Houston Exponential leader resigns, interim named

leadership change

Harvin Moore has resigned from his position as president of Houston Exponential. Serafina Lalany is acting as interim executive director. Photos courtesy of HX

Houston Exponential has announced a leadership change, according to a statement from the organization.

Harvin Moore, who has served as president of HX since June 2019, has announced his resignation to the chair of the organization, Barbara Burger, vice president of innovation at Chevron and president of Chevron Technology Ventures. In the statement, Burger says Moore is resigning to devote more time to working with growth-stage companies as a mentor, adviser, and investor.

Serafina Lalany, vice president of operations at HX, will act as interim executive director.

"In a rapidly growing and evolving landscape like this one, we must ensure resources are leveraged for greatest impact," Burger says. "The HX executive committee believes now is an appropriate time re-strategize with the HX organization to ensure it is aligned with the current needs of the innovation ecosystem. While changes may be called for to place resources where they can do the most good, there remains a need for a broad ecosystem champion and HX will continue to serve in that role."

Moore — who followed Russ Capper, the inaugural executive director of HX — has a 20-year career in tech and startups in Houston. He is a principal at an early-stage investment firm, Frontera Technology Ventures, and before that served as COO for Space Services Holdings Inc. According to his LinkedIn profile, he's also the director of Industrial Tech Acquisitions Inc., a blank check company, or SPAC.

"Under Harvin's leadership over the last two years, HX has maintained its successful trajectory and achieved important milestones," Burger continues in the statement. "I wish him well in his future endeavors."

According to the statement, all other Houston Exponential staff will remain in place during this review period to support ongoing activities.

Houston's VC activity has hit a new milestone. Photo via Getty Images

Report: Houston venture capital raised exceeds $1B over the past year

VC update

Over the past 12 months, companies in Houston have raised over $1 billion in venture funding — for the first time, according to a new report from Houston Exponential.

"Crossing the billion-dollar mark is a watershed moment for Houston," says Harvin Moore, president of Houston Exponential, in the report. "Venture capital invested in Houston startups has tripled since 2016."

HX was founded in 2017 to focus on convening citywide efforts towards growing Houston's technology innovation ecosystem.

"The sustained level of progress we've seen in startup formation and growth over the past four years shows that Houston has what it takes to do what other leading cities have done: build a vibrant and healthy innovation economy," Moore continues.

Source: Pitchbook and Houston Exponential

Reaching this new benchmark is due to an active first quarter of 2021. VC funding from January through April 2021 totaled $748 million across 53 deals. This figure represents more VC funding than all of 2020.

Some of the year's largest VC deals so far include:

The industry breakdown has evolved as well, according to the report. Information technology represents the largest chunk of the $1.1 billion raised in Houston between April 2020 and April 2021, followed closely by health care.

Source: Pitchbook and Houston Exponential

There's still progress to be made, according to Moore, but these numbers represent significant growth of the ecosystem.

"We've come a long way in a short time, but it's still very early in the game," says Moore in the release. "Our rate of startup formation and growth is still much smaller than other cities, including some significantly smaller than Houston. But these results are making it more clear than ever that Houston is a great place to start and grow a business – and I think we will see these numbers continue to grow."

According to a new report, Houston's energy and health care industries are attracting the most VC investment — with cleantech and oncology investments specifically on the rise. Graphic via the Houston Tech Report by the GHP

New report shows what industries in Houston are attracting the most venture capital investment

following the money

According to a recently released report, a few key industries in Houston have attracted the bulk of the city's venture capital investment dollars.

The Houston Tech Report by the Greater Houston Partnership and Houston Exponential has revealed that the city is home to 8,800 tech-related firms, including over 700 venture-backed startups that have attracted over $2.6 billion in VC funding over the past five years. Annual VC investment has tripled in that same timeframe — from $284 million in 2016 to $753 million in 2020.

"Houston is a city that has been leading the way for decades, with breakthrough innovations that have truly changed the world," says Bob Harvey, president and CEO of the Greater Houston Partnership, in a news release. "Over the past few years, we have been working to transform an already incredible economy into one that competes as a leading digital tech city."

