Historic downtown Houston building plans to expand inclusive coworking for entrepreneurs

moving on up

Esperson Flex plans on expanding within the historic Niels Esperson Building in the next five years. Photo via espersonflex.com

A nearly 100-year-old building in downtown Houston is welcoming in entrepreneurs, small business owners, and enterprise firms with a new opportunity to innovate outside of traditional office spaces.

Esperson Flex — a coworking concept managed by Cameron Management in The Niels Esperson Building, which has stood out in Houston's skyline since its inception in 1927 — offers various membership tiers in its facility featuring private offices, desk space, conference room, and access to the overall area for freelancers. As an add-on option to the membership, members will have the opportunity to connect with other entrepreneurs through offering reciprocal daily use passes to Cannon members and allow them to book the conference rooms.

“Coworking allows small entrepreneurs to have a community and startup ecosystem that is very cheap and very flexible," Cameron Management CEO Dougal Cameron tells InnovationMap. “They can invest money in their enterprise instead of signing expensive long leases.”

Photo via espersonflex.com

Esperson coworkers have access to The Cannon's digital platform, Cannon Connect, which provides a digital platform for connections, resources, and services to investors, entrepreneurs, startups, and small businesses.

Currently, the offering of the venue is 12,300 square feet and 62 percent of it is leased.The company hopes to expand the coworking facilities to 62,000 square feet in the next five years, according to Cameron.

There are seven groups who are growing their own coworking business under the Esperson and Cameron Management umbrella, and some include working with groups that are specifically targeting often overlooked demographics, including Hispanic, Black, and female entrepreneurs. The Us Space, for instance, is a women of color-focused collective providing support and coworking for its community.

“We believe that entrepreneurship is the answer to many important problems in our world,” Cameron Management CEO Dougal Cameron tells InnovationMap.

In addition, the facility works with the Prison Entrepreneurship Program, which is a comprehensive re-entry program to help empower those trying to change their lives.

Photo via espersonflex.com

Located downtown, Esperson Flex is the latest in flexible work spaces by Cannon, which also include locations in the Energy Corridor, Houston Galleria, Galveston, The Woodlands, and, as of this week, Memorial.

Spaces like Esperson Flex have become increasingly popular for remote workers, and in some cases, have shown increases in overall productivity. In a survey conducted by Airtasker, remote employees worked 1.4 more days every month, than office workers, which equals 16.8 more days every year. In a similar survey by the Gartner 2021 Digital Worker Experience Survey, 43 percent said that flexible working hours helped them achieve more productivity.

The Cannon, too, has seen coworking and community-building opportunities from all corners of Houston, as the company's CEO, Jon Lambert, shared on the Houston Innovators Podcast.

Golden Section Studios will support early-stage B2B software companies as they grow and scale. Photo via Getty Images

Exclusive: Houston software development co. and venture fund launches startup studio concept

startup support

The team behind Houston-based Golden Section Technology and Golden Section Ventures is introducing a new concept called Golden Section Studios to focus on advancing and supporting early-stage software companies.

"The Studios is a holistic ecosystem that aims to be a growth partner of early-stage companies in order to help them build their company strategically and efficiently, build out operational procedures, and help them find mentors and advisors," Studios Director Kristen Phillips tells InnovationMap.

The new concept, which launches officially today, June 8, will work off of the lessons learned by GST over the years to guide pre-seed and seed-stage B2B software companies as they scale. GSV, an early-stage fund launched in 2019 that now has over $20 million under management with eight current portfolio companies, will also contribute up to $500,000 in rounds less than $1 million.

"At Golden Section, we are good at learning from our mistakes and the list is 121 and counting," says Dougal Cameron, co-founder, Golden Section, in a press release. "These mistakes are core to our value add and enable us to transport founders through decades of experience. They come from our own experience as founders and of selling more than $350M in B2B software and partnering with more than 400 software founders at all stages. The result is less risk and less capital consumed, and a better outcome for founders, customers, employees, and investors."

Phillips explains the concept of GSS is something new and different from what accelerators and incubators do, but also goes beyond just an investment.

"We wanted to be different from what's out there in the Houston ecosystem. We wanted to be more value adding," says Phillips.

GSS's first startup in residence is Austin-based Swoovy, a volunteer matching platform that connects nonprofits, companies, and volunteers. Swoovy is launching in the Studios on June 14 and will be focused on the buildout of their enterprise level software.

