Houston investor outlines how rare VCs are in Houston — and how to find them

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If you feel like it's hard to find venture capitalists in Houston, you wouldn't be wrong, according to this Houston investor. Photo via Getty Images

As a venture capitalist and former startup founder living in Houston, I get asked a lot about the best way to find and connect with a venture capitalist in Houston. My usual advice is to start with a list, and reach out to everyone on that list. But no one has a comprehensive list. In fact, VCs are such a quiet bunch that I’ve yet to meet someone who personally knows everyone on this proverbial list.

So, I got together with a couple of VC friends of mine, and we put together our own Houston venture capitalist list.

There are, by our count, 11 active venture capital funds headquartered in Houston of any size and type, and outside of corporate venture capital and angel investors, there are 30 total venture capitalists running funds.

Houston has always been quite thin on the VC fund front. I’ve jokingly introduced myself for a while as “one of the 13 venture capitalists in Houston.”

Let’s put this scale in some brutal perspective. With 7.2 million people in the Greater Houston Metro Area, the odds of finding a partner level active venture capitalist in Houston is about 1 in 240,000, if you take a most expanded definition of venture capitalist that might come down to 1 in 100,000. We’re the fifth largest metropolitan area in the country with a tremendous economic engine; there is a ton of capital in Houston, but it’s residing in things like institutional fixed income and equities, real estate, wealth management, corporate, private equity, family office, energy and infrastructure Basically, mostly everywhere but in venture capital funds for tech startups.

By comparison, there are almost as many Fortune 500 CEOs in Houston — 24, by our count — as venture capitalists and fewer venture capitalists than Fortune 1000 CEOs, of which there are 43. That means running into a VC in the checkout line at HEB is about as rare as running into the CEO of CenterPoint, ConocoPhillips, or Academy. In fact, as there are 115 cities in the Greater Houston area, you are three times more likely to be a mayor in Greater Houston Area than a partner at an investor at a VC firm, and more likely to be a college or university president. While we’re at it, you’re 400 times more likely to be a lawyer, 250 times more likely to be a CPA, and over 650 times more likely to be a medical doctor.

Our 30 venture capitalists in the Greater Houston Area are spread across 20 firms and all major venture sectors and stages. Venture capitalist is defined for this list as a full time managing director or partner-level investment professional actively running a venture capital fund with limited partners, currently investing in new venture capital deals from their fund from seed to growth stage, and residing in the Greater Houston Metro area.

To get to 31 we added in a couple of people running venture set asides for PE funds, and a number who work from Houston for funds with no office here. We excluded CVCs, as the decision making is more corporate than individual and rarely includes the committed fund and carried interest structure that defines venture capital, and excluded professionals at angel networks, accelerators, and seed funds that provide investment, but don’t manage conventional venture capital funds, as well as PE funds that do the occasional venture deal. We might be able to triple the number if we include venture capitalists at any professional level, and add in those professionals at PE and angel and seed funds, and corporate venture capital teams who are actively investing. But we’ll get to those other sources of funding in the next list.

The 11 venture capital funds headquartered in Houston are: Mercury, Energy Transition Ventures (my fund), Montrose Lane (formerly called Cottonwood), Texas Medical Center Venture Fund, Artemis, New Climate Ventures, Fitz Gate Ventures, Curate Capital, Knightsgate Ventures, Amplo Ventures,and First Bight Ventures.

Another half a dozen firms have a partner level venture capital investor here, but are headquartered elsewhere: Energy Innovation Capital, Decarbonization Partners, 1984 Ventures, Altitude Ventures, Ascension Ventures, Moneta Ventures, and MKB & Co. Two others, CSL Ventures and SCF Partners, are local private equity funds with a venture capital partner in Houston and a dedicated allocation from a PE fund.

Culling these for partner or managing director level currently in Houston, in alphabetical order by first name, LinkedIn profile and all.

We may have missed a couple of VCs hiding in plain sight, as venture capital is a pretty dynamic business.

VCs are just rare. And yes, perhaps more rare in Houston than in California. Something less than 1 in 100 VCs in the country live in Houston. Across the US there are somewhere around 1,000 to 2,000 active venture capital firms, and maybe another 1,000 to 2,000 active US based CVCs — so, plus or minus maybe at most 4,000 to 5,000 currently active partner level venture capitalists in the country excluding CVC professionals (active VCs and VC funds are really hard to count).

