Ahmad Atwan founded VC Fuel in Houston to fund the future of the energy transition. Photo courtesy of VC Fuel

When Ahmad Atwan decided he was going to launch a venture capital fund focused on early-stage energy transition startups, Houston was a no brainer. But while there are similar funds on each of the coasts, Atwan learned that VC Fuel's concept was going to be kind of niche for Houston.

"We're the only early stage climate tech or energy transition firm in Houston right now, which is really surprising," Atwan tells InnovationMap, explaining that the Bay Area is home to dozens of these funds and there are even more on the East Coast. "I'm hoping there'll be more (similar funds in Houston), but it's also kind of a nice position to be in."

Atwan shares more about VC Fuel and the $100 million fund, which he's still raising for while also investing in a few startups at the same time, in an interview with InnovationMap. He also discusses how his expertise as a former founder and former private equity investor with Morgan Stanley and BlackRock makes him an opportune value-add investor.

InnovationMap: Why did you decide to start VC fuel?

Ahmad Atwan: I decided to start VC fuel because I've been in the energy industry my entire career. I've been both an entrepreneur — I started two companies in the 2000s that I sold. One was a energy technology firm and one was a Brazilian ethanol company.

After that I was on the buy side buying pretty large private energy companies — anywhere from the size of $500 million to $2 billion. And over that whole time, energy was a very exciting industry and was growing very fast.

But as I saw climate change happening more rapidly and becoming more of a reality, and as I started looking and investing in some renewable energy sources, like wind and solar, I realized that's really where my passion was and what I wanted to do. And at the same time, the world was moving towards that as well, and investors really wanted to have exposure to new energy or energy transition areas.

IM: What are you looking for in potential investment opportunities?

AA: The areas that we focus on are all decarbonized and kind of all across the board, ranging from clean agriculture, hydrogen, carbon capture and storage or carbon capture and usage, to energy efficiency, clean industrial processes, and more. And I think these are areas that they right now comprise less than 2 percent of the global energy mix, but they're going to be north of 10, 15, 20 percent over time. So, these are high growth areas, and they are either lower, zero, or even negative emissions.

We're looking specifically for companies that we call seed stage or series A, generally, sometimes series B. So, they're companies that are relatively early in their development, but have some sort of commercial traction. And ones that are looking for not only a venture capital firm, but someone that can be their partner and help guide them and help them in certain areas, like raising their next round of funding, helping them get introduced to customers.

IM: With your experience, what do you feel like you bring to the table as a hands-on investor?

AA: I think in my decade-plus in private equity, when I was an investor on the boards of a company, I always tended to be one of the most involved in helping guide operations and working with senior management. And I think that's probably because I was a founder in the past, so I really identify with founders and I try to figure out with them what's the gap in their skillset or knowledge base that needs to be filled. Sometimes it's one that I can naturally help fill, which might be on the financial side or on the commercial side. And sometimes it's just bringing in other experts to help the company out.

But I think having been both on the founder and the private equity side, I think I empathize with the founder usually. And I would give this advice to all founders out there: the most important relationship they're going to have is with their lead venture capitalist, because that's going to be the defining relationship that helps them get to legitimacy in terms of the next round of funding. It's something that I kind of learned from friends in Silicon Valley. It's not only building the relationship for VC fuel — it's building a relationship with one of the individuals in our firm, whether it's me or one of my partners, and having them be really invested in the company.

IM: Why did you decide on Houston for VC Fuel's HQ?

AA: First of all, Houston is the undisputed energy capital of the world. So to me, especially when you're looking at energy transition sectors that have to work with the energy industry, it was a no brainer. For a lot of the technologies we deal with — like carbon capture — and the businesses we deal with, it's going to be essential for them to connect with the energy world.

I think a second reason, frankly, and I didn't realize this until we really got deep into the idea is that we're a little bit unique and we have a little bit of a competitive advantage. There are over 30 climate tech firms in the Bay Area, and there are a large number as well in New York and Boston. We're the only early stage climate tech or energy transition firm in Houston right now, which is really surprising. And I'm hoping there'll be more of those, but that's also kind of a nice position to be in because, as we see opportunities come out of the energy companies, and as we try to attract talent and grow, we think we have a pretty unique offering.

IM: What has being located in Greentown Houston meant for you?

AA: It's been fantastic. I think Houston did a great job of attracting Greentown here as the second location. Working out of here, we're able to interact in real time with everything from startup companies to major corporations. You get such a diverse set of people who are passionate about energy transition. It's actually already led to some opportunities to invest in, as well as to connect with some of the bigger companies that want to invest with us. It's been just a great coincidence that we launched here when Greentown opened. We'd much rather be here than any other type of working space. So, we're very excited.

IM: What keeps you up at night as it pertains to the energy transition?

