Two Houston venture capitalists weigh in on the state of startup investing in an economic climate recovering from the COVID-19 crisis. Getty Images

It's no secret that — in light of coronavirus-caused closures, market disruption, and historic unemployment — venture capitalist might be a little more hesitant to join in on a startup's investment round. Yet one Houston VC group has managed amidst the crisis — and even succeeded in closing its most recent fund.

Fitz Gate Ventures, which operates out of Houston but with the support of Princeton University, announced the closing of its Fund II on May 5. Focusing on seed and pre-seed rounds, co-founders and managing directors Mark Poag and Jim Cohen will be looking for startups across industries — usually with some revenue and customer base — to write around $500,000 checks to.

At a virtual panel event hosted by Houston Exponential, the investors say they have appreciated focusing on smaller deals in times like these — it's allowed them to work closely with their portfolio of 15 startups, two of which (Cheers and Spruce) have roots in Houston.

"We are definitely more hands-on with our founders," Cohen says on the panel, noting that it feels like they are having board meetings daily — virtually, of course.

Most of these meetings, Poag explains, are focusing on making sure the portfolio startups have enough runway with their cash reserves to make it at least through the end of the year without any new sales. Of course, that's meant cutting salaries and employees and finding other options to operate in a lean way.

Fitz Gate also has stayed in touch virtually with its Friends of Fitz group — a unique network of Princeton-related professionals (such as faculty, fellow VCs, domain experts, etc.) that give the investors and their portfolio companies a strategic advantage.

While the video conferences are useful to stay in touch with existing portfolio companies, Poag says he — as well as other VCs — might be wary of making new investments in this capacity.

"We haven't invested in any new companies since the COVID situation, but it will be interesting to see if we and other venture capital firms get comfortable with making investments without an in-person meeting," says Poag on the panel.

Generally, Cohen says he has observed a different investment environment since the beginning of March, and there's no clear indication when things will change.

"I think in the short-term, investing will be slower. Basically, people are still trying to figure out what's going on," Cohen says, noting how, in March, the tides seemed to change every 24 hours. "Now, things have started to slow down, but the ground is still shifting beneath our feet. I think most venture investors are proceeding cautiously."

Something else to keep an eye on, as the Fitz Gate founders have experienced, is that startups are making changes to their products in order to provide a more relevant offer to customers. One of the fund's portfolio companies is Houston-founded Spruce, which recently started offering disinfecting deals along with its concierge services to apartment dwellers.

"None of our companies have pivoted to change anything they are doing fundamentally to take advantage of the situation," says Cohen, citing some supply chain software startups and a charity-based startup that have also seen business success during the COVID-19 crisis.

However, approaching VCs for the first time is now a different story, amidst the crisis. While the Fitz Gate founders explain that they open and respond to every email inquiry from startups, that's not the case for most VCs who prefer a warm introduction — but maybe not even that considering the current economic climate.

"If you're approaching a venture investor today, you might get a bit of a weird look," Cohen says of startups looking to fundraise.

On the virtual panel, the duo shared some insight on their passion for venture funding, as well as some general advice for startups. One key takeaway from the investors was a reminder that most VCs are funding between 1 and 2 percent of deals that come across their table.

"Don't get discouraged," Cohen says. "Any venture fund you talk to, they're not geniuses. They are operating on very limited information about whatever it is you pitched them in a really short fashion."

While it is disheartening to hear a "no" from an investor, it doesn't mean the startup's idea or product isn't valid.

In wrapping up the call, Cohen remarks on the environment for Houston innovation. While he admits the ecosystem lacks access to funding, he observes that this will change in a matter of time.

"It's amazing how many startups in Houston — and the support infrastructure," Cohen says, noting startup development organizations like The Ion, The Cannon, and more. "So much going on in this ecosystem, so I think, in that sense, it's an incredibly vibrant place to be as a founder."