Kristen Phillips leads Golden Section Studios. Photo courtesy of GSS

In the golden age of software companies, here's what SaaS entrepreneurs need to focus on to thrive. Getty Images

Local investor shares how Houston SaaS companies can stay afloat amid the pandemic

guest column

The COVID pandemic has created a macro environment that is similar to that of the 1918 Spanish Flu and the 2008 downturn and B2B software-as-a-service companies, like Salesforce, found the 2008 downturn an advantageous environment for cheap revenue growth — I've discussed this in a previous column. Now, I'd like to explore how B2B SaaS founders can position their businesses to capture this opportunity and better prepare themselves for the $400 billion of private equity looking for IT investments.

A prolonged recession due to the global response to COVID-19 provides opportunities for smart founders. Talent and partnerships from non-tech industries are likely to be much easier to access in a recessionary environment. Widespread adoption of technology is likely to result in a much more open and fruitful sales environment. And robust exit opportunities mean that this over performance will be rewarded.

So, how should smart founders operate given this opportunity? Here are a few implications that are congruent with our research.

Know your sales performance data

Many companies forsook effective KPI management while growing. Now is the time to home in on metrics so that you can discern the payoff of different tactics. Knowing sales performance metrics will help founders deploy capital wisely. Good quality and frequent data will also help you assess whether this thesis is working out for your firm.

Get whatever funding you can — and fast

In 2008, funding dropped by 20 percent, valuations by 20 to 25 percent and check sizes by 35 percent, and the current environment could be more drastic. This is paradoxical given the incredible opportunity for B2B SaaS right now, but it is in line with the human urge to run from risk. Despite claiming to be risk-seeking and long-term focused, most venture firms will pull back in this environment. Get what you can and be flexible on valuation. A smart founder who sees the opportunity can overcome additional dilution now.

Hire expert sales talent

The urge to cut back on salaries and freeze pay is high right now. Don't make that mistake, especially not in sales. There will be many firms that make this mistake, giving you the opportunity to hire expert sales talent. Pay them at the top of market, give them uncapped commission plans, and capture the growth opportunity.

Create a survival plan and set limits

This growth opportunity might not materialize. Fortunately for most B2B SaaS, there is operational flexibility built into the cost model. You can cut back on aggressive sales growth and pull expenses within your recurring revenue. Once you have a cash floor in mind and a downside plan of what you will do if either 1) you get to your cash floor or 2) the sales metrics are not proving attractive, you are safe to charge ahead. Armed with compelling acquisition data and a stable customer base, it would be easy to find additional capital.

Prepare for inflation in you customer contracts

While most B2B SaaS investors love long term contracts, the unprecedented level of fiscal and monetary support in the wake of a global shutdown will likely lead to above average levels of inflation. Current inflation expectations are muted (measured by the spread on the 10 year TIPS and the 10 year treasury). Inflation may not take off, but it is wise to prepare for it and include annual increases on multiyear contracts or a CPI price adjustment each year.

Be nice

Most companies are beating up on their vendors right now, if for no reason other than this is 'what you do during a downturn.' It is worth exploring what your vendors can do for you, but this should be a partnership driven discussion. Invite your vendor in and explore how to reach a win-win during this time. Communicate often and clearly and try to their point of view. Larger companies have programs in place to help where smaller ones might not have as much flexibility. This downturn will pass, but how you treat people will have consequences.

Build flexibility into your growth plan

This environment is a great opportunity to add flexibility and optionality into your cost profile. Leveraging flexible development resources from a firm like Golden Section Technology can get you expert talent and execution with month-to-month flexibility. This will help you scale down if your survival plan kicks in, but it will also help you ensure the product keeps up with a successful sales push.

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Dougal Cameron is director of Houston-based Golden Section Venture Capital.

While everyone always looks to Silicon Valley as the model of the ideal startup ecosystem, Houston is forging its own path. Getty Images

Houston isn't Silicon Valley — and that's a good thing, according to these experts

Houston Voices

As WeWork's fall from grace continues to dominate the headlines and we monitor the slew of layoffs and dipping share prices afflicting this year's Silicon Valley darlings, we reflect on Houston's own startup ecosystem. How are Houston startups and investors similar to and different from Silicon Valley early-stage deals? What are the drivers and factors that may be unique to Houston and how do they influence outcomes?

Jamie Jones, executive director of Lilie, sat down with early stage investor and Rice Business alum, Dougal Cameron of Golden Section Technology Venture Capital (GSTVC), to discuss the Houston startup and funding ecosystem. From that discussion, a number of key features emerged:

From Cameron's experience, Houston investors have historically focused on unit economics and profitability, in addition to top line growth, as their key performance measures. As an enterprise software investor, he notes that an indicator of a healthy venture that warrants early stage investment is one where profitability can be achieved as the venture reaches the $1 million revenue mark. Cameron, like other early stage investors in Houston, are interested in ventures that produce sustainable growth not only growth for growth's sake.

