3 observations about Houston's innovation ecosystem from out-of-town venture capitalists

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Three non-Houston investors discussed the strengths and weaknesses of Houston's innovation ecosystem. Getty Images

You'll go cross-eyed looking at the same puzzle for too long, and sometimes it's better to take a step back and introduce some fresh perspectives and ideas from someone not so connected to the matter at hand.

At the second annual HX Capital Summit hosted by Houston Exponential at Rice University, HX gathered three out-of-town venture capital experts to discuss Houston's innovation ecosystem with Sandy Wallis, managing director at the HX Venture Fund. The fund-of-funds focuses on connecting non-local investors to Houston in order to bring new venture opportunities to town. On the panel, the experts discussed their observations about the Bayou City, which can be summed up as follows.

Community engagement and corporate interest are good signs for Houston 

Right off the bat, the panelists agreed that its much more encouraging visiting Houston nowadays than it was in the recent past. Clint Korver, managing director at San Francisco-based Ulu Ventures, has only recently played witness to the city, thanks to his firm's work with HX and the fund of funds.

"I'm just getting to know the Houston community," Korver says. "I'm really intrigued by how much community support there is."

Korver says that, not unlike Houston startups, Bay Area companies find it a challenge getting a foot in the door at major corporations. However, he's observed that Houston-based corporates want a seat at the table of Houston innovation.

"All the corporate attention that's being integrated here is super intriguing," Korver says. "That's our startups' hardest problems."

The other panelists, who are much closer to Houston, echoed Kover's interest in the role corporations play. Venu Shamapant, founding partner at Austin-based LiveOak Venture Partners, and Thomas Ball, founder and managing director at Austin-based Next Coast Ventures, have witnessed Houston evolve into what it is today over the past decade or so.

"We've both been coming to Houston over the past 20 years and been investing in startups, and it's been a dramatically different scene even in just the past five years," Shamapant says.

Houston's ecosystem is going to take time

While the panelists remarked on the evolution the city has and the support that large corporations seem to be willing to provide, Houston has other assets that's setting it up for success. The panelists mention a solid pool for talent, impressive educational institutions, and more.

"When I look at Houston, I think it has every ingredient for success, which is why I want to spend time here," Ball says.

Sure, as Ball says, Houston has the ingredients, but what it now needs is the time to cook.

"To me, it's more of just time that it's going to take. We can't bake this Houston cake by turning the thermostat up to 900 degrees in an hour. It's going to take three hours at 300," Ball says, adding that he doesn't know very much about baking. "It will take time. This won't be an overnight success. We're here for the long haul."

Houston has some challenges yet to overcome 

Wrapping up the panel, an audience member asked about the changes Houston still needs to make to really get to the point it needs to be at.

For Korver, the answer was pretty simple. Houston needs a big exit.

"There's this incredible amount of momentum that comes along with a successful company that takes a hold of everyone — the rising tide floats all boats thing," Korver says.

For Ball, particularly comparing Houston to other major innovation-focused cities, the issue is that Houston is so spread out.

"To me the one thing I struggle with in Houston is what I would call a density problem," Ball says. "I think you need density here and you need to concentrate your resources in certain places in this city."

At Houston Exponential's second annual HX Capital Summit, four Houston entrepreneurs turned investors discussed their lessons learned. Getty Images

Here's what startups can learn from Houston exits

Success stories

One way to evaluate a city's innovation ecosystem is by the number of successful exits they've had. From startups being acquired by big companies to bringing in a private equity partner, exits can put a city on the map.

Houston has quite a few exits under its belt, and some of those entrepreneurs have stayed in town to fund future success stories. At Houston Exponential's second annual HX Capital Summit, four entrepreneurs discussed their exits, providing key lessons learned for entrepreneurs.

Houston has some perks. 

One thing moderator Samantha Lewis, director at the GOOSE Society of Texas, asked each panelist was what made each entrepreneur start their companies in Houston — and furthermore, what made them stay here after their successful exit.

Panelist Ashok Gowda co-founded and served as COO at Visualase Inc., a real-time tissue monitoring system that exited to Medtronic for over $100 million. He now leads Biotex, a Houston-based medical technology investment firm and accelerator, as president and CEO.

For Gowda, Houston was obviously a key market for med tech, but it provided something even more once he reached the commercialization phase of a product.

"From a commercial standpoint, once the technology became commercial, it was an ideal location," Gowda says. "We were traveling all across the US, and it was a nice hub. We're right in the center of the country, and you can get to either coast very quickly."

