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 company awarded $2.5B NASA contract to support astronaut health and space missions

space health

Houston-based technology and energy solution company KBR has been awarded a $2.5 billion NASA contract to support astronaut health and reduce risks during spaceflight missions.

Under the terms of the Human Health and Performance Contract 2, KBR will provide support services for several programs, including the Human Research Program, International Space Station Program, Commercial Crew Program, Artemis campaign and others. This will include ensuring crew health, safety, and performance; occupational health services and risk mitigation research for future flights.

“This contract reinforces KBR’s leadership in human spaceflight operations and highlights our expertise in supporting NASA’s vision for space exploration,” Mark Kavanaugh, KBR president of defense, intel and space, said in a news release.

The five-year contract will begin Nov. 1 with possible extension option periods that could last through 2035. The total estimated value of the base period plus the optional periods is $3.6 billion, and the majority of the work will be done at NASA’s Johnson Space Center.

“We’re proud to support NASA’s critical work on long-duration space travel, including the Artemis missions, while contributing to solutions that will help humans live and thrive beyond Earth,” Kavanaugh adde in the news release.

Recently, KBR and Axiom Space completed three successful crewed underwater tests of the Axiom Extravehicular Mobility Unit (AxEMU) at NASA's Neutral Buoyancy Laboratory (NBL) at Johnson Space Center. The tests were part of an effort to help both companies work to support NASA's return to the Moon, according to a release.

KBR also landed at No. 3 in a list of Texas businesses on Time and Statista’s new ranking of the country’s best midsize companies.

UH receives $1M grant to advance research on rare pediatric disorder

peds research

The University of Houston has received a two-year, $1.1 million gift from the Cynthia and George Mitchell Foundation to advance research on a rare genetic disorder that can lead to both deafness and blindness in children, known as Usher Syndrome.

The current grant will support the research of UH biomedical engineering professors Muna Naash and Muayyad Al-Ubaidi, who work in the Laboratory for Retinal Molecular and Cellular Biology and Gene Therapy in the Cullen College of Engineering. The professors have published their findings in the journal Nature Communications.

Naash and Al-Ubaidi’s research focuses on mutations in the USH2A gene, which is crucial to the development and maintenance of the inner ear and retina. The work was inspired by a chance meeting that changed Naash’s life.

“Our work began more than two decades ago when I met a young boy who had lost his both his vision and hearing, and it made me realize just how precious those two senses are, and it truly touched my heart,” Naash said in a news release from UH. “Thanks to the generosity of the Cynthia and George Mitchell Foundation, we can now take the next critical steps in our research and bring hope to families affected by this challenging condition.”

The grant from the foundation comes in addition to a previous $1.6 million award from the National Eye Institute in 2023, which helped create a research platform for innovative gene therapy approaches for the condition.

Usher Syndrome affects 25,000 people in the U.S. and is the most common genetic condition worldwide that impacts both hearing and vision in children. Currently, there is no cure for any of the main three types of the condition. UH believes support from the Cynthia and George Mitchell Foundation will help elevate research, advance real-world solutions in health and improve lives.

“What makes UH such a powerful hub for research is not just its own resources, but also its location and strategic partnerships, including those with the Texas Medical Center,” Al-Ubaidi said in a news release. “We have access to an extraordinary network, and that kind of collaborative environment is essential when tackling complex diseases like Usher syndrome, where no single lab can do it alone.”

Members-only coworking club Switchyards to open first Houston location

Where to Work

An innovative take on the coworking space is coming to Houston. Switchyards will open its first location in the Bayou City on Monday, September 29.

Located in the former Buffalo Exchange at 2901 S Shepherd Drive, Switchyards is well located on the border of Montrose, River Oaks, and Upper Kirby. Founded in Atlanta, the Houston location will join 30 outposts in cities such as Austin, Dallas, Denver, Kansas City, and Nashville.

Unlike WeWork, which caters to companies looking for office space for groups of employees, Switchyards pitches itself as a club for individuals who want to get a little work done away from their home offices.

“Working from home all the time is pretty lonesome,” Switchyards creative director Brandon Hinman says. “It feels good to have places to get out and mix it up. To change paces and change scenery.”

Switchyards facilitates that change of scenery with an environment that blends touches of hotel lobbies, college libraries, and coffee shops. As seen in the photos of the company’s other location, the furniture is a mix of desks, comfy chairs, and couches for individuals or small groups. It’s a far cry from the cube farms of the Office Space era.

“They tend to be historic, textured, layered,” Hinman says about the company’s locations. “A lot of really good furniture. Really thoughtful for getting a couple hours of work done.”

Each location features fast wi-fi, plenty of electrical outlets, and good quality coffee and tea. All 250 members have 24/7 access to the space. And by choosing the real estate they lease carefully, Switchyards keeps its membership price to $100 per month.

“Packaging it together like that and opening in these neighborhoods where people actually live has been pretty magical,” Hinman says. "The big opportunity, I think, is that 90 percent of our members have never had a shared space before. It is unlocking a new thing for people.”

Those who are interested in learning more can sign up at switchyards.com/houston-tx to get early access to memberships and an invite to a sneak peek party.

Memberships go on sale Thursday, September 25 at 10 am. Switchyards notes that the last 14 clubs have sold out on day one.

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This story originally appeared on CultureMap.com.