While early stage investment capital in Houston does flow, it does not do so at the same check sizes and the same velocity that you may see in Silicon Valley. Analysis of Pitchbook data indicates that Houston firms raised $28.1M in seed and early-stage funding in Q3 2019 versus $2.86B for Silicon Valley based ventures. The belief is that the density of the capital network in Silicon Valley means that if you get one $500,000 check then you will very likely to get others. Cameron noted that he believes the effects of loss aversion are on full display — no firm wants to be the one that passes on the next Google.

However, in Houston, entrepreneurs must be scrappy to pull together funding and ensuring they hit milestones along the way in order to drive scarcer investment into their ventures. From Cameron's perspective, Houston entrepreneurs own their cash balance and strive to keep their overhead low by working out of cheaper spaces, leveraging friends and family to contribute to the venture in its early days, etc.

With fewer investment dollars flowing in Houston, the use of Simple Agreements for Future Equity (SAFEs), which are common in Silicon Valley, are rarely used in Houston. Why? Cameron believes that using unpriced and loosely binding agreements may work in an ecosystem where startups are pushed for rapid top-line growth and may be burning through tens-of-thousands of dollars per month and will need to raise capital quickly, which will drive a pricing event. However, in Houston, investors may prefer arrangements that provide some downside risk.

Examples include convertible notes that include a lien on assets, which would be virtually unheard of in Silicon Valley, or through priced fundraising rounds. Without broad and deep capital networks and the pressure of rapid top-line growth, near term pricing events are not guaranteed, pushing Houston investors to prefer other deal structures.

While everyone agrees that Houston and the robust startup ecosystem that is growing across the city needs more cash to catalyze growth, Cameron firmly believes that new capital coming into the city must be the right type of capital. Capital that will not negatively distort the ecosystem by driving early-stage entrepreneurs to strive for top-line growth that is not sustainable through a profitable business model. This type of capital will not offer exorbitantly-sized seed rounds removing the entrepreneur's need to be scrappy and cost conscious.

We must understand that many Houston entrepreneurs seek to build businesses that have lasting impact and are not only "growing to close," the model Silicon Valley seems to have embraced over the past 7 to 10 years. Cameron is nervous that first big checks that come from outside Houston will push unprofitable businesses forward and will sour the market for local investors that are starting to engage in startup-investing.

While everyone always looks to Silicon Valley as the model of the ideal startup ecosystem, Houston may offer a look into the model of the future — one that is focused on building durable, profitable businesses by right-sizing growth over the venture's life-cycle. For Houston-based entrepreneurs, this means the opportunity to access capital that emphasizes sustainable, smart growth.

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Jamie Jones, executive director of the Liu Idea Lab for Innovation & Entrepreneurship at Rice University, and Dougal Cameron, managing director of Gold Section Technology Ventures and 2013 Rice Business alum, wrote this article for LILIE.

This article originally appeared on Liu Idea Lab for Innovation & Entrepreneurship's blog.

The new, Houston-based GSTVC fund will dole out $20 million to scalable SaaS companies. Photo by rawpixel.com from Pexels

Houston startup consulting firm launches $20 million venture capital fund for early stage software companies

Follow the money

A new venture capital fund has launched in Houston to serve seed-stage, software-as-a-service companies. The $20 million fund plans to make its first investment by the end of the third quarter of this year.

The fund is launching under Golden Section Technology, a Houston-based software consulting firm focused on demystifying technology and providing training and counseling for entrepreneurs. Managing director, Dougal Cameron, says he and a small group of investors made investments in some of the companies that GST has worked with over the years.

"Along the way, we've had the opportunity to invest in some businesses that were our clients," Cameron tells InnovationMap. "A couple years later, we realized that we've invested $8 million — the majority being in Houston-based startups."

Most of these investments saw successful exits, Cameron says, and now, with interest from other investors, Cameron wants to expand the company's reach and contribution with the GSTVC fund.

The GSTVC fund will invest in $500,000 to $750,000 increments and will have a strong presence in each of the portfolio companies.

"Where most capital wants to be hands off, we are going to be incredibly hands on and view that as an augmentation to the management team," Cameron says.

The hands-on approach isn't surprising, considering GST's specialty since its founding in 2011 has been helping scale its client companies. During the early stages of company growth, GST helps its clients make the right growth-centered decisions, and as the company scales up, the firm continues to provide C-level support and trained development teams.

Combining the $20 million of capital with GST's years of entrepreneurial and upscale expertise makes for a fund unlike anything else available in Houston.

