Houston venture fund of funds doles out $5 million in Austin firm in its first investment

money moves

LiveOak Venture Partners, an Austin-based firm, is the first recipient of Houston Exponential's fund of funds. Courtesy of LiveOak

After closing its initial round of funding last year, Houston Exponential's fund of funds, called the HX Venture Fund, has closed its first investment on March 29. Austin-based LiveOak Venture Partners received a $5 million investment from the fund.

The HX Venture Fund raised $30 million after launching in October of last year. The fund's goal is to invest in out-of-Houston venture funds in the hopes that they reinvest that money into Houston startups.

"We invested in LiveOak Venture II because of the firm's compelling investment track record, expertise and vigor of the general partners, their extensive network of relationships with proven entrepreneurs, and their focus on capital efficient early stage technology companies in Texas," says Guillermo Borda, managing partner at HX Venture Fund, in a release. "LiveOak's team is committed to making a significant impact in the Houston startup ecosystem."

The HX investment is a part of LiveOak's Fund II, which was oversubscribed and closed at $105 million, the company announced today. According to a release from LiveOak, Fund II is a continuation to the firm's dedication to Texas entrepreneurship. The fund will focus on funding within the state's four largest tech hubs — Austin, Houston, Dallas and San Antonio — and have initial investments ranging from $2 million to $4 million, the release states.

The firm's portfolio focuses on seed and series A funding, and most of its investments are Austin-based, with the exception of three Dallas companies. LiveOak invested in Houston-founded CS Disco, an AI-enabled tool for legal business, but the company has since moved to Austin, according to a public relations representative. LiveOak also invested in San Antonio-founded Infocyte, but the company also relocated to Austin.

Houston has been a strategic market for LiveOak, says managing partner, Krishna Srinivasan, in the release, citing the city's recent entrepreneurial activity.

"We are excited to partner with HX Venture Fund and its strategic investment partners, comprising multiple leading Houston based corporations, to catalyze and grow this activity," says Srinivasan, in the release. "Given LiveOak's investment strategy of being the leading source of capital for entrepreneurs across Texas, we view this investment as highly synergistic with our efforts to enable world-class, category dominating companies coming out of Houston."

HX modeled its fund after the Renaissance Venture Capital Fund in Michigan, from which 10 outside venture capital firms benefitted. Renaissance Fund reported positive results from the fund of funds and Chris Rizik, CEO and fund manager of Renaissance, serves as a member of the investment committee.

Nine companies committed to Houston Exponential's first round of funding. Shobeir Ansar/Getty Images

Houston Exponential's ambitious venture fund closes first round with $25 million

Money moves

Houston Exponential closed the first round of funding for its fund of funds with $25 million in commitments from nine companies. The money will go to non-Houston venture capitalists to invest back into Houston startups.

HX Venture Fund's first-round partners include: Insperity, Chevron, Shell, Quanta Services, Westlake Chemical, The Plank Companies, PROS, HEB, and Camden.

Kingwood-based Insperity was the anchor investor, committing to $5 million last October, according to the release. The company also provided an undisclosed amount of resources support the operations of the fund as it launched.

"This is another transformational moment for Houston," says Gina Luna, chair of Houston Exponential, in the release. "From day one at Houston Exponential, we have been executing a plan to accelerate the growth of the ecosystem, including connecting Houston startups with the capital they need to grow their businesses. This is a significant, tangible milestone. Houston's leading companies have stepped up in a big way to make this happen, and this is a clear signal that Houston is committed to success."

Houston-based venture capital firm Mercury Fund's co-founder and managing director, Blair Garrou, chaired the fund's advisory board. He's also a board member for HX.

The fund of funds won't donate to Houston organizations directly, Garrou says in a statement. The fund's organizers had a different approach to growing funds in Houston's startup space.

"The HX Venture Fund will invest in venture capital funds outside of Houston – generating investment and interest in the region while increasing the investable capital available to Houston-based startups," says Garrou. "The HX Venture Fund is built upon a proven model that provides multiple benefits to its investors."

The benefitting venture capital funds haven't yet been named.

HX modeled the fund after the Renaissance Venture Capital Fund in Michigan, from which 10 outside venture capital firms benefitted —Mercury Fund was one of the 10. It was Garrou who led the movement to get Renaissance Fund's CEO and Fund Manager, Chris Rizik, as a part of the HX Venture Fund from the start as a member of the investment committee.

The Michigan fund launched 9 years ago and exceeded all expectations. For ever dollar Rizik and his team invested, $17 came back into the Michigan area, he told the Houston Business Journal. He says Houston has the same potential.

"I've spoken to many cities about Renaissance's fund of funds model and the impact it has had on Michigan," says Rizik in the release. "Houston has leaned into this model and it is impressive what they have been able to accomplish in a short time. It is a testament to the commitment of Houston's business and tech leaders to growing the ecosystem. It's really exciting to see."

In October 2017, Houston Exponential was launched by Mayor Sylvester Turner's Innovation and Technology Task Force in collaboration with the Greater Houston Partnership's Innovation Round Table and the Houston Technology Center. HX's launch included three main goals, according to the release: "make Houston a top 10 innovation ecosystem, generate $2 billion in venture capital annually and create 10,000 new technology jobs a year by 2022."

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NASA taps Houston-area company to explore low-cost spacecraft delivery

Webster-based Arrow Science and Technology is one of six companies picked by NASA to study low-cost ways to launch and deliver spacecraft for difficult-to-reach orbits.

In all, nine studies will be performed under a roughly $1.4 million award from NASA. Another Texas company, Cedar Park-based Firefly Aerospace, is also among the six companies working on the studies.