The panel also agreed that the quality of life in Houston played a major role in settling down.

You might need to rethink your executive team. 

The panel full of venture capitalists of course touched on the ability to fundraise in Houston, as each panelist had been on both sides of the table. For Gowda, it's pretty simple.

"If you're struggling to raise money, you either have a bad idea or the wrong team," he says, adding that if you really believe in your idea, take a good hard look at who's at the leadership level of your team.

Talent is still a challenge in Houston.

Of course, if you do identify a problem within your team, finding the right leader for your technology might be difficult in Houston.

Keith Kreuer, who was also on the panel, is principal at RedHouse Associates, a group of angel investors that invest like a find would, but without having a fund. Between Kreuer and his team, they were involved in 10 startups before forming the investment group.

"We could find developer and sales talent here, but to get to that higher executive talent, we had to go out to other places," Kreuer says.

However, not all of the panelists agreed that talent was a major challenge they faced. Some noted that they got lucky with the talent they found.

Don Kendall, CEO of Kenmont Capital Partners, came to Houston to run a power company and family office. He turned $100,000 into $1.6 billion and now is a member of GOOSE.

"We had no problem getting the engineering talent," Kendall says. "We really found Houston to be a good environment, and it's only just continued to improve."

Playing to Houston's strengths might be key to success.

For Gray Hall, managing director at Austin-based BuildGroup, which focuses on writing big checks to a small amount of software startups, he knew how to play to his company's and Houston's strengths.

Hall previously served as CEO of AlertLogic, which had a private equity exit in 2013, and Hall stayed on until 2018 as the company continued to grow. He also co-founded Veracenter, which had a strategic exit after growing to $80 million in annual revenue.

"The common theme across both companies and why we were able to grow is real simple: Customer and people," Hall says.

Houston might be one of the country's best kept secrets when it comes to midmarket activity, Hall notes — midmarket companies being defined as those with $50 million to $1 billion in revenue.

"What Houston doesn't get enough credit for is the midmarket in Houston, which I think is tremendous," Hall says. "It's as strong as anywhere else in the country."

AlertLogic was able to tap into this midmarket to quickly grow its client base.

Something else that differentiates Houston from other cities is its culture, which is less focused on the glitz and glam and more focused on hard work.

"Engage with people that have a credible story and a credible plan to solve a problem," he says.

Houston is growing. 

One thing each of the entrepreneurs agreed on is that the city is only growing its resources and quality of startups.

"I see Houston as sort of a startup in the startup world," Kreuer says. "And, what we're trying to do is grow and catch up to the West Coast and the East Coast, but I think Texas as a whole is going to be pretty powerful, and Houston is going to be a central part of that mainly because we have the markets here, and the people in the area and the talent to do that."

As Houston's success stories become more frequent, this provides an avenue for more entrepreneurs turned investors.

"When you've done it before, you've learned the lessons, and you feel like you can do it again and again," Gowda says. "That's what we're trying to do. You see all the possibilities here."

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Meet 6 mentors who are helping the Houston startup scene flourish

meet the finalists

Few founders launch successful startups alone — experienced and insightful mentors often play an integral role in helping the business and its founders thrive.

The Houston startup community is home to many mentors who are willing to lend an ear and share advice to help entrepreneurs meet their goals.

The Mentor of the Year category in our 2025 Houston Innovation Awards will honor an individual like this, who dedicates their time and expertise to guide and support budding entrepreneurs. The award is presented by Houston City College Northwest.

Below, meet the six finalists for the 2025 award. They support promising startups in the medical tech, digital health, clean energy and hardware sectors.

Then, join us at the Houston Innovation Awards this Thursday, Nov. 13 at Greentown Labs, when the winner will be unveiled. The event is just days away, so secure your seats now.

Anil Shetty, InformAI

Anil Shetty serves as president and chief medical officer for biotech company Ferronova and chief innovation officer for InformAI. He's mentored numerous medical device and digital health companies at seed or Series A, including Pathex, Neurostasis, Vivifi Medical and many others. He mentors through organizations like Capital Factory, TMC Biodesign, UT Venture Mentoring, UTMB Innovation and Rice's Global Medical Innovation program.

"Being a mentor means empowering early-stage innovators to shape, test, and refine their ideas with clarity and purpose," Shetty says. "I’m driven by the opportunity to help them think strategically and pivot early before resources are wasted. At this critical stage, most founders lack the financial means to bring on seasoned experts and often haven’t yet gained real-world exposure. Mentorship allows me to fill that gap, offering guidance that accelerates their learning curve and increases the chances of meaningful, sustainable impact."

