Houston fintech startup acquired by California unicorn

M&A moves

Four-year-old Brassica has been acquired. Photo via brassicafin.com

A Houston fintech innovator is celebrating his latest startup's exit.

Brassica Technologies Inc., a fintech infrastructure company that's provides a platform for alternative assets, has been acquired by BitGo, a Palo Alto, California-based tech company with digital asset services. The terms of the deal were not disclosed.

"Joining forces with BitGo is a significant step towards Brassica's ultimate vision of building the financial infrastructure of the future," Youngro Lee, founder and CEO of Brassica, says in a news release. "Our strength lies in our 'one stop shop' approach of providing API-enabled infrastructure for the alternative assets industry.

"This sector is rapidly growing and bringing in new investors around the world," Lee continues. "Our technology-focused development, combined with our deep domain expertise in securities and banking laws, uniquely position us in the market, especially for sophisticated clients dealing with the complexities of private securities and digital assets."

Lee founded Brassica in 2020 after his first fintech company, NextSeed, was acquired by Republic. Brassica raised its $8 million seed round led by Houston-based Mercury last year.

The acquisition is a strategic move by BitGo, which was valued at $1.75 billion last year, according to the company after its $100 million raise. Adding Brassica's suite of technology expands on BitGo's ability to grow its customer base.

"We currently have a dichotomy in financial services — one side deals with traditional securities and the other deals with up-and-coming blockchain-based assets and cryptocurrencies," Mike Belshe, CEO of BitGo, says in the release. "With this acquisition, BitGo becomes the first major financial services firm to be able to provide comprehensive infrastructure support for both traditional private securities and blockchain-based assets, while significantly expanding our global presence."

Last year, Lee joined the Houston Innovators Podcast to discuss Brassica and his overarching mission of democratizing fintech and investment tools. He explains there hasn't been a seamless solution created for the backend of alternative asset transactions, things like custody of those assets or transferring and keeping track of them.

"The reason why I thought this was what I wanted to focus on next was exactly because it was an issue I struggled with as a founder of NextSeed," Lee says on the show. "The backend was always an issue. There's not one single vendor that we felt really understood our business, was doing it efficiently, or enabled us to deliver those services to our end clients."

A Houston fintech startup is aiming to modernize banking and investing — and has received fresh funding to do it. Photo via Getty Images

Houston fintech startup raises $8M seed round led by local VC

fresh funds

A Houston startup has raised millions for its fintech platform — and the company didn't have to go very far to find its lead investor.

Brassica Technologies Inc. closed its seed round at $8 million with Houston-based Mercury Fund leading the round. Valor Equity Partners, Long Journey Ventures, NGC Fund, Neowiz, Broadhaven Ventures, Armyn Capital, VC3DAO, Alpha Asset Management (Korea), and other global FinTech investors participated in the round as well.

The startup's platform has "institutional-grade solutions for the new era of private investing and alternative assets," per the release. Serving the alternative assets industry, Brassica's tools can easily integrate with any operating system to provide proprietary technology and unique regulatory licenses. The technology aims to modernize key banking and investing infrastructure to help enterprises safely grow their business and protect their customer assets.

With its "investment infrastructure as a service" model, Brassica was co-founded in 2021 by two familiar faces in Houston's fintech scene. CEO Youngro Lee and CTO Bob Dunton were behind NextSeed, a crowdfunding platform that allowed businesses to raise investment funding online. The startup was acquired in 2020 by Republic, where Lee currently serves as executive vice president and head of Asia.

“The future of finance will depend on the ability of trustworthy institutions to provide secure and seamless transitions between traditional financial services and web3 innovations while complying with strict regulations and still providing great customer experience,” says Lee in the news release.

“Today’s infrastructure solutions for alternative assets are often cobbled together through multiple incompatible vendors in a complex regulatory environment, which often creates unreasonable risk, errors, and single points of failure for market participants," he continues. "We started Brassica to address this fundamental problem and provide solutions to enable innovators in both traditional and web3 industries to build properly within a constantly evolving global regulatory framework.”

Along with the seed round news, the company has announced that Brassica Trust Company, its wholly-owned subsidiary, has received a Trust Charter by the Wyoming State Banking Board.