From restaurant finding apps to a healthy food startup — these are the lifestyle startups to watch in Houston. Getty Images

5 Houston lifestyle startups changing the way you live, work, and play

Companies to watch

While sometimes it seems like a lot of the Houston innovation landscape is energy and medical tech companies, there are several lifestyle-focused startups that fly under the radar. Whether it's a fizzle cocktail creator — or a cure for a hangover from said fizzy cocktail — these five Houston startups are ones to watch.

Cheers

Cheers, which has its office out of The Cannon, serves up pre-drinking pills to prevent any day after regrets. Courtesy of Cheers

While the sharks on Shark Tank didn't bite, Brooks Powell's Houston-based startup, Cheers, went on to close a $2.1 million seed round lead by NextView Ventures, which has the likes of TaskRabbit, thredUP, and Letgo among its portfolio. The new investment, Brooks says, has been helping the company rebrand from Thrive, its original moniker, to Cheers.

Powell thought up the company when he was a sophomore at Princeton University. He came across the science surrounding his product's key ingredient, Dihydromyricetin, a natural extract — like caffeine to coffee — that had been identified as an anti-alcohol treatment in 2012 following experiments on the effects on rats.

"I started working with some of my professors and asking them if it was safe and would it be effective," Powell says. Read more about Cheers' growth and origin story here.

Work & Mother

Work & Mother gives new moms a save, stylish place to pump during the workday. Courtesy of Work & Mother

Abbey Donnell has been advocating for new mothers long before she had any babies of her own. Though, as of a few weeks ago, the founder of Work & Mother claims a new title of mom to her newborn son.

While laws regulate employers to have private nursing rooms available for new moms, most either offer sub-par conditions or worse — none at all.

"There were constant stories about [women] being told the use the IT closet, or the conference room, or the bathroom or their cars," Donnell tells InnovationMap. "Some of them were pretty big oil and gas firms companies that should've had the resources and space to do better than that."

Work & Mother offers a solution that solves the problem on both sides: A suite of nursing rooms in a downtown office building where business can purchase memberships for employees — and new moms can have a stylish, relaxing place to pump. Read more about Work & Mother here.

Crityk

Crityk's main goal is to be a marketing asset to restaurants. Getty Images

What started as Sumit Sikka's mission to find the best Moscow Mule in Santa Monica has turned into a restaurant locating tool that doubles as a marketing platform for eateries. Houston-based Crityk launched last fall and now serves Houston and Austin restaurants.

"That was kind of the first big pivot," Sikka says. "First, we had an app based on user content. Then we pivoted to have content curated by the restaurant. For the first time ever, the restaurant gets to create their own profile."

There are hundreds of restaurants from Houston on the app now. Read more about Crityk here.

My Drink Bomb

What started as an idea to get her kids to drink more water has turned into a profitable party favor company. Courtesy of My Drink Bomb

Chloé Di Leo was just trying to encourage her kids to drink more water is now by creating fizzing, flavored drink mixes. She sent some extras to school with her kids, who then came home that day with $40.

"Our kids took some to school and came home with some pocket change," Di Leo tells InnovationMap. "They weren't supposed to sell it, but the kids liked it."

Di Leo realized there was a market for these mixes — specifically for adult beverages. She launched My Drink Bomb LLC in Houston at the beginning of summer 2018 and tells InnovationMap that the product was inspired by bath bombs, fizzing once added to a beverage. She created the company with her husband, William Roberts. Together, they own a few local businesses, and Di Leo also is also a jewelry designer at her own store, Chloé Di Leo & Co. Read more about My Drink Bomb here.

The Blonde Pantry

The Bayou City has its own Blue Apron-style startup with locally sourced produce. Courtesy of The Blonde Pantry

While Marla Murphy, a local entrepreneur and nutritionist, has helped Houstonians make healthy decisions with her food blog and consulting company for years, she wasn't sure she was doing enough. Now, the Houstonian has expanded from her meal delivery service to her own store front for locally sourced meals and meal kids.

Murphy relaunched her company, The Blonde Pantry, in March of last year she says to create the only local meal delivery service for the greater Houston area. She opened her store at 2800 Kirby Dr. in February. Read more about The Blonde Pantry here.

