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.

What are health tech investors looking for these days? Thes VC experts weigh in. Photo via Getty Images

Here's what venture capital investors look for in Houston health tech

money talks

It's been a tumultuous year for health technology — and venture capital investment activity has definitely been affected. Looking toward the future, a group of panelists discussed how they are investing — and what they are looking for.

The panel, which was presented in partnership with the Houston Angel Network and Cooley for Houston Tech Rodeo, featured three investors:

  • Dennis McWilliams, partner at Santé
  • Terri Burke, venture partner at Epidarex Capital
  • Farzad Soleimani, health care partner at 1984 Ventures
Here's what these professionals consider when evaluating a potential deal.

A unique idea

The idea and solution of the med tech device or digital health company is of course of high importance for the investors.

"We really look for that unmet need. What is the innovative technology or med tech that's doing something different?" Burke says. "We try to find things that are breakthrough or disruptive that aren't one of six going after the same thing."

In light of COVID-19, the panelists discussed the advancement of remote care and telehealth. Another concern amid population growth is access to primary care doctors.

"Five years from now, we're going to be short like 60,000 to 70,000 primary care doctors," Soleimani says. "The only way we can close the gap is either to turn regular doctors into super doctors, and that's going to be driven by AI and data. ... Or, enabling other providers to act more like primary care doctors."

This type of innovation is top of mind for investors. What technology can help experts like pharmacists to provide care of this sort?

"We've seen a lot of investment going into enabling other providers to act as primary care doctors," Soleimani says. "They have the training."

A strong team

Much like startups, the people power the product growth. The panelists emphasized the importance of the potential team they'd be investing in, and it's something you learn over the diligence process.

​"You want to work with people you enjoy working with, so finding the right mix of people — whether we build it ourselves and help scale up a new company or a seasoned teams comes to us," Burke says.

For Soleimani, he is specific about making sure companies have someone in the CTO role — not just a part-time developer or contract worker.

"You need to have somebody who can build the technology — I cannot stress that enough," he says. "The process is arduous, and you're not going to get there overnight."

IP and regulatory process

Investors are looking to support protected technology, the panelists say, and most of the times they want an entrepreneur to start that process earlier than you might think.

"Investors actually care and care a lot and go pretty deep to make sure that something in the idea is protectable," Burke says.

The panelists also say they want a team that understands the regulatory process that will get the technology to scale. And investors aren't scared of investing in companies going down these paths.

"The regulatory process is often times misinterpreted — it can be your ally," Soleimani says. "Just because something needs to go through the regulatory process doesn't mean it is less attractive. It just has to be the right process for it."

McWilliams says a few years ago, maybe the process was more confusing, but nowadays companies are familiar with their options.

"For the most part, most devices know what the pathway is going to be," he explains. "If a team is telling you they don't really know what their regulatory strategy is, they probably don't know what they are doing or they don't want to tell you."

The panelists acknowledged that these regulatory processes can be costly, so factoring that into the equation is important. It's also a space where surrounding yourself with the right people is important.

"I think it's important to not only know your pathway, but also what it will take to prove that out," Burke says. "That's where physician advisers can be really valuable, as well as regulatory consultants."

The right valuation

Valuation is another factor investors consider — both valuations that are too high and too low.

"There's always this question of valuation and there's always this desire to maximize your pre-money valuation on a deal, and I would say that this can often times get you in really big trouble," McWilliams says.

Consider the market and where your company capitalization stands, McWilliams adds, and make sure there's always room on either side.

Ultimately, it depends on the investor

The panelists left the audience with advice for entrepreneurs to do their homework when reaching out to potential investors. Both what kind of companies investors fund as well as what stage they contribute to.

"It's important to know what type of investor you're speaking to," Burke says.

Starting those relationships with plenty of time is also important.

"It's hard to build a meaningful, lasting relationship with an investor if you're running of cash in two months and need a decision right away," McWilliams says.

