Despite the effect COVID-19 has had on Houston venture capital, this Kansas City, Missouri-based VC is looking to continue to connect with the local tech scene remotely. Getty Images

A Kansas City, Missouri-based venture capital firm has had its eyes on Houston since fall of last year, and it's not letting the pandemic slow down its immersion into the local startup ecosystem.

Flyover Capital focuses on tech startups based in the middle of the country — from Denver to Atlanta, and the Twin Cities down to Houston. Usually funding seed to series A rounds, Flyover's thesis is geared at "creating the next generation of tech success stories outside traditional tech hubs," says Dan Kerr, principal at the firm.

This region, which Crunchbase dubbed "The Mighty Middle" in a recent report, has seen a growth in venture capital invested over the past decade. Annual investment grew from $5.8 billion invested in 2010 to $20.2 billion in 2019 alone, according to the report, and Texas is leading the pack. The Lone Star State accounted for $24 billion of the region's $92.6 billion venture capital invested in the past decade, per the report.

Flyover Capital, which was founded in 2014, has connected a couple dozen Houston startups in the past six months, Kerr says, and the firm is keeping up with several of those to this day. He predicts the firm will "dive in deeper" into some of those companies in the next six months.

Houston is "one of the cities among those that fall in our region where we plan to spend a significant amount of time," Kerr tells InnovationMap. "We cover a lot of ground, but there are certain cities were we try to get there quarterly. Houston is definitely one of those places."

Kerr says his first impression of Houston was its strength as a B2B — especially as that pertains to its entrepreneurs.

"There are a lot of people who are experienced in their career, maybe with a technical background, and are looking to build a business going after some problem that they see," Kerr says.

In a similar vein, Houston's corporate involvement with its startup ecosystem has been a big indicator of opportunity.

"One of the things we've identified as a strength in a lot of the middle America ecosystems is if they get the corporations involved, then that is a good marker for success, especially if you have some of the other ingredients involved," Kerr says.

Houston Exponential, which Kerr says has been helpful in allowing Flyover to tap into the ecosystem — especially in times like these — has also demonstrated Houston's strength as a B2B community with deep corporate connections.

And Flyover isn't the only VC firm that HX has seen interest from recently. This month, HX has planned more immersion days — where it connects VCs to startup development organizations and startups across town — than it's ever had in a single month, says Harvin Moore, president of HX. The immersion days will be happening completely online.

"It's clear from the indication that we get from VCs and angel networks that people are saying, 'Okay, we need to be looking for new deals,'" Moore says.

For Flyover Capital, Kerr describes the VC as "active, but of course cautious" when it comes to investing in new deals in the current economic environment.

"We're not alone in saying we're actively investing," Kerr says. "I think I've seen some surveys that 60 or so percent of investors are saying they're staying the course."

In fact, finding a positive spin, Kerr says the pandemic has had a "moderating effect" to the investment environment. "Rounds were happening in some cases in a crazy manner," he says of pre-COVID conditions.

Plus, while he hasn't seen a huge change to valuations, the economic conditions caused by COVID-19 could correct some of the over-valuations on the coasts.

"As unfortunate as these times are for lots of people, this is where many companies ultimately find their footing and success," Kerr says.

Houston startups have raised millions so far this year. Getty Images

Here's what 6 Houston startups have raised millions of dollars this year so far

VENTURE ADVENTURES

This year is starting strong when it comes to Houston startups receiving funding. From a $125 million raise from Houston's first unicorn to a local fund gathering up $50 million to deploy in mobility startups, Houston funding news has been pretty exciting.

In case you missed some of these headlines, InnovationMap has rounded up these seven deals based on previous reporting. Scroll through to see which Houston startups are catching the eyes — and cashing the checks — of investors.

HighRadius Corp.

Houston-based HighRadius has reported reaching unicorn status following a $125 million raise. Photo via highradius.com

Let's start with the biggest one, shall we? Houston-based HighRadius, an artificial intelligence-powered fintech software company, closed a $125 million raise, which earned it a a new title: Unicorn.

The series B round, which achieved this status for HighRadius, was led by ICONIQ Capital, with participation from existing investors Susquehanna Growth Equity and Citi Ventures, according to a news release from the company.

The company, which offices in West Houston, was founded in 2006 founded in 2006 and employs more than 1,000 people in North America, Europe, and Asia. In November, HighRadius opened an office in Amsterdam. According to the news release, the company will use the funds to further expand its global footprint.

Read the full story here.