Perhaps in the most stunning statistic, the 7,386 elected state legislators in the US today outnumber the total number of American venture capitalists. Luckily for startup founders, the venture capitalists are more likely to return your phone call.

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Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures. He’s currently hosting the Venture Capital for First Time Founders Series at the Ion, where ETV is headquartered.

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Montrose Lane managing partners, Ryan Gurney (left) and Jeremy Arendt, have announced a rebrand and the closing of the new fund. Photos via montroselane.com

Houston venture group closes $64M fund and rebrands with new name

money moves

A Houston venture investment group has announced today that it has a new name to go along with the recent closing of its second fund.

Cottonwood Venture Partners, a Houston-based firm focused on funding startups with software solutions for the energy industry, has closed its $64 million Fund II and renamed itself Montrose Lane.

"Our mission is to uphold a creative and fast-moving approach to partnering with software companies that help make energy affordable, safe, and environmentally friendly," says Jeremy Arendt, managing partner, in a news release. "For several reasons, 'Montrose Lane' captures that vision for us."

The new name is effective immediately, and the leadership at the firm is remaining the same. Chicago-based Kirkland & Ellis LLP served as fund formation counsel to Montrose Lane.

Montrose Lane's second fund — which is double the size of its first — included both new and previous investors, as well as strategic corporations. Founded in 2017, the fund has raised about $100 million in commitments.

"We are humbled to have had such supportive partners behind us since we first set out to invest in technology companies changing the way the energy industry does business," says Ryan Gurney, managing partner, in the release. "The global pandemic has only accelerated the need to adopt digital solutions throughout the energy industry. We are excited to pursue the opportunity alongside our existing and new investors."

Last year, Montrose Lane led several Texas energy tech startups' funding round, including Austin-based HURVData Inc.'s $5 million series A round, Dallas-headquartered Trivie Inc.'s $5 million series A round, Houston-based Hitched.com's $5.5 million series A, and Houston-focused Ambyint's $15 million series B.

Trivie has closed a $5 million investment round led by Houston-based Cottonwood Venture Partners. Photo via Trivie.com

Houston investment firm leads Texas startup's $5M series A round

money moves

A Texas-based tech startup that has created an artificial intelligence-enabled tool that gamifies corporate training and education has closed its most recent funding round thanks to a Houston investor.

Trivie as announced its $5 million series A investment round led by Houston-based Cottonwood Venture Partners, an investment firm that has a portfolio of technology companies that are providing digital solutions within the energy industry. Trivie will use the new funds to scale its product and expand across industries, from energy and manufacturing to hospitality, healthcare, consumer goods, and more.

"The Trivie team's success to date has been remarkable and we are humbled to partner with them to expand Trivie's reach as organizations increasingly look to maximize knowledge retention, particularly as it relates to health and safety," says Jeremy Arendt, managing partner of CVP, in a news release.

Now, as more employees are working from home than ever before, relevant training is crucial and at the top of mind for business leaders. Trivie's clients include Subway, Phillips66, Anheuser-Busch, to name a few.

"At Trivie, our mission is to ensure that every employee at every organization can be at their very best because what they have been taught, they remember, and what they have said is understood," says Lawrence Schwartz, CEO, and co-founder at Trivie, in a news release. "We are extremely excited to partner with Cottonwood Venture Partners to help us expand our footprint in the Fortune 1000 and to continue to execute on that mission."

One of Trivie's founders, Leland Putterman, who is based in Houston, first had the idea for a consumer-facing trivia game 18 years ago. When the app rolled out in 2013, it garnered more than three million downloads. As COVID-19 has brought new compliance guidelines to the forefront of every industry, Trivie was quick to make the CDC's coronavirus guidelines available to all of its clients for no additional charge to be used across their entire employment bases.

Additionally, Trivie prioritizing its user's ability to connect in a time of social distancing and working from home.

"The only way to maintain that company culture and close communication with confidence is to use something like Trivie," Putterman previously tells InnovationMap. "There's no feedback loop right now. The only way to bridge that gap is to have something like Trivie that's the glue."

Houston-based Tachyus closed a $15 million Series B round. Photo courtesy of Thomas Miller/Breitling Energy

Houston oil and gas software company closes $15 million round led by local PE firm

Money on the mind

It's pay day for Houston-based Tachyus. the data-driven software company has closed its Series B fundraising round at $15 million. The round was led by Houston-based Cottonwood Venture Partners, a private equity firm that funds companies using technology to solve problems within the energy industry.

