The ERCOT site features find nine different dashboards on the Grid and Market Conditions page. Each dashboard has a timestamp of when it was last updated and if you select "Full View," you'll get a detailed explanation of what the graphs mean.

If things are normal, the grid will be green. But if it's black, that means we're in an energy emergency level 3, so expect controlled outages. Energy conservation would also be critical.

------

Continue reading and watch the full video on our news partner ABC13.

3 Houston innovators to know this week

who's who

Editor's note: In this week's roundup of Houston innovators to know — the first of this new year — I'm introducing you to three local innovators across industries — from startup development to energy transition — recently making headlines in Houston innovation.

Joey Sanchez, senior director of ecosystems at the Ion Houston

Joey Sanchez joins the Houston Innovator Podcast to discuss his new role at The Ion Houston. Photo via LinkedIn

Joey Sanchez, who previously served as director of corporate engagement at Houston Exponential, has been in his new role as senior director of ecosystem at The Ion for about three months now.

"I'm focusing specifically on the communities of entrepreneurs, startups, investors — and trying to bridge connections among them," Sanchez says on the Houston Innovators Podcast. "This is the biggest challenge in Houston and we want to flip that with density. Density is really the key to solving connections."

Sanchez joined the Houston Innovators Podcast and shares about what gets him so excited about Houston innovation on the show. Click here to listen and read more.

Nisha Desai, founder and CEO of Intention

Four climatetech-focused individuals have been named to Greentown Lab's board. Photo via LinkedIn

Greentown Labs named new board members, including two community board members to act as liaisons between startups and Greentown Labs. Greentown Houston's appointed representation is Nisha Desai, founder and CEO of Intention, and community member.

Desai's current startup, Intention, is climate impact platform for retail investors, and she has previously worked at six energy-related startups including Ridge Energy Storage, Tessera Solar, and ActualSun, where she was co-founder and CEO. She's also worked in a leadership role at NRG Energy and spent several years as a management consultant with the energy practice of Booz Allen Hamilton — now Strategy&, a PWC company.

"I'm honored to join the board of Greentown Labs as a representative of the startup community," she says in the release. "This is a pivotal time for climate and energy transition. I look forward to working with the rest of the board to expand the collective impact of the Greentown Labs ecosystem." Click here to read more.

Moji Karimi, co-founder and CEO of Cemvita Factory

Moji Karimi joins InnovationMap to discuss how Cemvita Factory has deployed its recent investment funding and what's next for the company and Houston as a whole when it comes to biomanufacturing. Photo courtesy of Cemvita

Moji Karimi and his sister Tara had the idea for a company that could transform carbon emissions and mitigate new damage to the environment. Only, it seems, they were a bit ahead of their time.

Houston-based Cemvita Factory, founded in 2017, uses synthetic biology and take carbon emissions and transform them into industrial chemicals. However, it's only been since recently that the conversation on climate change mitigation has focused on carbon utilization.

"I think people are realizing more about the importance of really focusing on carbon capture and utilization because fossil fuels are gonna be here, whether we like it or not, for a long time, so the best thing we could do is to find ways to decarbonize them," Moji Karimi, co-founder and CEO, tells InnovationMap. "There's been this focus around carbon capture and storage, and I think the next awakening is going to be utilization." Click here to read more.

3 businesses join Houston initiative for carbon capture and storage

seeing green

Three big businesses — Air Liquide, BASF, and Shell — have added their firepower to the effort to promote large-scale carbon capture and storage for the Houston area’s industrial ecosystem.

These companies join 11 others that in 2021 threw their support behind the initiative. Participants are evaluating how to use safe carbon capture and storage (CCS) technology at Houston-area facilities that provide energy, power generation, and advanced manufacturing for plastics, motor fuels, and packaging.

Other companies backing the CCS project are Calpine, Chevron, Dow, ExxonMobil, INEOS, Linde, LyondellBasell, Marathon Petroleum, NRG Energy, Phillips 66, and Valero.

Business and government leaders in the Houston area hope the region can become a hub for CCS activity.

“Large-scale carbon capture and storage in the Houston region will be a cornerstone for the world’s energy transition, and these companies’ efforts are crucial toward advancing CCS development to achieve broad scale commercial impact,” Charles McConnell, director of University of Houston’s Center for Carbon Management in Energy, says in a news release.

McConnell and others say CCS could help Houston and the rest of the U.S. net-zero goals while generating new jobs and protecting current jobs.

CCS involves capturing carbon dioxide from industrial activities that would otherwise be released into the atmosphere and then injecting it into deep underground geologic formations for secure and permanent storage. Carbon dioxide from industrial users in the Houston area could be stored in nearby onshore and offshore storage sites.

An analysis of U.S Department of Energy estimates shows the storage capacity along the Gulf Coast is large enough to store about 500 billion metric tons of carbon dioxide, which is equivalent to more than 130 years’ worth of industrial and power generation emissions in the United States, based on 2018 data.

“Carbon capture and storage is not a single technology, but rather a series of technologies and scientific breakthroughs that work in concert to achieve a profound outcome, one that will play a significant role in the future of energy and our planet,” says Gretchen Watkins, U.S. president of Shell. “In that spirit, it’s fitting this consortium combines CCS blueprints and ambitions to crystalize Houston’s reputation as the energy capital of the world while contributing to local and U.S. plans to help achieve net-zero emissions.”