“The revolution of the private markets is here, and it is clear that the traditional, legacy infrastructure currently in place is not designed for the present and future investment world,” says Blair Garrou, managing director at Mercury Fund, in the release. “Brassica’s API-forward, institutional grade solutions make investing in private and digital assets more trustworthy, compliant, and secure than ever before, further bridging the gap between the worlds of traditional and decentralized finance. Their highly qualified and experienced senior business, legal, and technology executive team makes Brassica well-positioned to usher in this new era of alternative investments. We are proud to support Brassica on their ongoing mission to democratize finance globally.”

The company plans to use the funding to grow its product, engineering, business development, and customer success teams, per the news release, as well as develop a trust operations team in Wyoming. Current leadership includes former execs from Republic, Cleary Gottlieb, Kirkland Ellis, Morgan Stanley, Custodia Bank, LedgerX, Prime Trust, JP Morgan Chase, and M1 Finance.

Youngro Lee has announced funding for his latest fintech endeavor. Photo courtesy

Sylvia Kampshoff has launched Kanthaka's first crowdfunding campaign. Photo courtesy of Kanthaka

Houston fitness tech startup launches $1M crowdfunding campaign

money moves

Calling all cardio lovers, yogis, and strength trainers alike — a Houston fitness platform is opening up investment opportunities through a new crowdfunding campaign.

Kanthaka, a Houston-based app that connects clients to personal trainers and yoga instructors on-demand, announced it will be launching a $1 million campaign through Republic, a crowdfunding platform. Kanthaka's users and trainers — or anyone interested — now have the option to become part owners in the company.

"We are very happy at Kanthaka to have been selected by Republic for their crowdfunding campaign," says Sylvia Kampshoff, founder and CEO of Kanthaka, in a press release. "I want our users as our evangelists.

"Since we started the company I've had clients reaching out wanting to invest but it was complicated — you had to be an accredited investor or VC," Kampshoff continues. "Now through this crowdfunding campaign, clients and trainers can participate in our journey."

According to the release, Republic, which is strategically partnered with Houston-based NextSeed, only accepts less than 1 percent of applicants interested in being funded on the platform. Kanthaka has reportedly raised over $850,000 from two venture capitalists and angels investors to date.

The company provides both live in-person and virtual sessions. Between March 2020 and March 2021, Kanthaka grew over 700 percent in sessions sold, per the release, and now, with the COVID-19 vaccines, the company is seeing a new spike in sessions.

"Our vision is to become Amazon for health & fitness and the go-to provider to live a longer, happier and healthier life," Kampshoff says in the release. "We couldn't be more excited about this journey."

Frustrated with the lack of ease in booking training sessions, Kampshoff launched Kanthaka in 2017 and has grown the company and expanded into 15 markets. Kanthaka participated in Austin-based accelerator Sputnik ATX.

Image via mykanthaka.com

This week's roundup of Houston innovators includes Grace Rodriguez of Impact Hub Houston, Youngro Lee of NextSeed, and Liz Youngblood of Baylor St. Luke's Medical Center. Courtesy photos

3 Houston innovators to know this week

Who's who

Editor's note: In this week's roundup of Houston innovators to know, I'm introducing you to three local innovators across industries — startup development, fintech, and health care — recently making headlines in Houston innovation.

Grace Rodriguez, CEO and executive director of Impact Hub Houston

Impact Hub Houston has two new initiatives for female founders. Photo courtesy of Impact Hub Houston

Two accelerator programs were recently announced and they both are aimed at supporting female founders — and one Houston organization is behind them both. Impact Hub Houston announced that it has partnered up with Frost Bank to sponsor eight female founders to participate in Impact Hub's new Accelerate Membership Program.

Additionally, Impact Hub Houston has teamed up with MassChallenge for their own initiative supporting female founders in the Houston-Galveston region in partnership with Houston-based Workforce Solutions. The three organizations are collaborating to launch launch a bootcamp to support female founders in the greater Houston region.

"As a female founder myself, I'm incredibly excited about this opportunity to support and uplift more women entrepreneurs and women-led businesses in our region," says Grace Rodriguez, CEO and executive director of Impact Hub Houston, in a news release. "By now, it's no secret that women, and especially women of color, are under-invested in; and this is our chance to change that by helping more women strengthen their businesses and prepare to seek funding." Click here to read more.