Zooming into the industries attracting the most capital in Houston, life sciences and oil and gas technology continue to reign supreme. Of the VC dollars going into Houston companies, 17 percent goes into life science companies and 17 percent goes into oil and gas, according to the report. Cleantech and Oncology are both niches in Houston that have seen growth in VC investment.

Graphic via the Houston Tech Report by the GHP

Software as a service has seen significant growth since 2011, and represents the third-most invested in industry with 14 percent of the VC investment.

Contributing to the innovation ecosystem's growth is an increase in startup development organizations — the city now has added over 30 SDOs including non-profits, incubators/accelerators, coworking spaces and makerspaces since 2017 — and access to tech talent. According to the report, Houston has the 12th largest tech sector in the U.S. with 235,000 tech workers, and this sector generates $28.1 billion to the region's GDP.

"Houston in 2020 had not one but two unicorns (private tech companies exceeding a $1 billion valuation), our first ever," says Harvin Moore, president of HX. "That's a reflection of both the rate of growth and early stage of our ecosystem. We will see an increasing number of startups as these companies continue to grow and others follow."

Graphic via the Houston Tech Report by the GHP

According to the report, the most active investors into Houston-based companies between 2017 and 2020 include Austin-based Capital Factory with 29 deals, Houston-based TMC Innovation with 25 deals, and Houston Angel Network with 23 deals.

Houston Exponential's Harvin Moore and Serafina Lalany join this week's Houston Innovators Podcast to discuss The Listies. Photos courtesy

New awards to 'pay homage' to Houston's tech scene

HOUSTON INNOVATORS PODCAST EPISODE 55

The deadline for nominations has been extended to November 6. The original story below has been edited to reflect the extension.

With so much of 2020 going wrong, a new awards program is hoping to shine a spotlight on Houston tech startups and other major innovation players who are doing things right.

The Listies nominations are open online until this Friday, November 6, and are being hosted by Houston Exponential in partnership with InnovationMap.

"The idea for The Listies has been in the back of our minds for a long time," says Serafina Lalany, chief of staff at HX, on this week's episode of the Houston Innovators Podcast. "There has always been a need in the ecosystem to celebrate the wins and vibrant culture we have here. This is an opportunity to pay homage to that."

The 12 awards will recognize growing startups, individuals, mentors, corporations, investors, and more. Award eligibility requires nominees to have an account on HX's new platform, the HTX TechList, which is free to use and is intended to be a virtual meeting place and resource for Houston innovation.

The honorees will be awarded at a virtual event ceremony at 3 pm on Friday, November 30. The event is hoping to duplicate the engagement the organization saw at its HTX TechList launch in August, which had over 1,000 registrants and a message from Mayor Sylvester Turner.

"This ecosystem really eats up events — even if they are virtual," says Harvin Moore, president of HX, on the podcast. "This will be another opportunity for the organizations and all the people in the ecosystem to get together. ... It's also an opportunity to continue to develop what's happening in Houston."

The event is gathering tech and innovation influencers to promote and play a role in the event — from judges to award presenters. The program is also seeking sponsors to be included in the event as well.

"HX's true strength is bringing people together around a common mission, and this is very true to that," Lalany says.

Listen to the full interview below — or wherever you stream your podcasts — and subscribe for weekly episodes.

Houston Exponential has a released a report that found that Houston tech companies have seen a 7 percent year-over-year increase in venture capital investments so far in 2020. Getty Images

Houston tech companies have raised over $466M so far this year, new report finds

money moves

This year might be a wash for a lot of things, but according to a new fundraising report from Houston Exponential, the Bayou City has seen an increase in funding this year compared to 2019.

The HTX Funding Review found that Houston startups raised $466.33 million across 46 deals between January and July — compared to $437 in the same time frame last year. While the increase seems marginal, it's important to consider the effect of the pandemic and the few months of troubles for the oil and gas industry.

