How this startup leveraged friends and family investment for an oversubscribed round of funding

guest column

COVID-19 might have thrown a wrench in this health tech startup's fundraising plans, but it found a way to close an oversubscribed round anyways. Photo via Getty Images

When I wrote about fundraising early this year, I knew that I would be raising a round shortly, but had no idea I would be doing it in a changed COVID-19 world. I have experienced two unexpected recessions as an entrepreneur — in 2001 and 2008 — and each time causing huge struggles for entrepreneurs to raise funds. That is when I developed the mindset of acting like a desert rat, surviving with little help, learning to tap into the resources around you to survive and even thrive. Little did I know what was coming in March when the COVID-19 shutdown started.

Solenic Medical Inc. is a medical device company developing an innovative non-invasive treatment for infected metallic implants in the body. Using technology invented at the University of Texas Southwestern, Solenic will leverage the unique properties of alternating magnetic fields generated from external coils to eradicate biofilm on the surface of medical implants.

This non-invasive treatment addresses a major complication of various surgeries, such as knee and hip replacements, as well as in trauma related implants such as plates and rods. There are certainly challenges to fundraising for medical device companies, but each technology arena has its own challenges that I won't go into here.

The Solenic Medical team knew we needed to raise a round early this year, building upon the progress achieved since our founding investment in early 2019. The question was what type and size a round to raise.

We knew we were close to taking some valuable steps, but needed a just a little more time and funding to get there, at which point we figured we would be able to step up our valuation greatly. We decided on a modest $500,000 convertible note round, to help us accomplish at least a portion of the following items:

  • Recruit a reputable outside board member
  • Complete a planned large animal study stepping up from previous mice studies
  • Complete submission of a Breakthrough Device application to the FDA
  • Close our $1.3 million NIH grant and/or other non-dilutive funding
  • Fine tune simulation approaches to optimize the transducer design
  • File new intellectual property

We knew that some combination of these would occur in the succeeding months and would make it easier for Solenic to raise further funds.

The first domino was the on-boarding of an experienced technology executive from Virginia to join our board. The large animal study was delayed when the COVID-19 shutdown started, but our Breakthrough application and the grant application review started as the team went into virtual work mode. Progress was made on the simulations and drafting our next patent. The dominos were starting to fall in spite of the shutdown.

My philosophy was to treat the round as five different type of efforts, in pretty much five equal portions.

  • The first 20 percent in a round is always the hardest, even in closely held friends and family round. The first check regardless of size is always hard as often investors very interested in the round will wait for others to move first.
  • The second 20 percent is not much easier, still requiring a leap of faith by the investor.
  • The magic starts happening at 40 percent, where momentum picks up as you approach halfway and beyond.
  • At 60 percent you reach real momentum, where those investors who may have been waiting to move for a while now start moving.
  • At 80 percent you pick up investors who move quickly worried about missing out before the round closes.
  • With luck, you get enough momentum to oversubscribe the round and have to make the call to go beyond your target funds. For a quick hint on where I standard at that point, there's a saying that you never turn down money.

It was strange picking up the fundraising activity via zoom meetings, and it got off to a slow start as the initial circumstances of the new COVID-19 world settled in. Following my own advice from the January article, I started strategizing my communications, who might be the first check and first movers in first 20 percent, then the next 20 percent and so forth. For a friends and family round you start with your board as champions for the round, founders and management. No one is likely to be more committed and likely to get things started generally, much less in unusual financial times like a pandemic shutdown.

With an institutional co-founder like VIC Technology Venture Development and a passionate board we were able to jumpstart the round the round with $110,000 in commitments. This was quickly followed $100,000 from friends and family of board or management team members. Note that "quickly" in a pandemic was three months that in normal times might have taken only a month or so. Now that we had crossed that magic 40 percent hurdle, things started picking up speed, where members of the VIC Investor Network added individual investments totaling $140,000 to pass the next hurdle of 60 percent within another six weeks of individual presentations and discussions.

Momentum accelerated with friends and family and management team members stepping up to get us to 80 percent within few weeks. At the time of this article we are over-subscribed with more decisions to come. That is a great problem to have as things really picked up speed recently.