Jason Ethier, EnergyTech Nexus

Jason Ethier is the founding partner of EnergyTech Nexus, through which he has mentored numerous startups and Innovation Awards finalists, including Geokiln, Energy AI Solutions, Capwell Services and Corrolytics. He founded Dynamo Micropower in 2011 and served as its president and CEO. He later co-founded Greentown Labs in Massachusetts and helped bring the accelerator to Houston.

"Being a mentor means using my experience to help founders see a clearer path to success. I’ve spent years navigating the ups and downs of building companies, struggling with cash flow, and making all the mistakes; mentoring gives me the chance to share those lessons and show entrepreneurs the shortcuts I wish I’d known earlier," Ethier says. "At Energytech Nexus, that role goes beyond just helping individual founders — it’s about creating a flywheel effect for Houston’s entire innovation ecosystem."

Jeremy Pitts, Activate Houston

Jeremy Pitts serves as managing director of Activate Houston, which launched in Houston last year. He was one of the founders of Greentown Labs in the Boston area and served in a leadership role for the organization between 2011 and 2015. Through Activate, he has mentored numerous impactful startups and Innovation Awards finalists, including Solidec, Coflux Purification, Bairitone Health, Newfound Materials, Deep Anchor Solutions and others.

"Being a mentor to me is very much about supporting the person in whatever they need. Oftentimes that means supporting the business—providing guidance and advice, feedback, introductions, etc," But just as important is recognizing the person and helping them with whatever challenges they are going through ... Sometimes they need a hype man to tell them how awesome they are and that they can go do whatever hard thing they need to do. Sometimes they just need an empathetic listener who can relate to how hard these things are. Being there for the person and supporting them on their journey is key to my mentorship style."

Joe Alapat, Liongard

Joe Alapat founded and serves as chief strategy officer at Houston software company Liongard and chief information officer at Empact IT, which he also owns. He mentors through Founder Fridays Houston Group, Software Day by Mercury Fund, SUPERGirls SHINE Foundation, Cup of Joey and at the Ion. He's worked with founders of FlowCare, STEAM OnDemand, Lokum and many other early stage startups.

"Being a mentor to me means unleashing an individual’s 10x—their purpose, their ikigai (a Japanese concept that speaks to a person’s reason for being)," Alapat says. "Mentoring founders in the Houston community of early stage, high-growth startups is an honor for me. I get to live vicariously through a founder’s vision of the future. Once they show me that compelling vision, I’m drawn to bring the future forward with them so the vision becomes reality with a sense of urgency."

Neal Dikeman, Energy Transition Ventures

Neal Dikeman serves as partner at early stage venture fund Energy Transition Ventures, executive in residence at Greentown Labs, and offices in and supports Rice Nexus at the Ion. He mentors startups, like Geokiln, personally. He also mentored Helix Earth through Greentown Labs. The company went on to win in the Smart Cities, Transportation & Sustainability contest at SXSW earlier this year. Dikeman has helped launch several successful startups himself, most recently serving on the board of directors for Resilient Power Systems, which was acquired by Eaton Corp for $150 million.

"Founders have to find their own path, and most founders need a safe space where they can discuss hard truths outside of being 'on' in sales mode with their team or board or investors, to let them be able to work on their business, not just in it," Dikeman says.

Nisha Desai, Intention

Nisha Desai serves as CEO of investment firm Intention and mentors through Greentown Labs, TEX-E, Open Minds, the Rice Alliance Clean Energy Accelerator, Avatar Innovations and The Greenhouse. She currently works with founders from Solidec, Deep Anchor Solutions, CLS Wind and several other local startups, several of which have been nominated for Innovation Awards this year. She's served a board member for Greentown Labs since 2021.

"When I first started mentoring, I viewed my role as someone who was supposed to prevent the founder from making bad decisions. Now, I see my role as a mentor as enabling the founder to develop their own decision-making capability," Desai says. "Sometimes that means giving them the space to make decisions that might be good, that might be bad, but that they can be accountable for. At the end of the day, being a mentor is like being granted a place on the founder's leadership development journey, and it's a privilege I'm grateful for."

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The Houston Innovation Awards program is sponsored by Houston City College Northwest, Houston Powder Coaters, FLIGHT by Yuengling, and more to be announced soon. For sponsorship opportunities, please contact sales@innovationmap.com.

