Houston expert: How to build startup runway in a choppy venture funding market

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Founders, when you feel the market starting to tighten up, consider giving yourself, and your investors, some breathing space, then use that breathing space to drive value. Photo via Getty Images

The venture funding market in 2023 has been very tough.

The number of rounds closing is significantly down from the 2022, and a record number of companies are raising. Overall VC fundraising is down, but great deals are getting funded well and at good valuations, while many are struggling. Fewer new investors are writing lead checks and being more cautious when they do, later stage investors are shifting earlier stage to manage risk, bad cap tables, operating plans, and reluctant insiders are killing otherwise good deals, and everyone is working on ensuring their portfolio is in good shape.

This is just another venture cycle. The sky is not falling, the playbook for this cycle was written long ago. But if you are a founder, you may need to take action. If you are less than 15 months of runway, it’s time to go to your investors with a plan. You need to either be well on your way to closing a round, starting your fundraise if the company is ready, know your investor group’s plan to bridge or do an inside round if necessary and what you need to achieve to unlock that, or bring them a realistic plan yourself to get to 18 to 30 months of runway. But whatever you need to do, you need to do it now.

The runway plan

The core of a good runway plan is building a cash wedge by taking a little from everywhere, and drop margin and cash. A little revenues, a little in pricing, a little headcount reduction, a little insider capital, a little new capital, and a little balance sheet help. How much a little is, depends on your own dynamic. The secret to a good cash wedge runway plan is starting early, and doing it now. Every day of delay increases the depth of the changes needed for the same runway – until you reach a point where the brutal burn math just doesn’t work, and the changes become costly or even untenable.

Focus on your customers. Nothing cures runway or fundraising ills like revenue. You’ve built these relationships for a reason. They are taking your calls because they care. If you and your team aren’t spending most of your time with customers right now, you are doing it wrong. Good customers get it. Focus their attention on how your product makes them money, and how much. Support their internal efforts to grow the account. Open book it, raise prices if it makes sense, and ask for more volume or contract extensions at good prices if you can’t. With new customers, focus on getting more phase ones that fit in the budget your champions have available quickly. Bet you and your customer can find more budget later when you’ve demonstrated value to them. Bid every grant and non-dilutive source that makes sense, which builds leverage for yourself and your investors.

Burn matters. In a tight market, no one likes to buy burn, and demonstrating efficiency of revenue and backlog relative to capitalization and burn level matters. If you’re going to cut (and you probably should), cut much deeper than you think, and do it now. You ran this company when it was four people and no money, you can do it again if you really had to. Start making quick decisions about what you can defer and cut in the near term, there is always an easy 5 to 10 percent of costs you can cut and push to next year, and often a few points that can be pulled from supply chain deals. Overplan for growth, but don’t release to spend until your capital markets plan is clear.

Rebalance your spend. Shift your cost structure and organization chart forward towards the customer. Aggressively expand customer facing lead generation, guerilla marketing, applications engineering and direct sales efforts, at the expense of internally facing ones like R&D, manufacturing, and overhead. Repurpose people, change comp structures, job descriptions, or adjust costs and headcount. Get your team on board with the focus and where your runway is. A 12-person startup has about 2,000 labor hours a month to throw at its problems, 3,000 hours on overdrive, when your runway shortens, it’s time to hurl those at customers. Keep in mind, none of this is permanent, good startup organizations are elastic and in six months you can shift back or add again. You’re only really making 180-day changes here. That’s what the nimble startup means. It’s about runway and quick product and operational shifts.

Hit the balance sheet for cash. Depending on company stage and type, sell any underutilized assets and inventory, defer some capex, put someone on collecting AR and adjust your contract terms and pricing to pull forward cash flow, term out and negotiate payment terms on AP, leases and debt. One huge caveat. Do not take venture debt. Until you are profitable, venture debt does not actually create the runway in the real world that you see on paper, and has killed more good startups on the cusp of greatness. Venture debt is Lucy, runway is the football, and you are Charlie Brown.