Though the final tally is to be determined the mix for this friends and family round looks to be pretty typical to past experiences

  • Board & Management – 27 percent
  • Family – 27 percent
  • Friends – 22 percent
  • Others – 25 percent

Because of the shutdown, this pandemic round has been unusual and at times frustrating, with some highly vocal and interested prospects going strangely silent as soon as the shutdown started, while others moved more slowly than originally expected. Regardless of how things transpired, it turned out largely familiar. As usual, the people you know the best and that know and trust you the most are the ones that are mostly likely come through for you. Building your network to increase the size of that pool is what you do far before a round starts.

Later rounds will be quite different, but the same 20 percent momentum stages will apply. It's a matter of building and nurturing a network of prospects in advance. Larger rounds involve an "institutional" friends and family network that you have known for a while. That work begins long before you start developing them as prospect for an open investment round. By the time this article is published, we expect to have the final funds of this round in the bank but have already started building relationships for the next round. It never stops, but in some ways that is the fun part of it to meet new people to share your startup's story.

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James Y. Lancaster is the Texas branch manager for Arkansas-based VIC Technology Venture Development and interim CEO for Solenic Medical. Lancaster, who lives in College Station, oversees business there, in Dallas, and in Houston.

This week's Houston innovators to know roundup includes Harvin Moore, James Lancaster, and Joshua Baer. Courtesy photos

3 Houston innovators to know this week

who's who

Today starts the Houston Tech Rodeo — a week full of innovation-focused events — and its sure to corral entrepreneurs and investors across the city spur discussions of innovation and technology.

This week's Houston innovators to know includes the man at the helm of the organization behind the Tech Rodeo, plus two investors that are making moves in Houston as well as statewide.

Harvin Moore, president of Houston Exponential

Courtesy of HX

Houston Exponential has helped to coordinate over 30 innovation-focused events for the inaugural Houston Tech Rodeo, which will take place March 2 to 6 — in coordination with the start of the Houston Livestock Show And Rodeo — and will feature panels about diversity, reverse pitch events with startups and accelerators, on-stage office hours, and more.

"Really one of the things that makes a tech ecosystem like Houston really work and purr is when people get together, and people are able to bump into each other and bounce ideas off each other. Businesses do well, ideas thrive, and things happen," Harvin Moore, president of HX, says on the Houston Innovators Podcast. "We basically saw this as an opportunity to let the startup development organizations in town schedule their events around a particular week that really look good on a calendar."

Click here to read more and stream the episode.

James Y. Lancaster, Texas branch manager for Arkansas-based VIC Technology Venture Development

Courtesy of VIC

James Lancaster, Texas branch manager for Arkansas-based VIC Technology Venture Development, knows most startups fail for one of three reasons — no market need, running out of money, and not having a strong team. In his most recent guest article for InnovationMap, Lancaster dives into this third reason with key things founders must think about to give their startup the best shot at success.

"Like market need, evaluating the management team is on virtually every venture capitalist's list of what they look for in their target investments and you need to get it right," Lancaster says.

Click here to read more.

Joshua Baer, founder and CEO of Capital Factory

Courtesy of Capital Factory

While not technically a Houstonian, this Austinite gets an honorary title for his work here. Austin-based accelerator and investment organization Capital Factory recently merged with Station Houston, and CEO and Founder Joshua Baer says it's just the beginning of his focus on Houston startups.

"In total right now, we have 40 companies ever that have joined our accelerator from Houston, which is still a pretty significant number," he tells InnovationMap. "This year, we expect more than 40 companies to join the accelerator from Houston."

Click here to read more.Click here to read more.

Teamwork can make the dream work, but lack of a solid team can be a startup's downfall. Pexels

Here's what Houston startups need to keep in mind when building their teams

Guest column

The top two reasons for startup failure are no market need and running out of money, respectively. But the third reason for failure is not having the right team in place. Like market need, evaluating the management team is on virtually every venture capitalist's list of what they look for in their target investments and you need to get it right.

It is well known that new technologies have a limited window of opportunity to succeed and there are rarely second chances, whether choosing the right strategy, market, customers, partners, or raising rounds of financing. If a particular window is missed a chance to pivot may be available, but that typically requires a good, experienced and nimble team that is right for the overall opportunity.

Luck and timing are factors largely out of your control in a startup, but good-to-great teams are capable of dealing with fast changing conditions or lessons learned along the way.

There's not one "right team"

It is easy to say you need the right team, but the same team is not the right team for every startup. Any team needs some basic skills, and of course have the ability to deliver a solution to meet its customer's needs.

