Houston investor outlines how rare VCs are in Houston — and how to find them

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If you feel like it's hard to find venture capitalists in Houston, you wouldn't be wrong, according to this Houston investor. Photo via Getty Images

As a venture capitalist and former startup founder living in Houston, I get asked a lot about the best way to find and connect with a venture capitalist in Houston. My usual advice is to start with a list, and reach out to everyone on that list. But no one has a comprehensive list. In fact, VCs are such a quiet bunch that I’ve yet to meet someone who personally knows everyone on this proverbial list.

So, I got together with a couple of VC friends of mine, and we put together our own Houston venture capitalist list.

There are, by our count, 11 active venture capital funds headquartered in Houston of any size and type, and outside of corporate venture capital and angel investors, there are 30 total venture capitalists running funds.

Houston has always been quite thin on the VC fund front. I’ve jokingly introduced myself for a while as “one of the 13 venture capitalists in Houston.”

Let’s put this scale in some brutal perspective. With 7.2 million people in the Greater Houston Metro Area, the odds of finding a partner level active venture capitalist in Houston is about 1 in 240,000, if you take a most expanded definition of venture capitalist that might come down to 1 in 100,000. We’re the fifth largest metropolitan area in the country with a tremendous economic engine; there is a ton of capital in Houston, but it’s residing in things like institutional fixed income and equities, real estate, wealth management, corporate, private equity, family office, energy and infrastructure Basically, mostly everywhere but in venture capital funds for tech startups.

By comparison, there are almost as many Fortune 500 CEOs in Houston — 24, by our count — as venture capitalists and fewer venture capitalists than Fortune 1000 CEOs, of which there are 43. That means running into a VC in the checkout line at HEB is about as rare as running into the CEO of CenterPoint, ConocoPhillips, or Academy. In fact, as there are 115 cities in the Greater Houston area, you are three times more likely to be a mayor in Greater Houston Area than a partner at an investor at a VC firm, and more likely to be a college or university president. While we’re at it, you’re 400 times more likely to be a lawyer, 250 times more likely to be a CPA, and over 650 times more likely to be a medical doctor.

Our 30 venture capitalists in the Greater Houston Area are spread across 20 firms and all major venture sectors and stages. Venture capitalist is defined for this list as a full time managing director or partner-level investment professional actively running a venture capital fund with limited partners, currently investing in new venture capital deals from their fund from seed to growth stage, and residing in the Greater Houston Metro area.

To get to 31 we added in a couple of people running venture set asides for PE funds, and a number who work from Houston for funds with no office here. We excluded CVCs, as the decision making is more corporate than individual and rarely includes the committed fund and carried interest structure that defines venture capital, and excluded professionals at angel networks, accelerators, and seed funds that provide investment, but don’t manage conventional venture capital funds, as well as PE funds that do the occasional venture deal. We might be able to triple the number if we include venture capitalists at any professional level, and add in those professionals at PE and angel and seed funds, and corporate venture capital teams who are actively investing. But we’ll get to those other sources of funding in the next list.

The 11 venture capital funds headquartered in Houston are: Mercury, Energy Transition Ventures (my fund), Montrose Lane (formerly called Cottonwood), Texas Medical Center Venture Fund, Artemis, New Climate Ventures, Fitz Gate Ventures, Curate Capital, Knightsgate Ventures, Amplo Ventures,and First Bight Ventures.

Another half a dozen firms have a partner level venture capital investor here, but are headquartered elsewhere: Energy Innovation Capital, Decarbonization Partners, 1984 Ventures, Altitude Ventures, Ascension Ventures, Moneta Ventures, and MKB & Co. Two others, CSL Ventures and SCF Partners, are local private equity funds with a venture capital partner in Houston and a dedicated allocation from a PE fund.

Culling these for partner or managing director level currently in Houston, in alphabetical order by first name, LinkedIn profile and all.

We may have missed a couple of VCs hiding in plain sight, as venture capital is a pretty dynamic business.

