Report: Houston saw a spike in Black entrepreneur-founded companies amid pandemic

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New data shows that Houston communities saw an uptick in startup founding from Black entrepreneurs. Photo courtesy

It might seem that the formation of startups would have stagnated amid the COVID-19 pandemic. Yet that was anything but the case for Houston startups founded by Black entrepreneurs.

A recent study by economists at Rice University, Boston University, Columbia University, and the Massachusetts Institute of Technology (MIT) found that from 2019 to 2020, the startup rate rose 32 percent in four largely Black areas of Houston: Kashmere Gardens, Missouri City, South Acres, and Sunnyside. By comparison, the statewide startup rate during that period was only 10 percent.

There's no denying that Black-owned businesses already have a significant impact on the economy of the Houston metro area.

A report released in 2019 by the Greater Houston Black Chamber estimated the group's more than 1,500 members collectively generate anywhere from $1 billion to $2 billion in annual revenue. A little over one-fifth of the population in the Houston area is Black. That population is projected to grow 34 percent between 2010 and 2030.

In 2015, personal finance website NerdWallet ranked Houston the 15th best metro in the country and the best metro in Texas for Black-owned businesses.

The Rice economist who contributed to the study is Yupeng Liu, a doctoral student at the university's Jones Graduate School of Business. While he and his fellow researchers note that their study doesn't confirm a cause-and-effect relationship, "it is useful to note that the federal relief payments, and their uniform distribution (independent of eligibility criteria), may have played a role in enabling new firm formation in Black neighborhoods which might otherwise have been constrained by discrimination."

Furthermore, some experts speculate that last year's rise of the racial justice movement may have helped lift up Black entrepreneurs, and that many Black Americans set up new businesses out of necessity in 2020 after being laid off or seeing their work income or hours reduced.

The study, published by the National Bureau of Economic Research, compared startup data for 2020 in Texas and seven other states — Florida, Georgia, Kentucky, New York, Tennessee, Vermont, and Washington — with startup data for 2019. In all, the number of business formations spiked by 21 percent, with the growth of Black-owned startups being especially pronounced. However, an estimated 40 percent of Black-owned businesses closed during the pandemic, compared with 20 percent across all racial and ethnic groups.

The findings of the research bureau's study mirror a subsequent report from the Ewing Kauffman Foundation, a nonprofit that promotes entrepreneurship. The report found more Black-owned businesses were launched last year compared with the total population than at any time in the past 25 years, according to the Los Angeles Times. On average, 380 out of every 100,000 Black adults became new entrepreneurs during the 2020 pandemic, up from 240 in each of the previous two years, the report shows.

In reporting on the National Bureau of Economic Research study, CBS News and The New York Times spotlighted two new Black-owned startups in Houston.

Last July, Destiny McCoy and Oyinda Adebo of Houston launched a mental health company called Wellness for Culture. The company already has been so successful that McCoy says it now supports her financially, according to CBS News.

"All I knew is that I wanted to help Black women," McCoy told CBS News, "and all I knew was I didn't want to do therapy in the typical way."

Another Black entrepreneur from Houston, Pilar Donnelly, enjoyed similar success in 2020. Last summer, Donnelly began making playhouses for her two 6-year-old boys, the Times reported.

"She had been laid off from her job in sports marketing and wanted to give them something for their birthday. With no background in woodworking, she started off with a design she liked online and watched YouTube to learn woodworking techniques," according to the Times. "After making a number of playhouses for her friends and family, she realized it could be a business. That business, which she registered in June, is called Wish You Wood Custom Creations."

Woodworking is now Donnelly's full-time job.

"Everyone I encountered either had a really good year or a really bad year — and for me I had a good year," she told the Times. "Now I'm working outside in the grass and the dirt. I have a workshop in the garage; I have scrap wood everywhere. My life is really different."

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Four Houston scientists named rising stars in research

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Four Houston scientists were named among a total of five Texas rising stars in research by the Texas Academy of Medicine, Engineering, Science & Technology, or TAMEST, last month.