AA: I would say the first thing is commercial adoption. All of our companies so far have great management teams — especially founders — and excellent technology, but there's that bridge to actually get the technology adopted by a customer. Sometimes you can have the best technology, and it just never happens. So, I'm keeping my eye on how much progress are we making with commercial customers. A lot of these are big companies — whether it's a waste management or a tech company, like a Microsoft — are getting into energy transition. Customer adoption in that area is a key metric for us.

The second big one — and this one's a little newer to me because I didn't face it as much in the past — is regulation. So many of the areas that we look at are going to have their economics determined by regulations that are literally being written right now. For example, the Cares Act the by the Biden administration is deciding things like what the level of tax credits will be for carbon capture. The carbon capture company we've invested in suddenly sees their projects become a lot more profitable if that figure is on the higher side. It's important to keep our ear to the ground on regulation and try to anticipate where it's going. That's why we have a couple people who are ex-Department of Energy on our advisory board because we like to have that skill set.

IM: What's next for VC Fuel?

AA: Our cadence of investing is that we invest in about one company every couple of months, which is pretty fast for a venture capital firm in energy transition. What's next is for our current companies to get to the next stage of evolution. There is one that I can't talk about specifically, but it might be getting sold to a really exciting buyer — and it's very good to have that kind of exit early on in a fund's life. And for the rest of our portfolio companies it's about continuing to get customers and next rounds of funding.

We've done a really good job of building a portfolio. That's not concentrated in any one area of energy transition. We will continue to look for a diverse set of companies that compliment each other, and that can help each other out. One area we continue to look at is not just the carbon capture, but also the carbon use space where you can turn carbon into something that's actually productive. Another area that we continue to look at is the electric vehicle space, but not just traditional EVs, but the next generation EV technology.

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This conversation has been edited for brevity and clarity.

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Houston startup debuts new drone for first responders

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Houston-based Paladin Drones has debuted Knighthawk 2.0, its new autonomous, first-responder drone.

The drone aims to strengthen emergency response and protect first responders, the company said in a news release.

“We’re excited to launch Knighthawk 2.0 to help build safer cities and give any city across the world less than a 70-second response time for any emergency,” said Divyaditya Shrivastava, CEO of Paladin.

The Knighthawk 2.0 is built on Paladin’s Drone as a First Responder (DFR) technology. It is equipped with an advanced thermal camera with long-range 5G/LTE connectivity that provides first responders with live, critical aerial awareness before crews reach the ground. The new drone is National Defense Authorization Act-compliant and integrates with Paladin's existing products, Watchtower and Paladin EXT.

Knighthawk 2.0 can log more than 40 minutes of flight time and is faster than its previous model, reaching a reported cruising speed of more than 70 kilometers per hour. It also features more advanced sensors, precision GPS and obstacle avoidance technology, which allows it to operate in a variety of terrains and emergency conditions.

Paladin also announced a partnership with Portuguese drone manufacturer Beyond Vision to integrate its Drone as a First Responder (DFR) technology with Beyond Vision’s NATO-compliant, fully autonomous unmanned aerial systems. Paladin has begun to deploy the Knighthawk 2.0 internationally, including in India and Portugal.

The company raised a $5.2 million seed round in 2024 and another round for an undisclosed amount earlier this year. In 2019, Houston’s Memorial Villages Police Department piloted Paladin’s technology.

According to the company, Paladin wants autonomous drones responding to every 911 call in the U.S. by 2027.

Rice research explores how shopping data could reshape credit scores

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More than a billion people worldwide can’t access credit cards or loans because they lack a traditional credit score. Without a formal borrowing history, banks often view them as unreliable and risky. To reach these borrowers, lenders have begun experimenting with alternative signals of financial reliability, such as consistent utility or mobile phone payments.

New research from Rice Business builds on that approach. Previous work by assistant professor of marketing Jung Youn Lee showed that everyday data like grocery store receipts can help expand access to credit and support upward mobility. Her latest study extends this insight, using broader consumer spending patterns to explore how alternative credit scores could be created for people with no credit history.

Forthcoming in the Journal of Marketing Research, the study finds that when lenders use data from daily purchases — at grocery, pharmacy, and home improvement stores — credit card approval rates rise. The findings give lenders a powerful new tool to connect the unbanked to credit, laying the foundation for long-term financial security and stronger local economies.

Turning Shopping Habits into Credit Data

To test the impact of retail transaction data on credit card approval rates, the researchers partnered with a Peruvian company that owns both retail businesses and a credit card issuer. In Peru, only 22% of people report borrowing money from a formal financial institution or using a mobile money account.

The team combined three sets of data: credit card applications from the company, loyalty card transactions, and individuals’ credit histories from Peru’s financial regulatory authority. The company’s point-of-sale data included the types of items purchased, how customers paid, and whether they bought sale items.

“The key takeaway is that we can create a new kind of credit score for people who lack traditional credit histories, using their retail shopping behavior to expand access to credit,” Lee says.