Rice, Houston Methodist developing soft 'sleep cap' for brain health research

Researchers and scientists at Rice University and Houston Methodist are developing a “sleep cap” that aims to protect the brain against dementia and other similar diseases by measuring and improving deep sleep.

The project is a collaboration between Rice University engineering professors Daniel Preston, Vanessa Sanchez and Behnaam Aazhang; and Houston Methodist neurologist Dr. Timea Hodics and Dr. Gavin Britz, director of the Houston Methodist Neurological Institute and chairman of the Department of Neurosurgery.

According to Rice, deep sleep is essential for clearing waste products from the brain and nightly “cleaning cycles” help remove toxic proteins. These toxic proteins, like amyloids, can accumulate during the day and are linked to Alzheimer’s disease and other neurological issues.

Aazhang, director of the Rice Neuroengineering Initiative, and his team are building a system that not only tracks the brain’s clearing process but can also stimulate it, improving natural mechanisms that protect against neurodegeneration.

Earlier proof-of-concept versions of the caps successfully demonstrated the promise of this approach; however, they were rigid and uncomfortable for sleep.

Preston and Sanchez will work to transform the design of the cap into a soft, lightweight, textile-based version to make sleep easier, while also allowing the caps to be customizable and tailored for each patient.

“One of the areas of expertise we have here at Rice is designing wearable devices from soft and flexible materials,” Preston, an assistant professor of mechanical engineering, said in a news release. “We’ve already shown this concept works in rigid device prototypes. Now we’re building a soft, breathable cap that people can comfortably wear while they sleep.”

Additionally, the research team is pursuing ways to adapt their technology to measure neuroinflammation and stimulate the brain’s natural plasticity. Neuroinflammation, or swelling in the brain, can be caused by injury, stroke, disease or lifestyle factors and is increasingly recognized as a driver of neurodegeneration, according to Rice.

“Our brain has an incredible ability to rewire itself,” Aazhang added in the release. “If we can harness that through technology, we can open new doors for treating not just dementia but also traumatic brain injury, stroke, Parkinson’s disease and more.”

The project represents Rice’s broader commitment to brain health research and its support for the Dementia Prevention Research Institute of Texas (DPRIT), which passed voter approval last week. The university also recently launched its Rice Brain Institute.

As part of the project, Houston Methodist will provide access to clinicians and patients for early trials, which include studies on patients who have suffered traumatic brain injury and stroke.

“We have entered an era in neuroscience that will result in transformational cures in diseases of the brain and spinal cord,” Britz said in the release. “DPRIT could make Texas the hub of these discoveries.”

Autonomous truck company with Houston routes goes public

on a roll

Kodiak Robotics, a provider of AI-powered autonomous vehicle technology, has gone public through a SPAC merger and has rebranded as Kodiak AI. The company operates trucking routes to and from Houston, which has served as a launchpad for the business.

Privately held Kodiak, founded in 2018, merged with a special purpose acquisition company — publicly held Ares Acquisition Corp. II — to form Kodiak AI, whose stock now trades on the Nasdaq market.

In September, Mountain View, California-based Kodiak and New York City-based Ares disclosed a $145 million PIPE (private investment in public equity) investment from institutional investors to support the business combo. Since announcing the SPAC deal, more than $220 million has been raised for the new Kodiak.

“We believe these additional investments underscore our investors’ confidence in the value proposition of Kodiak’s safe and commercially deployed autonomous technology,” Don Burnette, founder and CEO of Kodiak, said in a news release.

“We look forward to leading the advancement of the commercial trucking and public sector industries,” he added, “and delivering on the exciting value creation opportunities ahead to the benefit of customers and shareholders.”

Last December, Kodiak debuted a facility near George Bush Intercontinental/Houston Airport for loading and loading driverless trucks. Transportation and logistics company Ryder operates the “truckport” for Ryder.

The facility serves freight routes to and from Houston, Dallas and Oklahoma City. Kodiak’s trucks currently operate with or without drivers. Kodiak’s inaugural route launched in 2024 between Houston and Dallas.

One of the companies using Kodiak’s technology is Austin-based Atlas Energy Solutions, which owns and operates four driverless trucks equipped with Kodiak’s driver-as-a-service technology. The trucks pick up fracking sand from Atlas’ Dune Express, a 42-mile conveyor system that carries sand from Atlas’ mine to sites near customers’ oil wells in the Permian Basin.

Altogether, Atlas has ordered 100 trucks that will run on Kodiak’s autonomous technology in an effort to automate Atlas’ supply chain.

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