Adjust your capital markets strategy. The classic rule is raise all you can when you can, because capital is available most when you need it least. But that’s not the whole story. And founders need to realize it is really dangerous to take a deal to market that is not ready, and doesn’t have the right level of insider support, is priced or structured wrong. While the market sets the price and terms, once you’ve a cap table full of investors, both new and existing investor appetite, and valuation, becomes a partial function of existing and new investor appetite and support. Take out a deal that’s not ready, or with too much burn, too little insider support, too high a last valuation, too large a convert or safe overhang or prior capitalization, too little team ownership, or too much valuation or cash need relative to its team, technology, TAM and traction (and cap table), and a founder and board can turn a good opportunity into a death spiral headed straight off a cliff, fast.

The "Magical 25" percent ratio. This is an art not a science, but the Magical 25 percent ratio on a prototypical startup will give you an idea of how powerful a Runaway Plan can be to get a deal done and reset a founder’s opportunity.

Imagine a middle of the road seed funded SaaS startup, burning $350,000 gross, with $100,000 in MRR, which has raised $3 million in cash from three investors and spent half of it. On its current trajectory it has six months of cash left, and is bankrupt by March. Market turned down, and the initial investor calls don’t result in a lead VC leaning in. The logic of burn rate math is brutal. In 90 days the company is on fumes, and it has no term sheet in hand, with the odds of getting one generally falling. And in today’s market the $1 million in ARR has become the new minimum not sufficient condition for fundraising, and the company will need to get farther on it’s A to be attractive to a B round investor. If the founder does nothing and waits 90 days they’ll be begging their investors for a bridge, and begging new investors for a flat round, and will likely end up with downround or an ugly insider bridge. At $250,000-a-month burn and no term sheet, within 150 days the founder will then need an inside round of between $4.5 and $6 million to get to the prototypical 24 month runway, or a $1.5 to $2 million bridge to buy enough more months to fundraise and build value. That’s 1.5x to 2x the capital raised, or over half the existing capital in a bridge, and puts intense pressure on strength of your cap table, growth rate, broad insider support, and quality of revenues in a tight venture funding market.

If the founder instead cuts costs 25 percent immediately, and then throws all hands on deck to find 25 percent more revenue — at this level of burn the startup probably has a team of at least 12 to 15 people, meaning the founder can throw at least 2,000-3,000 man hours in an all hands customer push in just the next 30 days if they had to. At the same time, the founder goes to his largest investors, walks through the cash and cost plan, and asks them to give him a term sheet for a seed extension with existing investors all kicking in 25 percent of their contribution to date, with the extension equal to 25 percent of the total capital at close. It can be papered fast and cheap. That adds $750,000, leaving the founder to find one new investor to join the insiders at the last price for 25 percent of the extension – a much easier ask of a new investor in a tough market, and probably one the founder has a couple of interested parties that have been watching, or certainly one of the founder’s investors can make a quick call to a friend to close. Brutal burn rate math has now become magical burn rate math and the company has 18 months of runway, has halved its net burn, and can additionally get away with half the A round equal to 1x the capital it has raised to date at the end of it if need be.

The "magical" part is the founder has now changed the odds for everyone – his team only has to find 25 percent revenues and costs. His insiders are only asked for 25 cents on the dollar support at a price they should love, leaving the typical fund with plenty of follow-on reserves after that, a new investor does not have to carry the lion share of the burn, set price, do as much dd, or worry about investor fatigue, and the insiders don’t have to go it alone and have external validation, and the founder has minimized their dilution, and their fundraising time. If the founder then is able to keep costs flat for just 6 months in a sprint and pick up another 25 percent in revenues, the runway at the current cashout date is still 16 months, and the company is set up well for its next round, with on $4 million in capitalization on nearly $2 million in ARR, a new investor with dry powder in the deal, and plenty of reserves left on the cap table to support the A, with a lot more traction – leaving the size of A round the company has to have at less than half the level of before, the effective revenue multiple insiders and new investors are facing halved, the burn the new investor had to buy halved and lots of time and options for the founder to drive value, dilution, and scale.