Proeza Ventures

Auto Driving Smart Car image

A new venture capital fund based in Houston and Monterrey, Mexico, has raised $50 million to back mobility startups. Hiroshi Watanabe/Getty Images

New fund Proeza Ventures, which is based in Houston and Monterrey, Mexico, reportedly closed its first fund Proeza Ventures I at $50 million. The fund is backed by Grupo Proeza, a Mexican portfolio management company with two global platforms operating in the mobility and agroindustry sectors, according to the fund's website.

With the fund's money, Proenza Ventures will invest in 12 to 15 early or growth-stage startups with solutions or new technology within industrial, smart components, new vehicles, MaaS, and digital data services.

Read the full story here.

Ambyint

oil and gas

Ambyint, which has offices in Calgary and Houston, has secured funding from Houston venture capital firms. Getty Images

Canada-based Ambyint, which has an office in Houston, has closed its $15 million series B funding. Houston-based Cottonwood Venture Partners led the round, and Houston-based Mercury Fund also contributed — as did Ambyint's management team, according to a news release.

The money will be used to grow both its Houston and Calgary, Alberta, offices and expand its suite of software solutions for wells and artificial lift systems. Ambyint's technology pairs artificial intelligence with advanced physics and subject matter expertise to automate processes on across all well types and artificial lift systems.

Read the full story here.

vChain Inc.

Houston-based vChain, creator of CodeNotary, has raised $7 million in a series A financing round. Pexels

Houston-based vChain, which created the CodeNotary Open Source code trust solution, has raised $7 million in a series A funding round. Paris-based Elaia Partners led the investment round, and other contributors include Zug, Switzerland-based Bluwat and Seattle-based Acequia Capital.

The software tool, which is used to ensure code is securely transmitted throughout the entire development to production process, has several platform integrations and works with languages such as JavaScript, Python, Go, Java, and more.

Read the full story here.

Vivante Health

good intestine health intestine Food for bowel Health

Vivante Health, which uses technology and at-home testing to help users treat chronic digestive health issues, has raised $5.8 million. Getty Images

Vivante Health raised $5.8 million in a series A1 round, according to a news release. The round was led by California-based Lifeforce Capital and Athens, Greece-based Big Pi Ventures. Additionally, NFP Ventures, FCA Venture Partners, and Longmont Capital contributed to the round.

With the fresh funds, Vivante will continue to develop its GI health platform, GIThrive. The digital tool has an at-home microbiome test kit for users, as well as a breath tester that monitors food sensitivities. GIThrive also connects users to on-demand support from nutritionists and experts on the GIThrive app.

Read the full story here.

Hitched Inc.

Houston-based Hitched has dug up new investment money from a local private equity firm. Pexels

Hitched Inc. raised $5.5 million in its series A funding led by Houston-based Cottonwood Venture Partners, a growth equity firm that focuses on digital tech solutions in the energy industry.

The company, which was founded in 2018, coordinates the rentals — from hosting and chartering to managing them — all on one centralized platform. Hitched has a catalogue of equipment from generators and cranes to light towers, pumps to forklifts, and the site lists out the cost per day of each piece of machinery.

Read the full story here.

LetsLaunch, a Houston-based fundraising platform, has teamed up with The Cannon. Courtesy of LetsLaunch

Houston fintech startup partners with local coworking space to grow investment opportunities

Funding friends

A Houston fintech software company has joined forces with The Cannon to help connect its members to capital. LetsLaunch, a platform that allows for smaller investments from non-accredited investors, and The Cannon — along with its venture arm, Cannon Ventures — have officially entered a partnership as of this month.

"We're basically providing a transactional tool to allow Cannon Ventures to access more members who, legally, they couldn't access before," says Nick Carnrite, co-founder and CEO of LetsLaunch. "For us, it's a good thing because instead of having to go out and create a community of startups and investors, that gets brought to us."

The partnership will allow for The Cannon's members to have access to the platform, and LetsLaunch can piggyback off the Cannon's existing network and programming. For instance, if The Cannon hosts a pitch night, LetsLaunch could enable live investing so that anyone in the crowd could invest that night.

Additionally, companies backed by Cannon Ventures can easily do a dual raise — one side open to accredited investors writing big checks and the other on LetsLaunch open to anyone. For this setup, LetsLaunch investors get the perk of having the company vetted by the Cannon Ventures investors.

"[The partnership] allows us to further the vision of Cannon Ventures, which is to truly democratize angel investing," says Lawson Gow, founder and CEO of The Cannon and Cannon Ventures. "We want to activate and allow anyone who is interested in making investments of any size and in any way." (Gow is the son of the CEO of InnovationMap's parent company.)