“With the increasing maturity of commercial space delivery capabilities, we’re asking companies to demonstrate how they can meet NASA’s need for multispacecraft and multiorbit delivery to difficult-to-reach orbits beyond current launch service offerings,” Joe Dant, a leader of the Launch Services Program at NASA’s Kennedy Space Center in Florida, said in a news release. “This will increase unique science capability and lower the agency’s overall mission costs.”

Arrow is teaming up with Rockville, Maryland-based Quantum Space for its study. Quantum’s Ranger orbital transfer vehicle provides payload delivery services for spacecraft heading to low-Earth and lunar orbits.

Arrow, a Native American-owned small business, offers technical support and hardware manufacturing services for the space and defense industries.

James Baker, founder and president of Arrow, said in a news release that the combination of his company’s deployment systems with Quantum’s Ranger vehicle “allows our customers the ability to focus on the development of their payload[s] while we take care of getting them where they need to be.”

“This is an exciting opportunity to demonstrate the unique capabilities of our highly maneuverable Ranger spacecraft, which will expand NASA’s options for reaching dynamic and challenging … orbits,” Kerry Wisnosky, CEO of Quantum Space, added in the release.

The nine studies are scheduled to be completed by mid-September.

NASA said it will use the studies’ findings “to inform mission design, planning, and commercial launch acquisition strategies for risk-tolerant payloads, with a possibility of expanding delivery services to larger-sized payloads and to less risk-tolerant missions in the future.”

ExxonMobil may pause plans for $7 billion Baytown hydrogen plant

Change of Plans

Spring-based ExxonMobil, the country’s largest oil and gas company, might delay or cancel what would be the world’s largest low-carbon hydrogen plant due to a significant change in federal law. The project carries a $7 billion price tag.

The Biden-era Inflation Reduction Act created a new 10-year incentive, the 45V tax credit, for production of clean hydrogen. But under President Trump’s "One Big Beautiful Bill Act," the window for starting construction of low-carbon hydrogen projects that qualify for the tax credit has narrowed. The Inflation Reduction Act mandated that construction start by 2033. But the Big Beautiful Bill switched the construction start time to early 2028.

“While our project can meet this timeline, we’re concerned about the development of a broader market, which is critical to transition from government incentives,” ExxonMobil Chairman and CEO Darren Woods said during the company’s recent second-quarter earnings call.

Woods said ExxonMobil is working to determine whether a combination of the 45Q tax credit for carbon capture projects and the revised 45V tax credit will help pave the way for a “broader” low-carbon hydrogen market.

“If we can’t see an eventual path to a market-driven business, we won’t move forward with the [Baytown] project,” Woods said.

“We knew that helping to establish a brand-new product and a brand-new market initially driven by government policy would not be easy or advance in a straight line,” he added.

Woods said ExxonMobil is trying to nail down sales contracts connected to the project, including exports of ammonia to Asia and Europe and sales of hydrogen in the U.S.

ExxonMobil announced in 2022 that it would build the low-carbon hydrogen plant at its refining and petrochemical complex in Baytown. The company has said the plant is slated to go online in 2027 and 2028.

As it stands now, ExxonMobil wants the Baytown plant to produce up to 1 billion cubic feet of hydrogen per day made from natural gas, and capture and store more than 98 percent of the associated carbon dioxide. The company has said the project could store as much as 10 million metric tons of CO2 per year.

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This article originally appeared on EnergyCapitalHTX.com.

Texas A&M pilots $59M program for autonomous helicopters to fight wildfires

Autonomous firefighting

Texas A&M University's George H.W. Bush Combat Development Complex will receive $59.8 million to develop a way for autonomous helicopters to fight to wildfires in the state.

The funds appropriated from the Texas legislature will go toward acquiring up to four UH-60 Blackhawk helicopters and developing their autonomous configuration, as well as to facilities, tools and equipment for research, testing and integration of firefighting capabilities over the next two years, according to a release from Texas A&M.

The BCDC was also selected to work with the Defense Advanced Research Projects Agency (DARPA) on its Aircrew Labor In-cockpit Automation System (ALIAS), which works to reduce risks for pilots and aircraft in high-risk missions.

"Working together with Texas, we have an opportunity to use autonomous helicopters to completely change the conversation around wildfires from containing them to extinguishing them,” Stuart Young, DARPA program manager for ALIAS, said in a release from DARPA.

The BCDC program will incorporate DARPA's automation toolkit, known as MATRIX, which has already demonstrated fully autonomous flight capabilities on approximately 20 aircraft platforms. MATRIX, which was developed by California-based Sikorsky Aircraft, was previously tested in proof-of-concept demonstrations of autonomous fire suppression in California and Connecticut earlier this year, according to DARPA.

“I am proud we are working with DARPA in a manner that will benefit Texas, the Department of Defense, and commercial industry,” retired Maj. Gen. Tim Green, director of the BCDC, said in the release. “Wildland firefighting will be the first mission application fully developed to take advantage of over a decade of work by DARPA on its Aircrew Labor In-cockpit Automation System (ALIAS).”

The BDC will test fully automated and semi-automated ALIAS-equipped aircraft on highly complex firefighting tasks. The complex will also work with Texas A&M University–Corpus Christi’s Autonomy Research Institute, the Texas Division of Emergency Management, the Texas A&M Engineering Extension Service, the Texas A&M Forest Service and the Texas A&M Engineering Experiment Station on the project.

John Diem, director of the innovation proving grounds at BCDC, will serve as principal investigator for the project.

“Advancing system capabilities through the last stages of technology maturation, operational testing, and concept development is always hugely exciting and rewarding,” Diem added in the release. “The best part of my career has been seeing systems I tested move into the hands of warfighters. Now, I’m proud to help ensure ALIAS is safe and effective in protecting life and property – and we will do that through realistic and challenging testing.”

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