In addition to a diverse technical team, a startup needs different skill sets, including various business, professional and soft skills. It is obvious that software is different than medical devices, but within "software" there are a wide variety of skills needed from user interface to security and everything in between. Within medical devices, the variety ranges beyond technology from working with the FDA to medical reimbursement.

Similarities between standard business processes like customer billing, collections and capital asset management often do not vary much across some otherwise pretty diverse businesses. On top of that, the needs of the team change over time as startups progress from concept, to prototype development to launch and through growth phases.

Having experience with many different startups, I have had some recurring team members with whom I worked with again in my next venture. I have also experienced significant turnover of individuals and growth within individuals that where ready for a new challenge to keep them motivated. The right team varies from venture to venture.

Know your industry

One lesson is to have a few cornerstone roles in the organization. First learned in my consulting days, a talented team member might serve in a kind of cornerstone role where you know that job is "solved" and you will not have to worry about it. You then complement and build around him, adding more experience in a complementary role if the first individual has raw talent and enthusiasm. You would add young talent with plenty of room for growth around an experienced individual that has the ability to mentor those around them. No one way exists to create a good team, other than the best practice of mixing experience, talent and diversity in creative ways based on who based on availability.

However, patterns should be identified and assessed to complement customers when deep engagement is a key part of your model or with partners, distributors, channels, or other strategic parts of your extended business model. Some customers will accept less experienced staff; others will not. Some markets can be targeted successfully by inexperienced sales or customer service representatives, while others require field experience or at a minimum extensive targeted training.

Finding support

Beyond patterns, consider some other best practices that are appropriate for various markets; for example, the risk incurred by having an inexperienced FDA process lead in an FDA regulated product. Having little real experience with FDIC, SEC or similar relevant federal or state agencies creates a lot of risk in FinTech companies. In any startup, some areas can be easily contracted out while others need to be core internal strengths, even if developed over time.

That last word is key, the "time" component of startups. Early stages of a startup have parallels to my consulting days. It is a project that is managed like any other project, balancing the big three assets: resources, money and time. Any project is a balancing act of acquiring and managing those three assets, at least when you take out administrative details like payroll and the like. The next stage is more operational in nature, whether stabilizing operations or managing for growth, but it is common for a startup to have two or more CEOs between founding and exit as needs change.

Since VIC primarily is focused on university technology startups, the inventor is often a university researcher with decades of experience in the field of the invention. We follow a best practice of bringing in one of our senior team members as CEO, an experienced business savvy entrepreneur who complements the inventor well in those early technology de-risking phases.

We support those key team members with a shared service team to handle finance, accounting, legal, websites and more, outsourcing specific areas of expertise like intellectual property in a given technical area. We then fill out gaps with select hires. Over time, we work ourselves out of a job when the technology has progressed to a point that different skills are needed, such as handing off to a growth-stage CEO.

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James Y. Lancaster is the Texas branch manager for Arkansas-based VIC Technology Venture Development. Lancaster, who lives in College Station, oversees business there, in Dallas, and in Houston.

This week's innovators to know are focused on bringing startup programming and venture capital to Houston. Courtesy photos

3 Houston innovators to know this week

who's who

This past week has been full of exciting innovation news in Houston — from big fundraising round closings to a new unicorn coming out of the Bayou City.

Houston innovators to know this week include a new program director for Houston's newest startup accelerator, a venture capital fund leader, and more.

Eléonore Cluzel, program director of gBETA Houston program as director

Courtesy of gBETA Houston

Houston's newest accelerator program, gBETA, named its new local leader. Eléonore Cluzel will lead the gBETA Houston program as director, and will be the point person for the program in the region for the two annual cohorts. Previously, Cluzel worked for Business France mentoring French startups and small businesses. In her new position, she says she's excited to support founders across all industries and foster innovation.

"We're adding another resource for local founders to grow their startups and to raise money, and not have to move to Silicon Valley to do it," she says. "We will also serve as a connector, introducing founders to mentors and investors within the community and across gener8tor broader network." Click here to read more.

Sandy Wallis, managing director of the HX Venture Fund

Courtesy of Sandy Wallis

After 20 years in the venture capital world, Sandy Guitar Wallis has seen the evolution of investing — on both coasts and here in Houston as well. Now, as managing director of the HX Venture Fund, Wallis leads the fund of funds that's investing in VCs around the country in order to bring investment to Houston.