VCs are just rare. And yes, perhaps more rare in Houston than in California. Something less than 1 in 100 VCs in the country live in Houston. Across the US there are somewhere around 1,000 to 2,000 active venture capital firms, and maybe another 1,000 to 2,000 active US based CVCs — so, plus or minus maybe at most 4,000 to 5,000 currently active partner level venture capitalists in the country excluding CVC professionals (active VCs and VC funds are really hard to count).

Perhaps in the most stunning statistic, the 7,386 elected state legislators in the US today outnumber the total number of American venture capitalists. Luckily for startup founders, the venture capitalists are more likely to return your phone call.

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Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures. He’s currently hosting the Venture Capital for First Time Founders Series at the Ion, where ETV is headquartered.

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The energy industry is finally prioritizing new technology and greener energy — both in light of and in spite of a global pandemic. Photo via Getty Images

Overheard: Here’s what these energy VCs think of the pandemic’s effect on the energy transition

eavesdropping online

In a lot of ways, venture capital firms are tasked with predicting the future. They put money into tech and business services that are going to disrupt the status quo, and energy VCs are tasked with taking bets on the energy transition.

At a virtual event as a part of the 18th annual Rice Alliance Energy Tech Venture Forum, which is taking place online this week, a group of panelists moderated by Sandy Guitar, managing partner at the HX Venture Fund, discussed how the pandemic has affected the energy transition. The group of experts talked about the future of work, decarbonization, and more.

If you missed the event, here are a few key moments from the discussion.

“The role of digitization is going to be huge. The pandemic really exacerbated just how far oil and gas had been behind in that.”

— Sean Ebert, partner at Altira. Ebert explains that when times are good for energy companies, it's hard to get the attention of executives to introduce new technologies. Now, corporations are having to invest in tech that allows their employees to be mobile and remote.

“There’s never been a better time to invest in energy technology. … We are at a point where we can get the type of returns [we look for.]”

— George Coyle, managing partner at Energy Innovation Capital. Coyle adds that he's seen the pandemic effect major growth opportunities in energy startups in his portfolio.

“What we have is a sense of urgency that didn’t exist 15 years ago. Public companies virtually all have a sustainability report and need to show some sort of progress."

— Cory Steffek, managing director at Ara Partners. He adds, "I really think the opportunity in the near term is de-risking software or hardware technologies and showing people that you can construct assets where they can deploy substantial amounts of capital profitably. If you have that, from a returns standpoint, you have something that should generate significant yield."

“The part we have been focused on is how can you make the conventional more efficient, so energy-on-energy conversion is even better.”

— Hossam Elbadawy, managing director at SCF Ventures and technology partner at SCF Partners. He's referring to the question of whether to prioritize new low-carbon innovations or to make conventional methods more sustainable. His observation is that the solution is going to be a hybrid of both.

“When we think about the future of work, we think about what are the capabilities going to be required in the future to be able to improve operations in the field today?”

— Ricardo Angel, managing director and CEO of PIVA. Angel adds that, "a lot of activities might be replaced by AI," and he and his firm are thinking about how they can go about "developing the skills for the people who will be working with those tools."

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Houston researchers make headway on affordable, sustainable sodium-ion battery

Energy Solutions

A new study by researchers from Rice University’s Department of Materials Science and NanoEngineering, Baylor University and the Indian Institute of Science Education and Research Thiruvananthapuram has introduced a solution that could help develop more affordable and sustainable sodium-ion batteries.

The findings were recently published in the journal Advanced Functional Materials.

The team worked with tiny cone- and disc-shaped carbon materials from oil and gas industry byproducts with a pure graphitic structure. The forms allow for more efficient energy storage with larger sodium and potassium ions, which is a challenge for anodes in battery research. Sodium and potassium are more widely available and cheaper than lithium.

“For years, we’ve known that sodium and potassium are attractive alternatives to lithium,” Pulickel Ajayan, the Benjamin M. and Mary Greenwood Anderson Professor of Engineering at Rice, said in a news release. “But the challenge has always been finding carbon-based anode materials that can store these larger ions efficiently.”