LetsLaunch opened for business at the end of last year. The site works, in many ways, like a crowdfunding site, only investors receive equity for their money. Due to regulations, investment campaigns max out at around a million dollars, and how much one can invest depends on their annual income. For LetsLaunch's demographic, most users can invest up to $20,000 a year, Carnrite says. There is a minimum of a $250 investment per transaction, but Carnrite says he expects the average investment to be closer to $1,000 per transaction.

According to Carnrite, LetsLaunch is solving the exclusivity problem that traditional investing creates. Such a small pool of people can invest in companies for equity.

"There's something like 30 million people globally that have a $1 million net worth, which is the definition of being an accredited investor," Carnrite says. "Thirty million people out of 7.7 billion, so it's a little less than half a percentage."

And, according to Gow, this is a huge problem in Houston for companies who don't have access to funding.

"We had a company leave The Cannon last week and move to New York because they couldn't get funding in Houston," Gow says. "We're still losing battles every day — and one of the main reasons is getting early stage funding in companies."

A new venture capital firm launched in Houston to focus on female-led startups. Courtesy of The Artemis Fund

Female-led venture capital firm launches in Houston to move the needle on investment in women-owned companies

Who runs the world?

Three powerhouse investment minds have teamed up to launch a female-focused seed and series A venture capital firm in Houston.

In its first $20 million fund, The Artemis Fund will invest in around 30 women-led companies, and will award a $100,000 investment prize at the Rice Business Plan Competition, which takes place April 4 through 6. According to the company's press release, The Artemis Fund is the first of its kind — being female-led and female-focused — in Houston.

"There is a wealth of female leadership in the Houston innovation ecosystem, and we would like to see the same representation in the investor the investor community to help female founders thrive," says Stephanie Campbell, co-founder and principal of The Artemis Fund.

Campbell, and her co-founders, Leslie Goldman and Diana Murakhovskaya, all have extensive experience in venture capital. Campbell has served as managing director for The Houston Angel Network since 2016, while Goldman currently sits on the board of the organization and Murakhovskaya has been a previous investor member. Murakhovskaya worked for a long time in New York City and co-founded the Monarq Incubator, which focuses on women-led startups.

Women make up only 9 percent of decision makers in VC firms in the United States, and women-led companies only receive of 2 percent of venture capital, the release cites. This imbalance is something Artemis exists to change, especially since two-thirds — $22 trillion — of the nation's personal wealth will be controlled by women by 2020, the release states, citing the BMO Wealth Institute, and women currently drive 85 percent of purchases, or $150 billion.

While fewer and farther in between, venture-backed, women-led startups are more profitable. Reportedly, they achieve higher revenues by 12 percent, according to the Kauffman Fellows Report, and higher returns by 63 percent, per First Round's 10-Year Report.

"I'm enthusiastic about launching The Artemis Fund in Texas and reaching a new class of funders to invest in the most diverse tech-enabled companies from across the country," says Murakhovskaya in the release. "Houston, in particular, is uniquely positioned to be the next big tech hub with one of the most active angel groups, a burgeoning innovation ecosystem, support from Houston Exponential, top universities, and historically sidelined capital ready to be activated."

The three principals and co-founders are arguably the fund's greatest asset — from their connections, experience, and reputation. Together, they have in backgrounds in business, law, and engineering.

"We want female entrepreneurs to feel that Houston is a welcoming place to start, grow, and support female-led businesses," says Goldman in the release. "The Artemis Fund will play an integral part in creating this environment."

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2 Houston research teams to receive support from local space health organization

out of this world

A Houston-based organization has named five research projects to advance the understanding of space radiation using human tissue. Two of the five projects are based in Houston.

The Translational Research Institute for Space Health, or TRISH, is based at Baylor College of Medicine and funds health research and tech for astronauts during space missions. The astronauts who are headed to the moon or further will be exposed to high Galactic Cosmic Radiation levels, and TRISH wants to learn more about the effects of GCR.

"With this solicitation, TRISH was looking for novel human-based approaches to understand better Galactic Cosmic Rays (GCR) hazards, in addition to safe and effective countermeasures," says Kristin Fabre, TRISH's chief scientist, in a news release. "More than that, we sought interdisciplinary teams of scientists to carry these ideas forward. These five projects embody TRISH's approach to cutting-edge science."