Founders, it’s your company. Your decision. Just be aware, how and how fast you play the tough decisions when the market shifts, changes the calculus for your investors, and their level of confidence and ammunition to back your future decisions. When you feel the market starting to tighten up, consider giving yourself, and your investors, some breathing space, then use that breathing space to drive value.

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Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures.

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Houston-based energy tech investor Neal Dikeman writes his observations on Houston's venture capital and startup community's growth — in stark comparison of Silicon Valley's recent evolution. Photo courtesy of the Ion

VC investor: Houston's energy tech ecosystem grows as Bay Area activity seemingly slows

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There's stretch of sleek low rise office buildings in Palo Alto — referred to as Sandhill Road — that has long been the center of Silicon Valley (and the world’s) venture capital sector. An investor friend of mine told me recently that Sandhill Road is a ghost town these days, with the key partners at many of the Silicon Valley venture funds largely working from home or at their second homes.

That’s disappointing if true, but not surprising. Commuting sucks, and this business is a lot more far flung and global than it used to be. The venture capital business is always a wild and fun ride, focused on founders and the next big thing, with constant movement and alliances and partnerships.

I’ve been in these waves since I began investing during the dotcom boom in 2000, making the jump from private equity to venture capital in San Francisco at a fund behind Yellowpages.com and a few others, before co-leading a prior firm I founded in San Francisco doing seed investing and advising funds and investment arms of Macquarie Bank, ConocoPhillips, and Shell. We got in on the ground floor of cleantech and did well. This is my third major VC downcycle – there is always opportunity on both sides, and the more things change, the more they stay the same in venture capital. Hubs matter, because the business is heavily a critical mass of talent and capital business, with a power curve of outcomes. Cutthroat as venture capital and startups are, it is not private equity. You do need partners.

Houston has long lacked a center of gravity at all, let alone in tech. You might try rereading the 2001 Economist headline article “The Blob that Ate East Texas” for some humorous color on that score. But in tech, that’s changing.

Rice University’s Ion Houston innovation district project came out of some of the Greater Houston Partnership work a few years ago on how to get a serious tech hub going (I briefly served on the GHP affiliated Houston Technology Center board for Royal Dutch Shell during that revamp). After a slow start, Ion has begun to fill up with tech startups and bona fide check writing investors to go with the constant barrage of startup programming on its Ion Activation Floor and adjacent Greentown Labs incubation building.

Chevron Technology Ventures opened a guest office on day one on the third floor and Houston private equity and sometime crossover VC investor Ara Partners took early space with its headquarters in the building across the hall from them. Local fund of funds HX Venture Fund, which was created out of that GHP/HTC revamp and also puts on the Venture Houston Conference, moved in on the second floor.

Our fund, Energy Transition Ventures, was the first venture capital fund to move into the Ion when we launched in 2021, is located two doors down from HXVF. My partners and I made the call to make Houston our headquarters over Austin where my partner, Craig Lawrence, is located. He’s a former energy tech and solar executive who learned venture investing leading the successful cleantech effort at Accel Partners in Palo Alto. We are both Texas educated, Bay Area venture capital alums who are doing venture capital in Texas because it’s our home. Our third partner, Q Song, moved from Korea to the US, picking Houston over Austin and our Bay Area office to join us.

Houston was not the obvious choice – it still isn’t – I got nostalgia when driving through Austin and San Francisco in the last week seeing the sheer mass of tech and venture capital names to do business with, but doing things our own way is kind of our brand. We chose the Ion, because well, venture capital and startup life is a participation not a spectator sport, and if Houston was ever going to have a shot at being an investment hub, it needed an actual hub, and founders needed a place to go meet venture capitalists, and that won’t work if venture capitalists all work out of their homes or alone in some energy corridor or downtown high rise.

