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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Oxy's $1.3B Texas carbon capture facility on track to​ launch this year

gearing up

Houston-based Occidental Petroleum is gearing up to start removing CO2 from the atmosphere at its $1.3 billion direct air capture (DAC) project in the Midland-Odessa area.

Vicki Hollub, president and CEO of Occidental, said during the company’s recent second-quarter earnings call that the Stratos project — being developed by carbon capture and sequestration subsidiary 1PointFive — is on track to begin capturing CO2 later this year.

“We are immensely proud of the achievements to date and the exceptional record of safety performance as we advance towards commercial startup,” Hollub said of Stratos.

Carbon dioxide captured by Stratos will be stored underground or be used for enhanced oil recovery.

Oxy says Stratos is the world’s largest DAC facility. It’s designed to pull 500,000 metric tons of carbon dioxide from the air and either store it underground or use it for enhanced oil recovery. Enhanced oil recovery extracts oil from unproductive reservoirs.

Most of the carbon credits that’ll be generated by Stratos through 2030 have already been sold to organizations such as Airbus, AT&T, All Nippon Airways, Amazon, the Houston Astros, the Houston Texans, JPMorgan, Microsoft, Palo Alto Networks and TD Bank.

The infrastructure business of investment manager BlackRock has pumped $550 million into Stratos through a joint venture with 1PointFive.

As it gears up to kick off operations at Stratos, Occidental is also in talks with XRG, the energy investment arm of the United Arab Emirates-owned Abu Dhabi National Oil Co., to form a joint venture for the development of a DAC facility in South Texas. Occidental has been awarded up to $650 million from the U.S. Department of Energy to build the South Texas DAC hub.

The South Texas project, to be located on the storied King Ranch, will be close to industrial facilities and energy infrastructure along the Gulf Coast. Initially, the roughly 165-square-mile site is expected to capture 500,000 metric tons of carbon dioxide per year, with the potential to store up to 3 billion metric tons of CO2 per year.

“We believe that carbon capture and DAC, in particular, will be instrumental in shaping the future energy landscape,” Hollub said.

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

New app by Sports Illustrated grants access to 700 sports courts in Houston

Goal!

A new sports center booking app CatchCorner, powered by Sports Illustrated, enables sports enthusiasts in Houston to seamlessly secure a spot for a quick game without membership fees.

It soft-launched in Houston this spring and, according to co-founder and chief operating officer Maya Azouri, has been a huge success.

"The Houston expansion has been jaw-dropping," she said. "Up until now, CatchCorner’s launch in New York City had been our most successful market, but Houston has launched on par with it."

Within a 30-day period this summer, over 30,000 users join the app, Azouri noted, adding that the app would include 700 unique recreational spaces users can choose from in the city.

"There’s a real sports culture here, with athletes of all levels from casual weekend players to competitive amateurs and even pros. The diversity of the sports community, combined with the number of high-quality facilities across the city, makes it a perfect fit for CatchCorner," she said.

CatchCorner in Houston offers bookings for basketball, volleyball, soccer, pickleball, padel, baseball, badminton, and tennis, with plans to include golf simulators and ice rink sports soon. The Zone Sports, Toros HTX, PAC Gym, and Houston Pickleball Center are among the most popular venues.

Using the app is a snap. Once you pick your sport, venues with available slots are listed including distance from you with the booking schedules in the results so there are no surprises. The slots can go fast, so occasional error messages pop up when trying to book, but it's otherwise a three-click process. CatchCorner also helpfully includes a picture of the facilities while booking.

CatchCorner announced Google integration in June that lets users book through the app directly from searches when they look up specific venues. This is slightly less intuitive to use than the app, but it does ultimately work in both mobile and desktops versions. Either way, it greatly streamlines the booking process for people who just want to schedule a quick pickup game somewhere.

"It’s especially useful for casual players or people who want to organize something on short notice," said Azouri. "Whether it’s a weekend basketball run, a weekday futsal match, or a spontaneous pickleball game with friends, CatchCorner makes it easy to coordinate without the usual logistical headaches.

"Some feedback here has been that we’re like 'Expedia for sports.' It’s because booking a flight online is that easy, booking your next game or workout should be just as simple."

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This article originally appeared on CultureMap.com.