The group will be honored at the 2023 Edith and Peter O’Donnell Awards by TAMEST in May. According to Edith and Peter O’Donnell Committee Chair Ann Beal Salamone, the researchers "epitomize the Texas can-do spirit."

The Houston winners include:

Medicine: Dr. Jennifer Wargo

A physician and professor of surgical oncology and genomic medicine at The University of Texas MD Anderson Cancer Center, Wargo was named a 2023 honoree for her discoveries surrounding the "important connection between treatment outcomes and a patient’s gut microbiome," according to a statement from TAMEST.

Engineering: Jamie Padgett

The Stanley C. Moore Professor of Engineering at Rice University, Padgett was honored for her work that aims to "enhance reliability and improve the sustainability of critical community infrastructure" through developing new methods for multi-hazard resilience modeling.

Physical sciences: Erez Lieberman Aiden

As a world-leading biophysical scientist and an associate professor of molecular and human genetics at Baylor College of Medicine, is being honored for his work that has "dramatically impacting the understanding of genomic 3D structures." He is working with BCM to apply his findings to clinical settings, with the hope that it will eventually be used to treat disease by targeting dark matter in the body.

Technology innovation: Chengbo Li

As a geophysicist at ConocoPhillips, Li is being recognized for innovations in industry-leading Compressive Seismic Imaging (CSI) technology. "This CSI technology allows the oil and gas industry to produce these seismic surveys in less time, with less shots and receivers, and most importantly, with less of an environmental impact," his nominator Jie Zhang, founder and chief scientist of GeoTomo LLC, said in a statement.

James J. Collins III at UT Southwestern Medical Center in Dallas was also named this year's rising star in the biological sciences category for his research on schistosomiasis, a disease that impacts some of the world’s poorest individuals.

The O'Donnell Awards have granted more than $1.5 million to more than 70 recipients since they were founded in 2006. Each award includes a $25,000 honorarium and an invitation to present at TAMEST’s Annual Conference each year, according to TAMEST's website.

The awards expanded in 2002 to include both a physical and biological sciences award each year, thanks to a $1.15 million gift from the O’Donnell Foundation in 2022.

Following a pivot, this Houston founder is ready make her mark on the creator economy

houston innovators podcast episode 171

When Madison Long started her company with her co-founder and friend, Simone May, she knew she wanted to do one thing: Provide a platform for young people to have reliable access to payment for their skills and side hustles. Through starting a business, making a name change, launching a beta, going through a pivot, completing an accelerator, and more — that mission hasn't changed. And now, young people across the country can opt into the platform.

Houston-based creator economy platform Clutch celebrated its nationwide launch earlier this month. The platform connects brands to its network of creators for reliable and authentic work — everything from social media management, video creation, video editing, content creation, graphic design projects, and more.

When the company first launched its beta in Houston, the platform (then called Campus Concierge) rolled out at three Houston-area universities: Texas Southern University, Rice University, and Prairie View A&M. The marketplace connected any students with a side hustle to anyone on campus who needed their services.

Long shares on this week's Houston Innovators Podcast that since that initial pilot, they learned they could be doing more for users.

"We recognized a bigger gap in the market," Long says. "Instead of just working with college-age students and finding them side hustles with one another, we pivoted last January to be able to help these young people get part-time, freelance, or remote work in the creator economy for businesses and emerging brands that are looking for these young minds to help with their digital marketing presence."

Once focusing on the gig economy, Clutch changed its focus to the creator economy. The founders launched a new beta after closing $1.2 million in seed funding last year.

"Even though we did have to pivot, we're excited to be at the place now where we do deeply understand how to service both sides of our marketplace — the next-gen creatives and the emerging brands — so that they can really empower each other to meet their goals," Long says on the show.

Clutch, which went through the DivInc Houston accelerator, credits a part of the company's ability to survive the challenges from making pivots on being founded in Houston.

"We attribute a lot of Clutch's success — especially early on — to being located in Houston," Long says, explaining that she moved to Houston from California in 2021 to focus on the company. "It was physically being in the tech ecosystem that was blossoming in the Houston network that allowed us to feel safe making the pivots we were making and get a lot of guidance from mentors we were meeting."