In our hallway of the Ion, you pass HX Venture Fund, Decarbonization Partners, Energy Transition Ventures, and WaterLens, a water testing startup which spun out of UT many years ago, all next door to each other at one end. And at the other end BP Ventures — with a newly added ExxonMobil venture capital team guest suite adjacent — next to water and energy pipeline corrosion detection software and hardware startup INGU, a Chevron Technology Ventures-backed startup, which is adjacent to one of Houston’s largest venture-backed SaaS companies, Liongard. That’s a half a dozen tech startup founders and a dozen investors across all stages in 125 feet.

I can count approximately 20 other startups in the building now, still heavily skewed to energy. Across the floor, Artemis Energy Partners and Veriten, run respectively by Houston energy fixtures Bobby Tudor and Maynard Holt two of the three Tudor Pickering Holt founders, have their offices, with Schlumberger and hydrogen software startup Velostics which just announced its seed round sandwiched in between. The co-founder of Tierra Climate, a Rice spinout that also just announced its seed round works out of the coworking, and Eigen Controls is building GHG detection equipment around the corner a few feet from an Edtech and medtech startup, and renewable energy services startup Clean Energy Services is headquartered a few feet from the entrance.

Since we moved in, GOOSE Capital, a Houston investment group launched out of Rice at the Rice Alliance Business Competition two decades ago, put its offices in the Ion Activation Floor, and you can quietly find their Managing Director Andrew Nicholson trooping up and down the stairs. BP Ventures then pulled the trigger in 2022 – and moved its US venture capital investing team HQ to the Ion — right down the hallway from us. Chad Bown who manages the US team is sitting in a phone booth 100 feet from me and Chris Spears is listening on pitches as I type this. And this month Decarbonization Partners, the climate growth fund of BlackRock and Temasek, opened its office next door to mine in between us and HX, with three investment professionals, led by David Hayes, formerly with BP Ventures. Aramco Ventures, now led by the former Energy Ventures US head Jim Sledzik, began weekly Friday morning office hours. Jim can often be grabbed for a casual chat on his way between meetings on a regular basis, as can Luis Alcoser or Kemal Anbarci who pop in and out of the Chevron Technology Ventures visiting offices on third floor, with Veriten, which just announced an investment fund, and now Artemis joining recently.

The Houston pool of high quality founders and startups has definitely improved as well – though we still don’t have the quantity or quality of teams needed for a healthy startup market. Blair Garrou from Mercury Fund was part of a recent panel for the Texas Venture Crawl at the Ion along with BP Ventures’ Ion based Grace Chan talking about why Houston, and he remarked that in their earlier funds, Mercury was 5 to 10 percent Houston startups, having to go far afield to fill up even one fund - but his recent fund is closer to 25 percent Houston based, as local team quality has improved.

Houston venture capital is two orders of magnitude smaller than the Bay Area – it’s about like writing an article asking whether Silicon Valley is the emerging Energy Corridor. But it’s nice to have coffee and beers with next door neighbors who are actually investing in, and founders who are actually running, venture backed businesses. Founders are learning that Houston’s venture investment and tech scene has an actual home these days, and is open for business.

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Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures.

Angel investors, corporate venture, and more options for Houston startups outside of the traditional venture capital model.

Houston innovator shares investment opportunities outside traditional VC model

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In my last column about tapping into Houston's venture capital ecosystem, I identified the 31 venture capitalists in Houston. By most measures Houston is around 0.5 to 1 percent of US venture capital activity, and that low volume is reflected in the limited number of venture capitalists locally.

But outside of venture capital funds, founders often pull money from other places including angel investors, seed funds and corporate venture capital arms as well as cross-over investors. I got asked this morning by a founder at the Ion, where’s the rest of the list?