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Houston family's $20M donation drives neurodegeneration research

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Neurodegeneration is one of the cruelest ways to age, but one Houston family is sharing its wealth to invigorate research with the goal of eradicating diseases like Alzheimer’s.

This month, Laurence Belfer announced that his family, led by oil tycoon Robert Belfer, had donated an additional $20 million to the Belfer Neurodegeneration Consortium, a multi-institutional initiative that targets the study and treatment of Alzheimer’s disease.

This latest sum brings the family’s donations to BNDC to $53.5 million over a little more than a decade. The Belfer family’s recent donation will be matched by institutional philanthropic efforts, meaning BNDC will actually be $40 million richer.

BNDC was formed in 2012 to help scientists gain stronger awareness of neurodegenerative disease biology and its potential treatments. It incorporates not only The University of Texas MD Anderson Cancer Center, but also Baylor College of Medicine, Massachusetts Institute of Technology (MIT) and Icahn School of Medicine at Mount Sinai.

It is the BNDC’s lofty objective to develop five new drugs for Alzheimer’s disease and related disorders over the next 10 years, with two treatments to demonstrate clinical efficacy.

“Our goal is ambitious, but having access to the vast clinical trial expertise at MD Anderson ensures our therapeutics can improve the lives of patients everywhere,” BNDC Executive Director Jim Ray says in a press release. “The key elements for success are in place: a powerful research model, a winning collaborative team and a robust translational pipeline, all in the right place at the right time.”

It may seem out of place that this research is happening at MD Anderson, but scientists are delving into the intersection between cancer and neurological disease through the hospital’s Cancer Neuroscience Program.

“Since the consortium was formed, we have made tremendous progress in our understanding of the molecular and genetic basis of neurodegenerative diseases and in translating those findings into effective targeted drugs and diagnostics for patients,” Ray continues. “Yet, we still have more work to do. Alzheimer's disease is already the most expensive disease in the United States. As our population continues to age, addressing quality-of-life issues and other challenges of treating and living with age-associated diseases must become a priority.”

And for the magnanimous Belfer family, it already is.

3 Houston innovators to know this week

who's who

Editor's note: Every week, I introduce you to a handful of Houston innovators to know recently making headlines with news of innovative technology, investment activity, and more. This week's batch includes a podcast with the founder of a new venture firm, a former astronaut and recent award recipient, and a health care innovator with fresh funding.

Zach Ellis, founder and managing partner of South Loop Ventures

Zach Ellis explains on the Houston Innovators Podcast that South Loop Ventures plans to invest in promising companies from across the country and bring them into Houston's ecosystem to grow and scale. Photo via LinkedIn

Houston has a lot of the right ingredients for commercialization and scaling up companies, so when Zach Ellis moved to town to stand up a venture capital firm that made investments in diverse founders, he decided to go about it in an innovative way.

South Loop Ventures, which Ellis launched two years ago, invests in pre-seed and seed-stage startups across health care, climatetech, aerospace, sports, and fintech. While the first handful of investments, which have already been made, are into Houston-based companies, Ellis explains on the Houston Innovators Podcast that the firm plans to invest in promising companies from across the country and bring them into Houston's ecosystem to grow and scale.

"Any investor wants to feel like they are looking at the best possible investment opportunities in which to deploy capital," Ellis says on the show. "So that's reason No. 1 to cast your net as widely as possible.

"At the same time, you want to give any investment that you make greatest chances of success," he continues. "The biggest factor of success outside of the team and the capital you give them, is the customers that they can call upon. In bringing targeted companies to Houston or connecting them with Houston, you introduce the opportunity for them to achieve rapid scale and work with world-class partners very efficiently." Read more.


Toby R. Hamilton, founder and CEO of Hamilton Health Box

Dr. Toby Hamilton has secured $10 million to grow his company. Photo via tmc.edu

A Houston company that is working on a value-based model for primary care has fresh funding to support its mission.