Lithium-ion batteries traditionally rely on graphite as an anode material. However, traditional graphite structures cannot efficiently store sodium or potassium energy, since the atoms are too big and interactions become too complex to slide in and out of graphite’s layers. The cone and disc structures “offer curvature and spacing that welcome sodium and potassium ions without the need for chemical doping (the process of intentionally adding small amounts of specific atoms or molecules to change its properties) or other artificial modifications,” according to the study.

“This is one of the first clear demonstrations of sodium-ion intercalation in pure graphitic materials with such stability,” Atin Pramanik, first author of the study and a postdoctoral associate in Ajayan’s lab, said in the release. “It challenges the belief that pure graphite can’t work with sodium.”

In lab tests, the carbon cones and discs stored about 230 milliamp-hours of charge per gram (mAh/g) by using sodium ions. They still held 151 mAh/g even after 2,000 fast charging cycles. They also worked with potassium-ion batteries.

“We believe this discovery opens up a new design space for battery anodes,” Ajayan added in the release. “Instead of changing the chemistry, we’re changing the shape, and that’s proving to be just as interesting.”

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This story originally appeared on EnergyCapitalHTX.com.

FAA demands investigation into SpaceX's out-of-control Starship flight

Out of this world

The Federal Aviation Administration is demanding an accident investigation into the out-of-control Starship flight by SpaceX on May 27.

Tuesday's test flight from Texas lasted longer than the previous two failed demos of the world's biggest and most powerful rocket, which ended in flames over the Atlantic. The latest spacecraft made it halfway around the world to the Indian Ocean, but not before going into a spin and breaking apart.

The FAA said Friday that no injuries or public damage were reported.

The first-stage booster — recycled from an earlier flight — also burst apart while descending over the Gulf of Mexico. But that was the result of deliberately extreme testing approved by the FAA in advance.

All wreckage from both sections of the 403-foot (123-meter) rocket came down within the designated hazard zones, according to the FAA.

The FAA will oversee SpaceX's investigation, which is required before another Starship can launch.

CEO Elon Musk said he wants to pick up the pace of Starship test flights, with the ultimate goal of launching them to Mars. NASA needs Starship as the means of landing astronauts on the moon in the next few years.

TMC med-tech company closes $2.5M series A, plans expansion

fresh funding

Insight Surgery, a United Kingdom-based startup that specializes in surgical technology, has raised $2.5 million in a series A round led by New York City-based life sciences investor Nodenza Venture Partners. The company launched its U.S. business in 2023 with the opening of a cleanroom manufacturing facility at Houston’s Texas Medical Center.

The startup says the investment comes on the heels of the U.S. Food and Drug Administration (FDA) granting clearance to the company’s surgical guides for orthopedic surgery. Insight says the fresh capital will support its U.S. expansion, including one new manufacturing facility at an East Coast hospital and another at a West Coast hospital.

Insight says the investment “will provide surgeons with rapid access to sophisticated tools that improve patient outcomes, reduce risk, and expedite recovery.”

Insight’s proprietary digital platform, EmbedMed, digitizes the surgical planning process and allows the rapid design and manufacturing of patient-specific guides for orthopedic surgery.

“Our mission is to make advanced surgical planning tools accessible and scalable across the U.S. healthcare system,” Insight CEO Henry Pinchbeck said in a news release. “This investment allows us to accelerate our plan to enable every orthopedic surgeon in the U.S. to have easy access to personalized surgical devices within surgically meaningful timelines.”

Ross Morton, managing Partner at Nodenza, says Insight’s “disruptive” technology may enable the company to become “the leader in the personalized surgery market.”

The startup recently entered a strategic partnership with Ricoh USA, a provider of information management and digital services for businesses. It also has forged partnerships with the Hospital for Special Surgery in New York City, University of Chicago Medicine, University of Florida Health and UAB Medicine in Birmingham, Alabama.

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