Tachyus was founded in 2013 in Silicon Valley and recently relocated to Houston. The fresh funds will go into growing its cloud-based, artificial intelligence-enabled platform.

"In this economic environment, oil and gas operators need disruptive tools to optimize their fields," Tachyus CEO and co-founder, Paul Orland, says in a release. "This investment allows us to reach more customers and accelerate the delivery of new technology that improves our clients' business performance."

The company has already grown its client base and has customers in Argentina, Europe, and Asia. Tachyus joins several other tech-focused energy startups in CVP's portfolio, including Ambyint, Novi Labs, and SitePro. Houston-based Tudor, Pickering, Holt & Co. served Tachyus as its financial adviser.

"As the oil and gas industry evolves in the face of new commercial challenges, operators need to focus on getting the best performance from their assets, and Tachyus' technology has a track record of doing just that," says Jeremy Arendt, managing partner of CVP, in the release. "We are excited to partner with the Tachyus team to expand their reach and empower customers to optimize production across their fields."

Tachyus closed its last round in 2016 with a $4 million investment from Primwest, according to CrunchBase. Before that, the company had raised several million.

Last year, the startup restructured its C-suite. Tachyus co-founder Dakin Sloss transitioned from CEO to chairman, and Orland, who was previously CTO, took the reins, according to a release.

Paul Orland is CEO of Tachyus. Photo via tachyus.com

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NASA awards Houston university $1.2M for diversity in aerospace initiative

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NASA will award the University of Houston $1.2 million toward a collaborative project with some of the biggest players in aerospace to foster diversity in the field.

The funds will go toward UH's Partnership for Inclusivity in Engineering Education and Research for Space, or PIE2RS, which is a collaboration between UH, UH-Clear Lake, NASA’s Johnson Space Center, the Boeing Company, and the Greater Houston Partnership.

PIE2RS will provide experiential learning opportunities for marginalized students through capstone projects, internships and research opportunities. It will also offer a 10-week paid research experience for 18 students each year, along with professional development workshops and mentoring opportunities.

It will be led by Jerrod A. Henderson, assistant professor of chemical and biomolecular engineering at UH. Karolos Grigoriadis, the Hugh Roy and Lillie Cranz Cullen Endowed Professor and chair of the Mechanical and Aerospace Engineering Department, will serve as co-principal investigator.

“Our research, as well as the research of leading scholars, has highlighted the challenges underrepresented students face, including isolation, marginalization, racial bias and hostile educational environments,” Henderson said in a statement. “Our goal with PIE2RS is to improve the recruitment and retention of students in aerospace-related STEM disciplines, increase their sense of belonging and broaden their participation through hands-on research and experiential learning opportunities.”

UH professors Olga Bannova, Mariam Manuel and Tian Chen will also work on the project along with collaborator Rick Greer.

The funds come from NASA’s Minority University Research and Education Project in partnership with the National Science Foundation’s Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science network, which aim to support diversity in the engineering fields.

UH is one of six universities to receive funding for DEI projects from NASA, totaling $7.2 million. The other institutions include:

  • Alabama A&M University
  • Morgan State University
  • North Carolina A&T University
  • University of Central Florida
  • University of Colorado – Denver

“With these awards, we are continuing to create pathways that increase access and opportunities in STEM for underrepresented and underserved groups,” Keya Briscoe, NASA's MUREP manager, said in a statement. “NASA continues to invest in initiatives that are critical in driving innovation, fostering inclusion, and providing access to the STEM ecosystem for everyone.”

NASA has inked several deals and agreements with Houston ties in recent months.

Space tech company Intuitive Machines (Nasdaq: LUNR, LUNRW) secured its fourth contract with NASA’s Commercial Lunar Payload Services, or CLPS, program last month for $116.9 million. The agreement includes six lunar deliveries.

In August, oil giant bp America and NASA agreed to share digital technology and technical expertise to boost U.S. space exploration efforts.

Ken Nguyen, principal technical program manager at bp, explained the unique opportunities behind the deal in a recent episode of the Houston Innovators Podcast.

First-of-its-kind electric jet to fly over greater Houston area

flying evs

An aircraft that's being touted as the first fully electric jet is taking off from Hobby Airport to serve the greater Houston area.