The 7 percent increase in funding is impressive compared to the national average of 2.5 percent, according to the report, which was organized by Serafina Lalany, HX chief of staff. Eighteen later stage deals made up for 76 percent of the total money raised, indicating key growth for the ecosystem.

"This expansion in Houston's relatively new and booming tech innovation ecosystem shows a strength and resilience that is really exciting," says Harvin Moore, president of HX, in the report. "We are seeing a maturation of our very young ecosystem, as rapidly growing tech companies increasingly access later stage venture capital, which often comes from outside the local area."

The report calls out 11 deals — ranging from angel to late stage — that have occured in Houston to date in 2020:

Preventice Solutions, a medical device company, raised a $137 million series B led by Palo Alto-based Vivo Capital along with support from existing investors, including Merck Global Health Innovation Fund, Boston Scientific, and the Samsung Catalyst Fund.
Fintech and software-as-a-service company HighRadius raised a $125 million series B led by ICONIQ Capital, with participation from existing investors Susquehanna Growth Equity and Citi Ventures.
Liongard, a SaaS company, raised a $17 million series B led by TDF Ventures, Integr8d Capital, and private investors.
Base Hologram, a provider of hologram concert experience, raised $15.4 million in an outsized angel round this past May.
ThoughtTrace, another SaaS company, raised $10 million in a series B led by McRock Capital and existing investors, as well as Chevron Technology Ventures.
Renewable energy company Quidnet also raised a $10 million series B. Bill Gates-backed Breakthrough Energy Ventures and Canada-based Evok Innovations, which both previously invested in the company, contributed to the round.
SmartAC.com emerged from stealth mode witha $10 million series A fundraising announcement.
Retina AI, an AI company focused on diagnostics for diseases such as diabetic retinopathy from pictures of the retina, raised $4.1 million in an angel round which closed mid-July.
E-commerce platform Goodfair raised $3.67 million from but the round was led by Imaginary, with support from MaC Venture Capital, Global Founders Capital, Willow Ventures, Watertower, Amplify.LA, Capital Factory, and Texas Ventures.
SecurityGate, a cybersecurity platform, raised funds from Houston Ventures in June, but wouldn't disclose how much.
Oil and gas software company, M1neral, raised $1.6 million pre-seed co-led by Amnis Ventures and Pheasant Energy, among a few other select investors and strategic partners.

While the pandemic has made funding and vetting new portfolio companies, Blair Garrou, managing director of Houston-based Mercury Fund, says venture capital firms are committed to backing the strongest startups already in their portfolio.

"We've seen many VCs focus on a 'flight to quality,'" Garrou says. "Specifically, VCs are focused more on making sure their best performing portfolio companies have cash, especially at the later stages, as well as investing in the later rounds of new deals that are clear over-performers during COVID."

Looking forward, the HX report predicts that fundraising growth will continue throughout the rest of the year.

"There are several very large local deals in final term sheet stage, and we expect full year 2020 to be the highest ever for venture capital in Houston; our ecosystem is really thriving," says Moore in the report.

According to a survey from Houston Exponential, the Bayou City's startup founders see the light at the end of the pandemic's dark tunnel. Photo by Zview/Getty Images

Houston founders optimistic about COVID-19 recovery, survey finds

thinking positive

Given the current economic environment, you might think founders of Houston startups would view the future with a healthy dose of pessimism. But you'd be wrong.

A survey conducted between April 23 and May 7 by Houston Exponential, a nonprofit that promotes the local innovation ecosystem, revealed that Houston startup founders largely see the future through a lens of optimism. For example:

More than half of the startups that said they were harmed by the coronavirus pandemic believe they'll begin bouncing back before the end of this year.
70 percent of the startups that said they were hurt by the pandemic believe they'll begin recovering before they run out of cash. "They're saying, 'We're making it through this to the other side, and we're going to be better on the other side," says Bryant Chan, director of product at HX.
80 percent of startups said they planned to add employees within the following 12 months.
Two-thirds of startups said they had a funding runway of at least six months.

"Houston is a resilient city, and its agile founders are the most adept at making the best of any situation," HX states in a summary of the survey results.