Houston has five active corporate venture capital funds, or CVCs, with at least one senior investment professional in Houston with and one with headquarters here (Chevron). A short list of the key investment professionals in the group includes:

There are maybe half a dozen other corporates In Houston that organize around a fund structure and governance of some type, and have been actively investing in venture capital rounds with professionals in Houston. Equinor, a long time corporate investor, Baker Hughes which relaunched a CVC effort in 2021, Mitsubishi has investment professionals in Houston, and Williams which launched a new CVC effort in 2022, as well as Occidental, BHP, and Waste Management which had active CVC efforts in the past that have gone a bit on ice, as did ConocoPhillips, P66 and Schlumberger. Two larger private equity funds Ara Partners and Quantum are active in venture capital deals, but in a more mixed model. This universe would probably add another 30 to 40 Houston based active investment professionals.

The city also has around 10 angel networks, pre-seed funds, pre-seed investors, and accelerators that write checks, typically in the $100K to $1 million range, but either without committed venture funds in an acceleration model, at varying degrees of active, scale, model, and type.

Layering them in no particular order the Houston universe expands by another dozen full time or mostly full time professionals, and a few dozen angels. I’ve included their main contacts below:

These are certainly not large numbers for a city our size, and commensurate with the size of the Houston startup market. But while the cupboard may be a bit bare, it’s not empty. As a founder chasing money, that’s about 75 to 100 names to go chase, with probably double that in active or semi-active angel investors investing through these pools.

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Neal Dikeman is a venture capitalist and seven-time startup co-founder investing out of Energy Transition Ventures.

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

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

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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.

A local venture capital investor has teamed up with the Ion to bring four workshops focused on helping founders navigate startup funding. Image courtesy of the Ion

Houston VC launches founder-focused workshop series

ready to grow

Calling all founders — the Ion is hosting a four-part workshop series geared at educating startup CEOs on venture capital.

The Venture Capital for First Time Founders series is put on by Energy Transition Ventures and the Ion and is completely free to attendees. Serial entrepreneur and investor Neal Dikeman is hosting the series with guests joining him for each event. A networking opportunity follows onsite at Second Draught.

“Houston needs more founders," says Neal Dikeman, co-founder and partner of Energy Transition Ventures, in a news release. "The Investor Studio Series is the unvarnished reality of what it takes."

More information and registration is available online. Here's what each workshop will focus on, according to the release:

  • Startuplandia - What Makes Startups Go on Wednesday, January 11, at 4 pm. So you want to do a startup? We all have a choice in life to work for someone else or start something. But half of what you’ve been told about how tech startups form and launch is wrong - get the real story. Guest: Juliana Garaizar, vice president of Innovation and head of Greentown Labs Houston, and a board member of the Angel Capital Association
  • VC 101 - How Venture Capital Funds Work on Wednesday, January 18, at 4 pm. If you’re going to be, or raise money from, a VC, you better have a good idea of how their business works and what makes them tick — demystifying the decisions and person behind the curtain from a venture capitalist’s own experience. Guest: Andrew Nicholson, managing director of Goose Capital
  • How to Raise Venture Capital as a First-Time Founder on Wednesday, January 25, at 4 pm. Raising venture capital is an art with unwritten rules the VCs, and your advisors don’t tell you. Luckily venture capitalists are more predictable than they think — avoid the rookie mistakes and get the story on how to pull it off from a 7-time startup founder turned VC. Guest: Brad Burke, managing director of Rice Alliance for Technology and Entrepreneurship
  • The Biggest Mistakes Founders Make After Raising Money on Wednesday, February 1, at 4 pm. So now you’re in the rarified Funded Founders Club. Can you avoid the first-time founder mistakes or build a VC-backed company and make it to a successful exit? Guest: John Reale, venture lead for the Texas Medical Center Venture Fund and managing director of Integr8d Capital,

More guests may be announced and featured at the upcoming events. Each workshop takes place at the Ion.

“As Houston's HQ for innovation, the Ion is the perfect meeting place to host this workshop series for anyone interested or has a stake in a startup," says Christine Galib, senior director of Entrepreneurship and Innovation at the Ion, in the release.