"We have done things a bit differently than the traditional investment fund as we supply far more than just working capital," says Isaac Shi, managing partner at GSTVC, in a release. "We have the full strength of our software development company, Golden Section Technology, as well as deep experience in early stage B2B Sales and Marketing. The combination of our experience, capital and hands on approach has the potential to substantially decrease the risk for our investment companies and increase the return for our investors."

One of the GST clients that has already received an investment is QMSC LLC, a Houston-based, B2B SaaS company that enables cloud technology and analytics to help businesses lower operating costs. QMSC has already seen the benefit of GST's funding and consulting working together.

"The world doesn't need one more B2B investment fund like all the others, but there is surely room for one which reduces the risk of execution and accelerates product development in the manner that GSTVC can," says Marshall Williams, founder of QMSC, LLC, in a news release. "They are doing something very different."

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Biosciences startup becomes Texas' first decacorn after latest funding

A Dallas-based biosciences startup whose backers include millionaire investors from Austin and Dallas has reached decacorn status — a valuation of at least $10 billion — after hauling in a series C funding round of $200 million, the company announced this month. Colossal Biosciences is reportedly the first Texas startup to rise to the decacorn level.

Colossal, which specializes in genetic engineering technology designed to bring back or protect various species, received the $200 million from TWG Global, an investment conglomerate led by billionaire investors Mark Walter and Thomas Tull. Walter is part owner of Major League Baseball’s Los Angeles Dodgers, and Tull is part owner of the NFL’s Pittsburgh Steelers.

Among the projects Colossal is tackling is the resurrection of three extinct animals — the dodo bird, Tasmanian tiger and woolly mammoth — through the use of DNA and genomics.

The latest round of funding values Colossal at $10.2 billion. Since launching in 2021, the startup has raised $435 million in venture capital.

In addition to Walter and Tull, Colossal’s investors include prominent video game developer Richard Garriott of Austin and private equity veteran Victor Vescov of Dallas. The two millionaires are known for their exploits as undersea explorers and tourist astronauts.

Aside from Colossal’s ties to Dallas and Austin, the startup has a Houston connection.

The company teamed up with Baylor College of Medicine researcher Paul Ling to develop a vaccine for elephant endotheliotropic herpesvirus (EEHV), the deadliest disease among young elephants. In partnership with the Houston Zoo, Ling’s lab at the Baylor College of Medicine has set up a research program that focuses on diagnosing and treating EEHV, and on coming up with a vaccine to protect elephants against the disease. Ling and the BCMe are members of the North American EEHV Advisory Group.

Colossal operates research labs Dallas, Boston and Melbourne, Australia.

“Colossal is the leading company working at the intersection of AI, computational biology, and genetic engineering for both de-extinction and species preservation,” Walter, CEO of TWG Globa, said in a news release. “Colossal has assembled a world-class team that has already driven, in a short period of time, significant technology innovations and impact in advancing conservation, which is a core value of TWG Global.”

Well-known genetics researcher George Church, co-founder of Colossal, calls the startup “a revolutionary genetics company making science fiction into science fact.”

“We are creating the technology to build de-extinction science and scale conservation biology,” he added, “particularly for endangered and at-risk species.”

Houston investment firm names tech exec as new partner

new hire

Houston tech executive Robert Kester has joined Houston-based Veriten, an energy-focused research, investment and strategy firm, as technology and innovation partner.

Kester most recently served as chief technology officer for emissions solutions at Honeywell Process Solutions, where he worked for five years. Honeywell International acquired Houston-based oil and gas technology company Rebellion Photonics, where Kester was co-founder and CEO, in 2019.

Honeywell Process Solutions shares offices in Houston with the global headquarters of Honeywell Performance Materials and Technologies. Honeywell, a Fortune 100 conglomerate, employs more than 850 people in Houston.

“We are thrilled to welcome Robert to the Veriten team,” founder and CEO Maynard Holt said in a statement, “and are confident that his technical expertise and skills will make a big contribution to Veriten’s partner and investor community. He will [oversee] every aspect of what we do, with the use case for AI in energy high on the 2025 priority list.”

Kester earned a doctoral degree in bioengineering from Rice University, a master’s degree in optical sciences from the University of Arizona and a bachelor’s degree in laser optical engineering technology from the Oregon Institute of Technology. He holds 25 patents and has more than 25 patents pending.

Veriten celebrated its third anniversary on January 10, the day that the hiring of Kester was announced. The startup launched with seven employees.

“With the addition of Dr. Kester, we are a 26-person team and are as enthusiastic as ever about improving the energy dialogue and researching the future paths for energy,” Holt added.

Kester spoke on the Houston Innovators Podcast in 2021. Listen here

Startup funding, sportstech win and more trending innovation news for January

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