HX sent the survey to more than 1,000 startup founders in Houston. The survey results include responses from founders of companies with 30 or fewer employees.

Harvin Moore, president of HX, says he wasn't surprised by the generally optimistic outlook of Houston startup founders. In part, that's because local startups as a whole aren't swimming in deep pools of venture capital, according to Moore. Lower valuations lead to lower overhead and shorter cash runways, translating into abundant resilience, he says.

Moore suspects that if a startup founders survey were to be conducted in a VC hotbed like Silicon Valley, "we would probably find less resilience just because there were higher burn rates and, therefore, more dependence on runway."

Chan says startups in Houston hold an advantage over startups in hotspots like Silicon Valley because they're used to practicing "capital efficiency."

"Hopefully, we will maintain that as an advantage," Moore says.

Despite the optimistic elements of the survey results, Houston startups are encountering obstacles. Those include:

One-third of startups with at least six employees said they carried out layoffs or furloughs as a result of the pandemic-scarred economy.
Thirty percent of startups said they saw contracts fade and revenue shrink because of the pandemic.
Nearly one-fifth of startups that said they were raising capital before and during the pandemic saw their valuations decline by 10 percent to 20 percent.

One of the most noteworthy findings in the negative column was that the No. 1 hiring challenge for startups (cited by 21 percent of them) was offering competitive pay.

"Founders are finding talented candidates in Houston, but are unable to meet their salary demands," HX states. "It's common for startups to compensate early employees through company equity in lieu of salary, but with such economic uncertainty, employees may prefer that guaranteed cash and liquidity."

Before the pandemic, the top hiring challenge for Houston startups likely would have been finding the right talent, Chan says.

Despite such challenges, the path ahead for Houston's startup community seems to be pretty smooth, particularly as organizations like HX keep pursuing more access to angel, early stage, and seed funding.

"We have a strong economy, low cost of living — all these things that are solid about Houston and are not going away," Moore says. "We're confident that 2021 will be a great year. 2020 is probably going to be — for most people in Houston, just like around the rest of the country — the year of reimagining and repositioning and recovering. For some companies, it's going to be a huge inflection-point year."

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Rice University's edtech company receives $90M to lead NSF research hub

major collaboration

An educational technology company based out of Rice University has received $90 million to create and lead a research and development hub for inclusive learning and education research. It's the largest research award in the history of the university.

OpenStax received the grant funding from the U.S. National Science Foundation for a five-year project create the R&D hub called SafeInsights, which "will enable extensive, long-term research on the predictors of effective learning while protecting student privacy," reads a news release from Rice. It's the NSF's largest single investment commitment to national sale education R&D infrastructure.

“We are thrilled to announce an investment of $90 million in SafeInsights, marking a significant step forward in our commitment to advancing scientific research in STEM education,” NSF Director Sethuraman Panchanathan says in the release. “There is an urgent need for research-informed strategies capable of transforming educational systems, empowering our nation’s workforce and propelling discoveries in the science of learning.

"By investing in cutting-edge infrastructure and fostering collaboration among researchers and educators, we are paving the way for transformative discoveries and equitable opportunities for learners across the nation.”

SafeInsights is funded through NSF’s Mid-scale Research Infrastructure-2 (Mid-scale RI-2) program and will act as a central hub for 80 partners and collaborating institutions.

“SafeInsights represents a pivotal moment for Rice University and a testament to our nation’s commitment to educational research,” Rice President Reginald DesRoches adds. “It will accelerate student learning through studies that result in more innovative, evidence-based tools and practices.”

Richard Baraniuk, who founded OpenStax and is a Rice professor, will lead SafeInsights. He says he hopes the initiative will allow progress to be made for students learning in various contexts.

“Learning is complex," Baraniuk says in the release. "Research can tackle this complexity and help get the right tools into the hands of educators and students, but to do so, we need reliable information on how students learn. Just as progress in health care research sparked stunning advances in personalized medicine, we need similar precision in education to support all students, particularly those from underrepresented and low-income backgrounds.”