Lilium Jet, which takes off and lands vertically, is making its United States market debut at Houston-area facilities – Houston Hobby Airport, Conroe North Houston Regional Airport, and The Woodlands Heliport Lilium. Houston-based aircraft brokerage EMCJET will house the Lilium Jet at its Galaxy FBO Houston-area facilities at the airports.

“We are excited to transform Galaxy FBO into a cutting-edge hub for the eVTOL innovation,” Jeremy Gee, CEO of Galaxy FBO, says in a news release. "As the future of electric aviation takes flight, this marks a significant step in making Houston a leader in sustainable and efficient transportation solutions. Our team is proud to support Lilium's revolutionary mode of travel that will connect Greater Houston in ways never thought possible."

The Lilium Jet is capable of quickly connecting routes like Houston Hobby Airport to Galveston, Houston Spaceport to College Station, The Woodlands to Galveston, and others. The jet is designed for regional travel with its aerodynamic shape. The ducted electric fans prioritize efficiency and speed during forward flight. The jet’s anticipated initial operating range is roughly 110 miles. Lilium aims for the first piloted flight of the Lilium Jet to occur early in 2025.

“Lilium is serious about expanding in the U.S. and actively progressing towards FAA validation,” Lilium’s Vice President of Commercial Americas Matthew Broffman says in a news release.” As part of our commitment to working with communities across the U.S. and expanding our customer base, we’re excited to showcase our aircraft for the first time in Houston, a city with a proud legacy of aerospace innovation in America.”

The Greater Houston Partnership will also host a discussion with industry leaders on how electric aviation can “revolutionize regional travel” according to a news release.

“Houston is home to the world’s leading aerospace companies, and we’re thrilled to welcome Lilium and this next generation of aviation technology,” says Kevin Tipton, senior director for aerospace and aviation at GHP in a news release. “Together, we’re on the brink of something groundbreaking for our region.”

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This article originally ran on EnergyCapital.

US Latinas are contributing to the Houston economy at a volume worth celebrating

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Hispanic Heritage Month provides an opportunity each year to reflect on the impact Hispanics have made in our culture. Whether we recognize it or not, we experience this impact year-round through our food, sports, business, politics, science, education and the arts. Yet, one of the most important and lasting impacts that isn’t often celebrated is the role the Hispanic community plays in accelerating economic growth.

The recently released U.S. Latina GDP Report, commissioned by Bank of America, reveals a powerful truth: Latinas are a driving force in the U.S. economy, contributing $1.3 trillion to the GDP in 2021.

In fact, Latina economic output has grown over 50 percent in a decade - far outpacing the growth rate of any other segment. Today, the Latina GDP is larger than the entire economy of Florida, and that of every other state except California, New York and Texas.

This rapid rise reflects the resilience, hard work and entrepreneurial spirit of Latinas across the country. Here in Houston, these statistics are evident in the contributions of Latinabusiness owners who are driving our local economy and revitalizing our community.

Known as one of the most ethnically and culturally diverse cities in America, Houston is bolstered by an ever-growing Latino population. With over 2.8 million Hispanic and Latino residents in 2023, the Houston metropolitan area is home to the fourth-largest Hispanic and Latino population in the nation. Latina entrepreneurs are playing a vital role in shaping our economic landscape. About 25 percent of all Latino-owned businesses in Texas are owned by Latinas. To provide perspective, there are more than 11,000 Latino-owned businesses in Houston that are preserving the heritage of our community while fueling economic growth.

When it comes to college education, the number of Latinas with a bachelor’s degree or higher increased 103 percent between 2010 and 2021, while the number of highly-educated non-Hispanic females increased only 38.3 percent. And despite being just 9.3 percent of the U.S. population, Latinas are responsible for 30.2 percent of the U.S. labor force growth since 2010.

Through this increased educational attainment and powerful entrepreneurial mindset, Latinas continue to build thriving businesses that uplift their local communities, propel economic mobility and create generational wealth. They provide valuable services and act as role models, showing the next generation what is possible with dedication and opportunity.

As we celebrate Hispanic Heritage Month and the significant role Latinas play in our nation’s economic growth, we applaud the women who are strengthening our city, local communities and beyond.

These women are not just contributing to the economy; they are giving life to it.

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Elizabeth Romero is the managing director of business banking and Central and Southwest Region executive at Bank of America Houston.

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