"We have raised a fund of funds with the HX Venture Fund, and we're deploying that capital across probably 10 venture capital funds over time," Wallis explains on the most recent episode of the Houston Innovators Podcast. "Each one of those funds, will invest in 15 to 20 underlying private companies. So, at the end of the day, HX Venture Fund 1 will have exposure to 10 VC funds, as an example, and — by virtue of those investments — maybe 300 private companies." Click here to read more.

James Y. Lancaster, Texas branch manager for Arkansas-based VIC Technology Venture Development

Photo courtesy of VIC

Startups fail — and there are a number of reasons why that is. James Y. Lancaster, who serves as Texas branch manager for Arkansas-based VIC Technology Venture Development, writes in a guest column for InnovationMap about the second most common reason for startup failure: funding.

"A key part of the startup CEO's job is to understand how much total cash remains on hand and whether it is enough to carry the startup towards a milestone that can lead to successful financing as well as a positive cash flow," Lancaster writes. "Just as important is how to allocate their time and efforts to the fundraising process along the way." Click here to read more.

The second most common reason for startup failure is running out of funds. A Texas expert has tips for avoiding that downfall. Getty Images

Failing to fundraise can be the downfall of Houston startups — here's what you need to know

Guest column

Startups are pulling outsized financing rounds and debt acquisitions at an unprecedented rate despite the high 80 percent failure rate of startups overall. Among the three primary reasons why startups tend to fail, running out of cash falls in the number two spot on the list at 29 percent — following no market need.

But startups need to recognize that their time and a strategic fundraising effort are tied together as critical resources to allocate properly to drive their fundraising efforts.

Despite a multitude of ideas and approaches in the pursuit of the very elusive product-market fit and monetization, the majority of startups fail to raise funds or run out of cash after initial fundraising success. For the startup to be successful, it is imperative that funds, finances, and related resources are allocated productively and precisely.

A key part of the startup CEO's job is to understand how much total cash remains on hand and whether it is enough to carry the startup towards a milestone that can lead to successful financing as well as a positive cash flow. Just as important is how to allocate their time and efforts to the fundraising process along the way.

A constant battle

For starters, valuations of a startup do not change linearly over time. Simply because it was twelve months since raising a series A round does not mean that it will be easier to raise more money or be ready for a step-up in valuation. To reach an increase in valuation, a company must achieve certain key milestones that are relevant to showing progress to market and in most investors eye's progress towards monetization.

It is important to understand what potential investors think is worthy of a step up, but generally valuation is pretty flat in between inflection points where key milestones are reached that earn a big increase.

Active vs. passive investment pursuits

Given that it often takes six to nine months and two-thirds of a CEO's time during a major round of fundraising, optimally you should align progress points into major milestones where efforts can be concentrated for fundraising success approaching the inflection points. That does not mean that the CEO can ignore fundraising in between those major milestones, but should think about waves of active and passive fundraising activities.

Active fundraising is obvious, which is the typical efforts to craft a pitch, meet with investors, nurture investor prospects into lead and following investor types. Most of the effort should be put into the early investors that will lead the round as the first checks are always the hardest.

From my experience rounds develop their own momentum when reaching about 40 percent of their target and even more when reaching 60 percent as long as the prospective investor pool is large enough. However, the CEO cannot ignore the company's progress while the raise is actively underway, as they will typically meet with prospective investors multiple times who will want to hear about progress each time.

Passive fundraising is less obvious, which happens in the gaps in between active fundraising where one round closes and before the next round starts. The primary passive activity is general investor networking, where the CEO should be out expanding their network, meeting new prospects and trying to identify the mostly likely early investors or best fit for the company.

I'm not suggesting this is really a passive activity, as it takes a lot of work. But this should be an ongoing between rounds. This passive effort gives the CEO a chance to put most of their emphasis on the progress of the company to the next milestones, but avoids a cold start to the next fundraising round.

Regardless, there are two best practices in this passive mode. First, use networking techniques to identify good prospective investors for your company and two to work on getting referrals to investors well before an actual fundraising round is open. Getting a referral is obviously to your advantage, because it takes you out of cold-calling mode that has a low success rate.

Meeting an investor while you are not fundraising takes the pressure off both the CEO and investor and gives them a chance to get to know each other personally. Again, many will not be your round leaders or champions to other investors, but this lower pressure effort gives investors a chance to listen and reach out to potential experts in their networks to validate the problem and your solution.