An energy transition venture team has moved into the Ion. Photo courtesy of The Ion

Houston-based clean energy venture firm opens new office, adds partner

making moves

A Houston-based venture capital firm has been busy — with deploying capital, growing its team, and moving into new space.

Energy Transition Ventures has opened an office in the Ion Houston. The fund, which was announced last year, was founded by Craig Lawrence and Neal Dikeman — two former Silicon Valley venture capitalists with Texas ties. The team has a presence in Austin, as well as a satellite office in San Mateo.

"We’re excited after working remotely since we 'opened our doors' during the pandemic, to place our first office in the Ion," says Dikeman, adding that he's excited to work with the community's leadership. "I know several other investors have been looking or are in process to relocate to the Ion, but I believe we are the first venture capital fund to move in. Looking forward to the time when we are just one of long list of funds competing for startup founders’ attentions at Ion."

In addition to the new office space, ETV has also added a third investing partner. Q Song — vice president of GS Group, which was an early investor in the fund — relocated from Seoul, Korea, to Houston last summer to join the organization full time.

“Houston is a natural fit both professionally and personally," Song says. "GS Group has been partnered with Chevron in the GS Caltex refinery, one of five largest refineries in the world, for decades, and there is a huge Korean expat community here as well. For ETV, we needed a place like the Ion both suitable for hosting investors and executives when they come to town, and where startup founders feel comfortable and at home.”

The firm has made investments in four startups, and three have been announced publicly, Dikeman says. The most recent investment was in green hydrogen company Ohmium, which was founded by former SunEdison, Bloom Energy, and Plug Power executives and closed a $45 million round last month.

ETV has also invested in Dronebase, an aerial inspection company for renewables, and Resilient Power, a power electronics startup launching a next generation EV Fastcharging product.

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Texas tops ranking of best state for investors in new report

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Texas ranks third on a new list of the best states for investors and startups.

Investment platform BrokerChooser weighed five factors to come up with its ranking:

  • 2024 Google search volume for terms related to investing
  • Number of investors
  • Number of businesses receiving investments in 2024
  • Total amount of capital invested in businesses in 2024
  • Percentage change in amount of investment from 2019 to 2024

Based on those figures, provided mostly by Crunchbase, Texas sits at No. 3 on the list, behind No. 1 California and No. 2 New York.

Especially noteworthy for Texas is its investment total for 2024: more than $164.5 billion. From 2019 to 2024, the state saw a 440 percent jump in business investments, according to BrokerChooser. The same percentages are 204 percent for California and 396 percent for New York.

“There is definitely development and diversification in the American investment landscape, with impressive growth in areas that used to fly under the radar,” says Adam Nasli, head analyst at BrokerChooser.

According to Crunchbase, funding for Texas startups is off to a strong start in 2025. In the first three months of this year, venture capital investors poured nearly $2.9 billion into Lone Star State companies, Crunchbase data shows. Crunchbase attributes that healthy dollar amount to “enthusiasm around cybersecurity, defense tech, robotics, and de-extincting mammoths.”

During the first quarter of this year, roughly two-thirds of VC funding in Texas went to just five companies, says Crunchbase. Those companies are Austin-based Apptronik, Austin-based Colossal Biosciences, Dallas-based Island, Austin-based NinjaOne, and Austin-based Saronic.

Autonomous truck company rolls out driverless Houston-Dallas route

up and running

Houston is helping drive the evolution of self-driving freight trucks.

In October, Aurora opened a more than 90,000-square-foot terminal at a Fallbrook Drive logistics hub in northwest Houston to support the launch of its first “lane” for driverless trucks—a Houston-to-Dallas route on the Interstate 45 corridor. Aurora opened its Dallas-area terminal in April and the company began regular driverless customer deliveries between the two Texas cities on April 27.

Close to half of all truck freight in Texas moves along I-45 between Houston and Dallas.

“Now, we are the first company to successfully and safely operate a commercial driverless trucking service on public roads. Riding in the back seat for our inaugural trip was an honor of a lifetime – the Aurora Driver performed perfectly and it’s a moment I’ll never forget,” Chris Urmson, CEO and co-founder of Pittsburgh-based Aurora, said in a news release.