Hamilton Health Box announced the completion of a $10 million series A funding round led by 1588 Ventures with participation from Memorial Hermann Health System, Impact Ventures by Johnson & Johnson Foundation, Texas Medical Center Venture Fund, and the Sullivan Brothers.

The company, founded in 2019 by Dr. Toby R. Hamilton, will use the funding to fuel its expansion into rural areas to help assist those living in Health Professional Shortage Areas, or HPSAs. Read more.

Ellen Ochoa, former astronaut and center director at the NASA's Johnson Space Center

Ellen Ochoa was recognized for her leadership at NASA Johnson and for being the first Hispanic woman in space. Photo via NASA

Two astronauts recently received Presidential Medals of Freedom from President Joe Biden for their leadership in space.

Ellen Ochoa, the former center director and astronaut at the NASA's Johnson Space Center in Houston, and Jane Rigby, senior project scientist for NASA’s James Webb Space Telescope, were honored at the White House on May 3.

Ochoa spent 30 years with NASA, which included being the 11th director of JSC, deputy center director of JSC, and director of Flight Crew Operations. She served on the nine-day STS-56 mission aboard the space shuttle Discovery in 1993, and became the first Hispanic woman in space. She flew four more times to space with STS-66, STS-96, STS-110, and more.

“I’m so grateful for all my amazing NASA colleagues who shared my career journey with me,” Ochoa says in a NASA news release. Read more.

Houston health care institutions receive $22M to attract top recruits

coming to Hou

Houston’s Baylor College of Medicine has received a total of $12 million in grants from the Cancer Prevention & Research Institute of Texas to attract two prominent researchers.

The two grants, which are $6 million each, are earmarked for recruitment of Thomas Milner and Radek Skoda. The Cancer Prevention & Research Institute of Texas (CPRIT) announced the grants May 14.

Milner, an expert in photomedicine for surgery and diagnostics, is a professor of surgery and biomedical engineering at the Beckman Laser Institute & Medical Clinic at the University of California, Irvine and the university’s Chao Family Comprehensive Cancer Center

In 2013, Milner was named Inventor of the Year by the University of Texas at Austin. At the time, he was a professor of biomedical engineering at UT. One of his major achievements is co-development of the MasSpec Pen, a handheld device that identifies cancerous tissue within 10 seconds during surgical procedures.

Skoda is a professor of molecular medicine in the Department of Biomedicine at the University of Basel and the University Hospital Basel, both in Switzerland. He specializes in developing treatments for myeloproliferative neoplasms, which are a group of blood diseases including leukemia.

Other recruitment grants provided by the institute to Houston-area organizations are:

  • $4 million for recruitment of Susan Bullman to the University of Texas M.D. Anderson Cancer Center. She was an assistant professor at Seattle’s Fred Hutchinson Cancer Center, where she studied the connection between microbes and cancer.
  • $4 million for recruitment of Oren Rom to the University of Texas M.D. Anderson Cancer Center. Rom is an assistant professor of pathology and translational pathobiology at Louisiana State University Shreveport.
  • Nearly $2 million for recruitment of Lauren Hagler to conduct RNA cancer biology at Texas A&M University. She is a postdoctoral scholar in biochemistry at Stanford University.

The institute also awarded grants to five companies in the Houston area:

  • $4.7 million to 7 Hills Pharma for development of immunotherapies to treat cancer and prevent infectious diseases.
  • $4.5 million to Indapta Therapeutics for the Phase 1 trial of a cell therapy for treatment of multiple myeloma and non-Hodgkin’s lymphoma.
  • $2.75 million to Bectas Therapeutics for development of antibodies and biomarkers to overcome a type of resistance T-cell checkpoint therapy.
  • $2.69 million to MS Pen Technologies for development of technology that differentiates between normal tissue and cancerous tissue during surgery.
  • $2.58 million to Crossbridge Bio for development of an antibody-drug combination to treat certain solid tumors.