With the relationship established and your solution validation received, moving to an active discussion about investment comes more naturally as well as targeting of the best lead investor candidates leading to due diligence, negotiation and closing the funds.

Within a technology development firm like my firm, VIC, we have the benefit of "always-on" VIC Investor Network that we are constantly working to refresh and expand. Because of our large portfolio, seventeen companies at the time of writing this, there is a good chance that almost any life science investor can find something that suits their interest, experience, or passions.

Each member of the firm can allocate their time between active and passive efforts for the companies they are most closely involved with while still providing a wide portfolio of other companies that might be of interest to a prospective investor. Even with a portfolio of companies, the same concepts of active and passive efforts apply.

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James Y. Lancaster is the Texas branch manager for Arkansas-based VIC Technology Venture Development. Lancaster, who lives in College Station, oversees business there, in Dallas, and in Houston.

This week's top innovation stories include a new coworking space announce its plan to pop up in East Downtown. Courtesy of Common Desk

5 most popular innovation stories in Houston this week

What's trending

Editor's note: Halloweek was a scary one for Houston baseball, but the innovation world fared just fine. A Texas coworking company announced plans for a Houston location, innovators to know, The Cannon Houston's grand opening, and more top news from this week.

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Houston Innovation Awards to honor Wade Pinder as 2025 Trailblazer

And the award goes to...

On Nov. 13, we'll gather for the 2025 Houston Innovation Awards to celebrate the best and brightest in Houston innovation right now. And, as is tradition with the annual program, we'll honor one longstanding Houston innovator with the Trailblazer Award.

The award was established to recognize an individual who has left a profound impact on Houston's business and innovation ecosystem and is dedicated to continuing to support Houston and its entrepreneurs. The recipient is selected by our esteemed panel of judges from a pool of internal and external recommendations.

The 2025 Trailblazer Award recipient is Wade Pinder of Product Houston. A familiar face to those active in Houston's innovation sector, Pinder identifies as an "Ecosystem Wayseeker" and is the founder of Product Houston.

Pinder, a former product manager at Blinds.com, arrived in Houston in 2008 and has been deeply engaged in Houston’s startup and innovation scene since 2012. Over the years, he has supported hundreds of founders, product leaders, and community builders across the Houston area.

In 2023, he was honored as Mentor of the Year in the Houston Innovation Awards. Today, he fosters collaboration, clarity, and connection through his work at Product Houston, and he helps innovators find their place in the local sector via his monthly "Houston Ecosystem Mapping" sessions.

Read below for Pinder's insightful takes on the Houston innovation scene and what it means to blaze a new trail. Then, join us as we celebrate Pinder and all of our nominees and winners at the 2025 Houston Innovation Awards on Nov. 13 at Greentown Labs. Tickets are available now.

InnovationMap: Describe the growth of the Houston innovation ecosystem from your arrival in 2008 to now.

Wade Pinder: When I first arrived in Houston in 2008, the innovation ecosystem was more fragmented than it is today. Connecting with other innovators often meant attending a lot of hit-or-miss events. Over the years, it’s been incredible to see the network take shape and grow into a true community. I’ve had the privilege of being involved with several coworking spaces and accelerator programs along the way, and it’s been especially exciting to see Station Houston evolve into what is now the Ion District. What makes the Ion unique is how it blends openness and opportunity… ideas spill into and out of the space, and anyone can walk in, participate in programming, and find themselves in proximity to people who might help them take the next steps.

Additionally, the expansion of spaces like Texas Medical Center Innovation, Helix Park, The Cannon, and many others, have broadened Houston’s innovation landscape in powerful ways.

Today, when someone new moves to Houston and wants to plug into the startup and innovation scene, it’s much easier for them to find their way than when I moved here in 2008. I think that’s something Houston can really be proud of.

IM: As someone who engages with the broader Houston innovation community on a regular basis, what are the shared characteristics and traits that you see among its members?

WP: One of the things that makes Houston’s innovation community unique is how deeply it’s rooted in industry. So many of the innovators I meet come from within Houston’s major sectors, and they’ve seen firsthand where opportunities lie, which gives their innovation a certain practicality. They’re developing solutions that solve real, often complex, business and industry problems, not chasing trends or trying to create the next flashy consumer app.