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Austin company to bring AI-powered school to The Woodlands

AI education

Austin-based Alpha School, which operates AI-powered private schools, is opening its first Houston-area location in The Woodlands.

The 8,000-square-foot school, scheduled to be ready for the 2026-27 academic year, initially will serve students in kindergarten through eighth grade. Alpha says the school will offer “open workshop spaces and innovative classrooms that support personalized instruction, core academics, leadership development, and real-world life skills.”

Alpha sets aside two hours each school day for the AI-driven, self-paced study of core subjects like math, reading and science. The rest of each school day consists of life-skills workshops focusing on topics such as leadership and financial literacy.

Alpha’s school in The Woodlands has begun accepting applications for the 2026-27 school year. Annual tuition costs $40,000.

“The Woodlands is one of the most dynamic, forward-thinking communities in Texas, and Alpha is proud to bring

an innovative educational model that complements its strong academic foundation,” says Rachel Goodlad, head

of expansion for Alpha.

Founded in 2014, Alpha School combines adaptive technology-driven instruction with immersive life-skills workshops. Its model emphasizes mastery-based learning in core subjects alongside development of communication, critical thinking, financial literacy and leadership skills. It operates more than 15 schools across the country.

Elsewhere in Texas, Alpha operates schools in Austin, Brownsville, Fort Worth and Plano. Alpha also operates 12 Texas Sports Academy campuses in Texas, including locations in Houston, Pearland and Richmond, along with a NextGen Academy esports school in Austin, a school for gifted students in Georgetown, and lower-cost Nova Academy campuses in Austin and Bastrop.

Alpha has fans and critics. While supporters tout students’ high achievement rates, detractors complain about the high tuition and the AI-influenced depersonalization of education.

“Students and our country need to be in relationship with other human beings,” Randi Weingarten, president of the American Federation of Teachers, a teachers union, tells The New York Times. “When you have a school that is strictly AI, it is violating that core precept of the human endeavor and of education.”

Alpha co-founder MacKenzie Price, a podcaster and social media influencer, doesn’t share Weingarten’s views.

“Parents and teachers: We need to embrace this change,” Price wrote after President Trump signed an executive order promoting AI in schools.

The Times notes that Alpha doesn’t employ AI as a tutor or a supplement. Rather, the newspaper says, AI is “the school’s primary educational driver to move students through academic content.”

Houston researcher secures $1.7M to develop drug for aggressive form of breast cancer

cancer research

A University of Houston researcher has joined a $3.2 million effort to develop a new drug designed to attack a cancer-driving protein commonly found in triple-negative breast cancer.

Triple-negative breast cancer (TNBC) is one of the most difficult-to-treat forms of cancer and accounts for 10 percent to 15 percent of all breast cancer cases. The disease gets its name because tumors associated with it test negative for estrogen receptors, progesterone receptors and excess HER2 protein, making it difficult to target. Due to this, TNBC is often treated with general chemotherapy, which can come with negative side effects and drug resistance, according to UH.

UH College of Pharmacy research associate professor Wei Wang is developing a drug that can target the disease more specifically. The drug will target MDM2, a protein often overproduced in TNBC that also contributes to faster tumor growth.

Wang is working on a team led by Wei Li, director of the University of Tennessee Health Science Center College of Pharmacy’s Drug Discovery Center. She has received $1.7 million to support the research.

Wang and UH professor of pharmacology and toxicology Ruiwen Zhang have discovered a compound that can break down MDM2. In early laboratory models, the compound has shown the ability to shrink tumors.

Wang and Zhang will focus on understanding how the treatment works and monitoring its effectiveness in models that closely mirror human disease.

“We will study how the drug targets MDM2 and evaluate the most promising drug candidates to determine effective dosing, understand how the drug behaves in the body, compare it with existing treatments and assess early safety,” Wang said in a news release.

Li’s team at the University of Tennessee will be working on the chemistry and drug design end of the project.

“This work could lead to an entirely new class of therapies for triple-negative breast cancer,” Li added in the release. “We’re hopeful that by directly removing the MDM2 protein from cancer cells, we can help more patients respond to treatment regardless of their tumor type.”