The final sample included 46,039 credit card applicants who had received a single credit decision, had no delinquent loans, and made at least one purchase between January 2021 and May 2022. Of these, 62% had a credit history and 38% did not.

Using this data, the researchers built an algorithm that generated credit scores based on retail purchases and predicted repayment behavior in the six months following the application. They then simulated credit card approval decisions.

Retail Scores Boost Approvals, Reduce Defaults

The researchers found that using retail purchase data to build credit scores for people without traditional credit histories significantly increased their chances of approval. Certain shopping behaviors — such as seeking out sale items — were linked to greater reliability as borrowers.

For lenders using a fixed credit score threshold, approval rates rose from 15.5% to 47.8%. Lenders basing decisions on a target loan default rate also saw approvals rise, from 15.6% to 31.3%.

“The key takeaway is that we can create a new kind of credit score for people who lack traditional credit histories, using their retail shopping behavior to expand access to credit,” Lee says. “This approach benefits unbanked applicants regardless of a lender’s specific goals — though the size of the benefit may vary.”

Applicants without credit histories who were approved using the retail-based credit score were also more likely to repay their loans, indicating genuine creditworthiness. Among first-time borrowers, the default rate dropped from 4.74% to 3.31% when lenders incorporated retail data into their decisions and kept approval rates constant.

For applicants with existing credit histories, the opposite was true: approval rates fell slightly, from 87.5% to 84.5%, as the new model more effectively screened out high-risk applicants.

Expanding Access, Managing Risk

The study offers clear takeaways for banks and credit card companies. Lenders who want to approve more applications without taking on too much risk can use parts of the researchers’ model to design their own credit scoring tools based on customers’ shopping habits.

Still, Lee says, the process must be transparent. Consumers should know how their spending data might be used and decide for themselves whether the potential benefits outweigh privacy concerns. That means lenders must clearly communicate how data is collected, stored, and protected—and ensure customers can opt in with informed consent.

Banks should also keep a close eye on first-time borrowers to make sure they’re using credit responsibly. “Proactive customer management is crucial,” Lee says. That might mean starting people off with lower credit limits and raising them gradually as they demonstrate good repayment behavior.

This approach can also discourage people from trying to “game the system” by changing their spending patterns temporarily to boost their retail-based credit score. Lenders can design their models to detect that kind of behavior, too.

The Future of Credit

One risk of using retail data is that lenders might unintentionally reject applicants who would have qualified under traditional criteria — say, because of one unusual purchase. Lee says banks can fine-tune their models to minimize those errors.

She also notes that the same approach could eventually be used for other types of loans, such as mortgages or auto loans. Combined with her earlier research showing that grocery purchase data can predict defaults, the findings strengthen the case that shopping behavior can reliably signal creditworthiness.

“If you tend to buy sale items, you’re more likely to be a good borrower. Or if you often buy healthy food, you’re probably more creditworthy,” Lee explains. “This idea can be applied broadly, but models should still be customized for different situations.”

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This article originally appeared on Rice Business Wisdom. Written by Deborah Lynn Blumberg

Anderson, Lee, and Yang (2025). “Who Benefits from Alternative Data for Credit Scoring? Evidence from Peru,” Journal of Marketing Research.

XSpace adds 3 Houston partners to fuel national expansion

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Texas-based XSpace Group has brought onboard three partners from the Houston area to ramp up the company’s national expansion.

The new partners of XSpace, which sells high-end multi-use commercial condos, are KDW, Pyek Financial and Welcome Wilson Jr. Houston-based KDW is a design-build real estate developer, Katy-based Pyek offers fractional CFO services and Wilson is president and CEO of Welcome Group, a Houston real estate development firm.

“KDW has been shaping the commercial [real estate] landscape in Texas for years, and Pyek Financial brings deep expertise in scaling businesses and creating long‑term value,” says Byron Smith, founder of XSpace. “Their commitment to XSpace is a powerful endorsement of our model and momentum. With their resources, we’re accelerating our growth and building the foundation for nationwide expansion.”

The expansion effort will target high-growth markets, potentially including Nashville, Tennessee; Orlando, Florida; and Charlotte and Raleigh, North Carolina.

XSpace launched in Austin with a $20 million, 90,000-square-foot project featuring 106 condos. The company later added locations on Old Katy Road in Houston and at The Woodlands Town Center. A third Houston-area location is coming to the Design District.

XSpace condos range in size from 300 to 3,000 square feet. They can accommodate a variety of uses, such as a luxury-car storage space, a satellite office, or a podcasting studio.

“XSpace has tapped into a fundamental shift in how entrepreneurs and professionals want to use space,” Wilson says. “Houston is one of the best places in the country to innovate and build, and XSpace’s model is perfectly aligned with the needs of this fast‑growing, opportunity‑driven market.”