What I admire most is that this community is growing in its understanding of the value of collaboration. They work with the systems and expertise that already exist, and find better ways to make them work together. Another shared trait I see across Houston’s innovators is a deep sense of curiosity and a drive to question the status quo while looking for better ways to build, improve, and solve.

IM: You’ve said, "Houston has Houston problems, and Houston needs Houston solutions." How do you see this taking shape in the innovation sector right now?

WP: When I first started getting connected to Houston’s startup and innovation scene in 2012, I noticed folks had a tendency to look at other cities and ask, "How can we do what they did?" Back then, we saw phrases like "Silicon Bayou" pop up, and while that enthusiasm was hopeful, it often discounted the things that make Houston unique. Over time, I’ve come to believe that the better question is: "What are we already great at, and how can we innovate from there?" The flip side of that question is to reflect on the things that hold us back as an ecosystem… identifying the friction points and finding practical ways to smooth them out.

From my time wandering around our ecosystem, I’ve come to understand Houston is great at infrastructure at scale, solving life-and-death challenges in the global spotlight, and "boldly going where no one’s gone before." These three things, in my opinion, capture the essence of Houston does best: We do hard things here.

What excites me today is that we’re applying innovation to those core strengths in ways that feel authentically Houston. One area I’m especially excited about is the emergence of the “New Space Economy,” captured beautifully in Wogbe Ofori’s thought piece “The Astropreneur’s Startup Journey Map.” It's a great example of how the next wave of space-related innovation might connect to Houston’s long-standing strengths in manufacturing, logistics, and problem-solving at scale.

Another challenge Houston faces is what I call a "proximity problem." Even when events are only a few miles apart, traffic can make it difficult for people to stay connected across the city. That’s why I’m so encouraged by the rise of what I think of as "intent-based gatherings" around the city: events designed with purpose, where people know they’ll find real connection and value once they arrive.

IM: Finally, what does being a "Trailblazer" mean to you?
WP: To me, trailblazing in the Houston innovation ecosystem means being willing to wander through the many different corners of the community and look for value in places we often overlook. It’s about showing up at events, community meetings, and pitch competitions — not just to participate, but to notice how each of these "nodes" in the ecosystem connects and adds value to the others.

Sometimes the trailblazer only walks a trail once: as they are discovering it. If you can help others see a newfound trail’s purpose and potential, it becomes a path others can follow more easily in the future. That’s the real work of a trailblazer: mapping connections, framing their value, and helping people recognize how those pathways strengthen the ecosystem as a whole.

In a broader sense, trailblazing is about seeing things not just as they are, but as they could be. Then taking the steps, however small, that make that vision real.

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

Houston-area VC funding sunk to 5-year low in Q3 2025, report says

by the numbers

Fundraising for Houston-area startups experienced a summertime slowdown, sinking to a five-year low in the third quarter, according to the latest PitchBook-NVCA Venture Monitor.

The PitchBook-NVCA Venture Monitor shows startups in the Houston metro area attracted $204.4 million in venture capital from June through August. That’s 55 percent below the total for the previous quarter and 51 percent below the total for the third quarter of 2024.

More telling than those figures is that the third-quarter haul dropped to its lowest total for Houston-area startups since the fourth quarter of 2020, when $133.4 million in VC was raised. That was the third full quarter after health officials declared the pandemic in the U.S.

In Q3 2025, AI accounted for nearly 40 percent of VC deal volume in the U.S., Kyle Stanford, director of U.S. venture research at PitchBook, said in the report. And through the first nine months of 2025, AI represented 64 percent of U.S. deal value.

VC deal activity “has been nearly steady, emphasizing a consistent influx of companies, especially at the pre-seed and seed stages,” Stanford said. “Large deals remain the primary driver of market deal value, with almost all of these deals focused on AI.”

Bobby Franklin, president and CEO of NVCA, said that while fundraising hasn’t returned to pre-pandemic highs, deal values are going up in sectors such as AI, manufacturing, robotics and space tech, many of which have already exceeded their investment totals for all of 2024.

Meet 6 of the fastest-growing scaleup companies in Houston right now

meet the finalists

From raising funding rounds to earning FDA acceptance, some of Houston's most innovative companies have reached major milestones this year.

The 2025 Houston Innovation Awards will recognize their progress by bringing back our Scaleup of the Year category for the second year. The award honors an innovative later-stage startup that's recently reached a significant milestone in company growth.