The five projects are:

  • Michael Weil, PhD, of Colorado State University, Colorado — Effects of chronic high LET radiation on the human heart
  • Gordana Vunjak-Novakovic, PhD of Columbia University, New York — Human multi-tissue platform to study effects of space radiation and countermeasures
  • Sharon Gerecht, PhD of Johns Hopkins University, Maryland — Using human stem-cell derived vascular, neural and cardiac 3D tissues to determine countermeasures for radiation
  • Sarah Blutt, PhD of Baylor College of Medicine, Texas — Use of Microbial Based Countermeasures to Mitigate Radiation Induced Intestinal Damage
  • Mirjana Maletic-Savatic, PhD of Baylor College of Medicine, Texas — Counteracting space radiation by targeting neurogenesis in a human brain organoid model

The researchers are tasked with simulating radiation exposure to human tissues in order to study new ways to protect astronauts from the radiation once in deep space. According to the release, the tissue and organ models will be derived from blood donated by the astronaut in order to provide him or her with customized protection that will reduce the risk to their health.

TRISH is funded by a partnership between NASA and Baylor College of Medicine, which also includes consortium partners Caltech and MIT. The organization is also a partner to NASA's Human Research Program.

Houston biotech company launches animal testing on a drug that could treat COVID-19

searching for a cure

A clinical stage pharmaceutical company based in Houston has entered into the next phase of testing out a drug that could be used to treat COVID-19.

Moleculin Biotech Inc. has tapped an independent lab to examine the antiviral activity of its WP1122 portfolio in a COVID-19 animal model. The drug was originally developed as a cancer-fighting glycolysis inhibitor and submitted for its COVID-19 treatment patent in April.

"With in vivo studies for the treatment of COVID-19 in such high demand, we are excited to begin an in vivo study involving our WP1122 portfolio," says Walter Klemp, chairman and CEO of Moleculin, in a press release. "Even though we may have initial observations earlier, having the final data readout in December will push the estimated window for filing an Investigational New Drug application into 2021.

"We are also planning to conduct other in vivo studies, intended to enable us to file a complete IND with the US Food and Drug Administration."

The in vivo study, which would use the lab's hamster model and SARS-CoV-2. Moleculin Biotech expects to have the data from the study in December.

"We are excited about the additional in vitro testing as this will involve more than one molecule from our WP1122 anitmetabolite portfolio against SARS-CoV-2 and other viruses," says Klemp.

Moleculin Biotech was founded by Klemp in 2007 and went public in 2016. The company is based in the Memorial Park area of Houston.

Houston apartment company on 6 smart home technologies for renters

guest column

With recent changes to the ways we work and live, the importance of smart home technology in apartment complexes is becoming more important than ever. Residents not only want to streamline their lifestyles, but are looking for ways to limit contact when performing interactions.

A great example of smart home technology can be found at Drewery Place in Midtown. Built by Australian property developer Caydon, Drewery Place is at the forefront of smart home technology, providing residents with plenty of options to simplify their lifestyles in contactless style. Below are just some of the smart home features that residents in this tech savvy development enjoy.

Latch keyless entry

Fumbling for your keys is a thing of the past. Now you can use your phone to open not only your apartment door, but also resident-only areas such as the fitness center, pool area and pet park.

Smart thermostats

Come home to the perfect climate with smart thermostat technology. Now you can flick on the heat or blast in the cool as you can control the temperature from anywhere on your phone.

Set the scene

You know those days when things are just a little too bright? Or maybe you want to lighten the mood a little? Whatever you're feeling, get your lighting to match it with dimmer and lighting controls on your phone. There's also a host of pre-programmed lighting scenes so you can set the mood for any occasion.

Alexa — your new best friend

All of Drewery Place's apartments are wired and ready for Amazon's smart assistant, Alexa. Using voice control, you can get Alexa to adjust lighting, play your favorite music, summon an Uber and even order Amazon packages.

Caydon HQ

All residents at Drewery Place can pay their rent, request a maintenance repair, book amenities, organize a dog walker or request a Spruce chore such as a deep clean for their apartment. You can also get notifications from the concierge on when packages arrive and arrange contactless pickup from the downstairs mail lockers.

Get physical

Not into group classes? Organize a training session for one, anytime at the fitness center using MIRROR gym technology. This is literally a magic mirror, where a virtual trainer will train with you in the class of your choice. There's over 20+ categories to choose from, plus they'll correct your form in real-time — so you get personalized attention minus the class numbers.

The staff at Drewery Place are also taking extra precautions to help stop the spread of COVID-19 with regular deep cleanings, social distancing protocol and signage throughout the building. If you want to learn more, you can organize a personal tour complete with masks and social distancing.

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Emma Alexander is acting chief of operations and director of sales and marketing for Caydon.