She shares more about what's next for Clutch on the podcast. Listen to the interview below — or wherever you stream your podcasts — and subscribe for weekly episodes.

10 can't-miss Houston business and innovation events for February

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It's time to look at what's on the agenda for February for Houston innovators — from pitch competitions to networking events.

Here's a roundup of events not to miss this month. Mark your calendars and register accordingly.

Note: This post might be updated to add more events.

Feb. 8 — Digital Marketing Luncheon

Join Insperity, a partner of The Cannon, and digital marketing expert, Danny Gavin, at The Cannon Downtown for a lunch and learn.

The event is Wednesday, February 8, at noon, at The Cannon Downtown. Click here to register.

Feb. 9 — Innovation on Tap: Fred Higgs, Engineering at Rice University

Discuss research in the speaker’s engineering lab at Rice University on key Industry 4.0 technologies, namely additive manufacturing.

The event is Thursday, February 9, at 4 pm, at the Ion. Click here to register.

February 10 — Women in Leadership Conference

The 23rd annual Women in Leadership Conference will be held in-person at Rice University. The conference has been a beacon of inspiration in the Houston community, empowering women to accomplish their career goals. In panel discussions and interactive workshops, attendees hear from leaders across different industries, explore various approaches to leadership, and discuss future opportunities for success.

The event is Friday, February 10, at 8 am, at McNair Hall at Rice University. Click here to register.

Feb. 15 — Real Talk from Real VCs

Join this event for a candid fireside chat on venture capital and its role in supporting and growing innovative startups.

The event is Wednesday, February 15, at 5:30 pm, at the Ion. Click here to register.

Feb. 16 — Engage VC: Lerer Hippeau

Lerer Hippeau is an early-stage venture capital firm founded and operated in New York City. Since 2010, they have invested in entrepreneurs who embody audacity, endurance, and winning mindset – good people with great ideas who aren't afraid to do hard things. Join the HX Venture Fund to hear Caitlin Strandberg, Partner at Lerer Hippeau discuss her perspective on how to build and scale a great company, what early-stage investors are looking for, why Houston, and market trends among other topics.

The event is Thursday, February 16, at 8:30 am, at the Ion. Click here to register.

Feb. 16 — Female Founders and Funders

Calling all rockstar female founders and investors in the Houston area. Mark your calendars for this month's Female Founders and Funders meetup. Coffee and breakfast is provided and the event is free to attend.

The event is Thursday, February 16, at 9 am, at Sesh Coworking. Click here to register.

Feb. 21 — Web3 & HOU: Demystifying the Web3 Space Panel I

Join us to learn more about Web3 and its numerous applications.

The event is Tuesday, February 21, at 6 pm, at the Ion. Click here to register.

Feb. 22 — The Trailblazer’s Guide to Cultivating Authenticity

In this fun and interactive workshop presented by Erica D’Eramo of Two Peirs Consulting, we’ll look at how to foster a leadership style that works for you, even in the absence of role models.

The event is Wednesday, February 22, at 2 pm, at Sesh Coworking. Click here to register.

Feb. 22 — Houston Startup Showcase

The Houston Startup Showcase is a year-long series of monthly pitch competitions. Founders will pitch at the Ion and compete for the grand prize package. Watch the startups pitch their company and see who the judges will name the champion of the Houston Startup Showcase 2023.

The event is Wednesday, February 22, at 6 pm, at the Ion. Click here to register.

Feb. 23 — Navigating Innovation in the Corporate World

Join us for a fireside chat with leaders from Houston's largest employers, including Microsoft and Chevron to discuss how they have navigated successful careers in technology and innovation.

The event is Thursday, February 23, at 11:30 am, at the Ion. Click here to register.

Feb. 27-March 2 — Houston Tech Rodeo

The Houston Tech Rodeo is a conference showcasing the best and brightest of the Houston startup community in the region and beyond by putting investors, entrepreneurs, industry leaders, and creative minds in a room to talk about the biggest innovations and the future of tech sandwiched by some happy hours and friendly competition.

The events run Monday, February 27, through Thursday, March 2, at various locations in Houston. Click here to register.