Six breakthrough businesses have been named finalists for the 2025 award. They range from climatetech startups to a biotech company developing new drugs for neurodegenerative diseases and more.

Read more about these businesses and their impressive growth below. Then join us at the Houston Innovation Awards on Nov. 13 at Greentown Labs, when the winner will be unveiled at our live awards ceremony.

Tickets are now on sale for this exclusive event celebrating all things Houston Innovation. Corporate 10-packs, featuring reserved seating and custom branding, and individual tickets are still available. Secure your seats today.

Coya Therapeutics

Clinical-stage biotechnology company Coya Therapeutics (NASDAQ: COYA) has developed COYA-302 that enhances anti-inflammatory T cell function and suppresses harmful immune activity. The drug candidate is being advanced for several neurodegenerative diseases—including ALS, Alzheimer’s, Parkinson’s, and frontotemporal dementia—and has demonstrated promising reductions in neuroinflammation in preclinical and early clinical studies, according to the company.

Coya, founded in 2021, received FDA acceptance for its investigational new drug application for COYA-30 this summer. It closed its IPO in January 2023 for more than $15 million and added $26 million in PIPE funding that same year. Last year, the company secured an additional $15 million in PIPE funding.

Fervo Energy

Houston-based Fervo Energy is working to provide 24/7 carbon-free energy through the development of cost-competitive geothermal power. The company is developing its flagship Cape Station geothermal power project in Utah, which is expected to generate 400 megawatts of clean energy for the grid. The first phase of the project will supply 100 megawatts of power beginning in 2026. The second phase is scheduled to come online by 2028.

The company raised $205.6 million in capital to help finance the project earlier this year and fully contracted the project's capacity with the addition of a major power purchase agreement from Shell. Founded in 2017 by CEO Tim Latimer and CTO Jack Norbeck, Fervo is now a unicorn, meaning its valuation as a private company has surpassed $1 billion. In March, Axios reported Fervo is targeting a $2 billion to $4 billion valuation in an IPO.

Koda Health

Houston-based Koda Health has developed an advance care planning platform (ACP) that allows users to document and share their care preferences, goals and advance directives for health systems. The web-based platform guides patients through values-based decisions with interactive tools and generates state-specific, legally compliant documents that integrate seamlessly with electronic health record systems. The company also added kidney action planning to its suite of services for patients with serious illnesses last year.

Koda Health was founded out of the TMC's Biodesign Fellowship in 2020 by CEO Tatiana Fofanova, chief medical officer Dr. Desh Mohan, and chief technology officer Katelin Cherry. The company raised a $7 million series A earlier this year, and also announced major partnerships and integrations with Epic, Guidehealth, Medical Home Network, Privia Health and others.

Mati Carbon

Houston climatetech company Mati Carbon removes carbon through its Enhanced Rock Weathering (ERW) program that works with agricultural farms in Africa and India. Mati says the farmers it partners with are some of the most vulnerable to the impacts of climate change. The nonprofit won the $50 million grand prize in the XPRIZE Carbon Removal competition, backed by Elon Musk’s charitable organization, The Musk Foundation, earlier this year.

Mati Carbon scaled operations in India, Zambia, and Tanzania this year and has advanced its proprietary measurement, reporting and verification (MRV) platform, known as matiC, enabling seamless field data capture, chain-of-custody and carbon accounting at scale. The company was founded in 2022 by co-directors Shantanu Agarwal and Rwitwika Bhattacharya.

Molecule

Houston-based Molecule Software has developed an energy trading risk management (ETRM) platform that allows companies trading power, oil and gas, biofuels, renewables and more stay ahead as the markets evolve.

The company closed a Series B round earlier this year for an undisclosed amount. Sameer Soleja, founder and CEO of Molecule, said at the time that the funding would allow the company to "double down on product innovation, grow our team, and reach even more markets." The company was founded in 2012 by CEO Sameer Soleja and participated in the Surge Accelerator the same year.

Utility Global

Houston-based Utility Global has developed its proprietary eXERO technology that produces low-cost, clean hydrogen from water and industrial off-gases without requiring grid electricity.

First founded in 2018 by CEO Parker Meeks, the company participated in Greentown Labs and the Rice Alliance for Technology and Entrepreneurship programs. It raised a $55 million funding round earlier this year and launched commercial partnerships with ArcelorMittal Brazil and Hanwha Group in South Korea to deploy its hydrogen solutions at scale.

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