Aurora produces software that controls autonomous vehicles and is known for its flagship product, the Aurora Driver. The software is installed in Volvo and Paccar trucks, the latter of which includes brands like Kenworth and Peterbilt.

Aurora previously hauled more than 75 loads per week under the supervision of vehicle operators from Houston to Dallas and Fort Worth to El Paso for customers in its pilot project, including FedEx, Uber Freight and Werner. To date, it has completed over 1,200 miles without a driver.

The company launched its new Houston to Dallas route with customers Uber Freight and Hirschbach Motor Lines, which ran supervised commercial pilots with Aurora.

“Transforming an old school industry like trucking is never easy, but we can’t ignore the safety and efficiency benefits this technology can deliver. Autonomous trucks aren’t just going to help grow our business – they’re also going to give our drivers better lives by handling the lengthier and less desirable routes,” Richard Stocking, CEO of Hirschbach Motor Lines, added in the statement.

The company plans to expand its service to El Paso and Phoenix by the end of 2025.

“These new, autonomous semis on the I-45 corridor will efficiently move products, create jobs, and help make our roadways safer,” Gov. Greg Abbott added in the release. “Texas offers businesses the freedom to succeed, and the Aurora Driver will further spur economic growth and job creation in Texas. Together through innovation, we will build a stronger, more prosperous Texas for generations.”

In July, Aurora said it raised $820 million in capital to fuel its growth—growth that’s being accompanied by scrutiny.

In light of recent controversies surrounding self-driving vehicles, the International Brotherhood of Teamsters, whose union members include over-the-road truckers, recently sent a letter to Lt. Gov. Dan Patrick calling for a ban on autonomous vehicles in Texas.

“The Teamsters believe that a human operator is needed in every vehicle—and that goes beyond partisan politics,” the letter states. “State legislators have a solemn duty in this matter to keep dangerous autonomous vehicles off our streets and keep Texans safe. Autonomous vehicles are not ready for prime time, and we urge you to act before someone in our community gets killed.”

Houston cell therapy company launches second-phase clinical trial

fighting cancer

A Houston cell therapy company has dosed its first patient in a Phase 2 clinical trial. March Biosciences is testing the efficacy of MB-105, a CD5-targeted CAR-T cell therapy for patients with relapsed or refractory CD5-positive T-cell lymphoma.

Last year, InnovationMap reported that March Biosciences had closed its series A with a $28.4 million raise. Now, the company, co-founded by Sarah Hein, Max Mamonkin and Malcolm Brenner, is ready to enroll a total of 46 patients in its study of people with difficult-to-treat cancer.

The trial will be conducted at cancer centers around the United States, but the first dose took place locally, at The University of Texas MD Anderson Cancer Center. Dr. Swaminathan P. Iyer, a professor in the department of lymphoma/myeloma at MD Anderson, is leading the trial.

“This represents a significant milestone in advancing MB-105 as a potential treatment option for patients with T-cell lymphoma who currently face extremely limited therapeutic choices,” Hein, who serves as CEO, says. “CAR-T therapies have revolutionized the treatment of B-cell lymphomas and leukemias but have not successfully addressed the rarer T-cell lymphomas and leukemias. We are optimistic that this larger trial will further validate MB-105's potential to address the critical unmet needs of these patients and look forward to reporting our first clinical readouts.”

The Phase 1 trial showed promise for MB-105 in terms of both safety and efficacy. That means that potentially concerning side effects, including neurological events and cytokine release above grade 3, were not observed. Those results were published last year, noting lasting remissions.

In January 2025, MB-105 won an orphan drug designation from the FDA. That results in seven years of market exclusivity if the drug is approved, as well as development incentives along the way.

The trial is enrolling its single-arm, two-stage study on ClinicalTrials.gov. For patients with stubborn blood cancers, the drug is providing new hope.

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