OpenStax awarded $90M to lead NSF research hub for transformational learning and education researchwww.youtube.com

2 Houston startups selected by US military for geothermal projects

hot new recruits

Two clean energy companies in Houston have been recruited for geothermal projects at U.S. military installations.

Fervo Energy is exploring the potential for a geothermal energy system at Naval Air Station Fallon in Nevada.

Meanwhile, Sage Geosystems is working on an exploratory geothermal project for the Army’s Fort Bliss post in Texas. The Bliss project is the third U.S. Department of Defense geothermal initiative in the Lone Star State.

“Energy resilience for the U.S. military is essential in an increasingly digital and electric world, and we are pleased to help the U.S. Army and [the Defense Innovation Unit] to support energy resilience at Fort Bliss,” Cindy Taff, CEO of Sage, says in a news release.

A spokeswoman for Fervo declined to comment.

Andy Sabin, director of the Navy’s Geothermal Program Office, says in a military news release that previous geothermal exploration efforts indicate the Fallon facility “is ideally suited for enhanced geothermal systems to be deployed onsite.”

As for the Fort Bliss project, Michael Jones, a project director in the Army Office of Energy Initiatives, says it’ll combine geothermal technology with innovations from the oil and gas sector.

“This initiative adds to the momentum of Texas as a leader in the ‘geothermal anywhere’ revolution, leveraging the robust oil and gas industry profile in the state,” says Ken Wisian, associate director of the Environmental Division at the U.S. Bureau of Economic Geology.

The Department of Defense kicked off its geothermal initiative in September 2023. Specifically, the Army, Navy, and Defense Innovation Unit launched four exploratory geothermal projects at three U.S. military installations.

One of the three installations is the Air Force’s Joint Base San Antonio. Canada-based geothermal company Eavor is leading the San Antonio project.

Another geothermal company, Atlanta-based Teverra, was tapped for an exploratory geothermal project at the Army’s Fort Wainwright in Alaska. Teverra maintains an office in Houston.

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This article originally ran on EnergyCapital.

Houston investor calls for all angels to move the ecosystem forward

houston innovators podcast episode 233

One of the biggest components of a well-functioning startup ecosystem is inarguably access to capital, and Mitra Miller is dedicated to enhancing education around investment and growing Houston's investor base.

As vice president and board member of the Houston Angel Network, the oldest angel network in Texas and one of the most active angel networks in the country, Miller strives to provide guidance to new and emerging angel investors as well as founders seeking to raise money from them.

"Most founders have no idea or understanding of how investors think — we are not an ATM," Miller says on the Houston Innovators Podcast. "We are really partners you are getting married to for the next 5, 8, 10 years — sometimes longer. We need to bring your allies in every sense of the word."

HAN, a nonprofit, provides a unique opportunity for its members, as Miller explains. The group consists of around 100 individuals from all business backgrounds, so evaluating companies together brings more than just a wealth of capital — but also a wealth of knowledge.

"What HAN provides is access to investments," Miller says, adding that members have the benefit in evaluating companies together with people from different backgrounds. "Inside a group like HAN, we have extraordinary expertise."

In addition to educating both founders and investors in the process, Miller has dedicated herself to providing opportunities for students in low-income parts of Houston to learn about the startup world. Eight years ago, she founded Eagle Investors, an organization that provides a year-long program that culminates in a group of students participating as judges for the Rice Business Plan Competition.

"They spend a year learning about innovation, entrepreneurship, and investing by meeting local investors, entrepreneurs, and service providers. They go around Houston to get to visit and ... experience all of the ecosystem," Miller says.

At RBPC, the cohort of high school students evaluate the pitches and select a company to provide a $5,000 prize.

Miller herself has been a judge at RBPC for 20 years now, and she's had a front row seat for watching Houston develop as an ecosystem. She's seen the city make real progress, but has one major call to action.

"The piece that I am most aware of that I would like to see grow is activating more accredited investors who are interested in this asset class of early-stage companies and plugging in," Miller says. "They can also invest their time and knowledge to help companies in our region grow and scale."

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