Youngro Lee, co-founder and CEO of NextSeed and COO of Republic

What does the future of investment look like? That's something Youngro Lee thinks about daily – and he shares his thoughts on this week's episode of the Houston Innovators Podcast. Photo courtesy of NextSeed

The world of investing is changing — and the power shift is tilting from the rich elite to individuals. Youngro Lee, co-founder and CEO of NextSeed and COO of Republic, has seen the change starting several years ago.

"Investing is traditionally seen as something you can't do unless you're rich," Lee says on this week's episode of the Houston Innovators Podcast. "There was a certain understanding of what anyone (looking to invest) should do. … But now the world is so different."

Lee shares more about the future of investing and how he's watched the Houston innovation ecosystem develop over the years on the episode. Click here to read more and stream the podcast.

Liz Youngblood, president of Baylor St. Luke's Medical Center and senior vice president and COO of St. Luke's Health

As we enter year two of the pandemic, the way hospitals function now and in the future is forever changed. Photo courtesy

No industry has been unaffected by COVID-19, Liz Youngblood, president of Baylor St. Luke's Medical Center and senior vice president and COO of St. Luke's Health, observes in a guest column for InnovationMap. But hospitals — they've had a spotlight shown on them and their technology adoption since day one of the pandemic.

"The pace of innovation for hospitals has been at breakneck speed — from the evolution of new treatment protocols to the need to reconfigure physical spaces to support an influx of patients while also promoting a healing environment during this unprecedented time," she writes.

Hospitals, she says, look and feel completely different now than they did last year and the year before that. Click here to read more.

Houston fintech startup continues to grow to represent a new era of investing

HOUSTON INNOVATORS PODCAST EPISODE 78

When Youngro Lee and his co-founders launched NextSeed — an investment platform that allows non-accredited investors to invest in small, local businesses for as little as $100 — they were creating something that hadn't existed before. Now, Lee is actively working toward a world where this type of crowd-sourced investment is commonplace.

And the industry is changing — finally. The first change was in 2012 when the Jobs Act allowed for unaccredited investors to make small-scale investments into businesses. It was this new law change that drove Lee and his co-founders to create NextSeed as the landscape of both investors and companies that were able to get funding began to evolve.

And the financial world was due some changes, Lee says. If you look at the top 10 companies in the world right now, he explains on the show, most of those companies weren't on that list 20 years ago. "And that's not a coincidence," he says.

"Technologies, lifestyles, and generations change, but in the world of finance — because of regulations and old school mentality — it doesn't catch up," Lee says.

But new companies — like NextSeed on the private side of the market and Robinhood representing public investment — are putting investment power into the hands of individuals. And the new generations of investors look at investment differently.

"The future of investment is less about, 'let me maximize my ROI,'" he says, "it's going to transition to, 'I want to invest in things that make me happy and things that I value."

Last fall, NextSeed and New York-based Republic, another investment platform, entered into a strategic partnership that mutually benefits both companies and expands their horizons — both geographically and on an industry level. From Republic's perspective, the company is tapping into a new market in Houston and Texas — a region that's growing its population and attracting new businesses.

Lee shares more about the deal, the future of investing, and how he's watched the Houston innovation ecosystem develop over the years on the episode. Listen to the full interview below — or wherever you stream your podcasts — and subscribe for weekly episodes.

Rice University's annual Veterans Business Battle is calling for submissions. Courtesy of Rice University

Rice University competition to link veterans with NextSeed investors

it's on

Rice University's Business Veterans Association has helped military veteran raise more that $3.5 million in investments over the last seven years through it's annual pitch competition. And this year, the stakes are even higher.

The Veterans Business Battle — held April 23-24 — allows veterans to pitch their early-stage business or existing company to a panel of investors, as well as engage in educational opportunities and networking. Cash prizes are awarded for first, second, and third place pitches, ranging from $5,000 to $15,000

This year the VBB has also partnered with NextSeed Securities. The registered broker dealer and FINRA member will allow vetted startups invited to present at the event to raise capital from investments by the general public.

"Last year's online-only event gave us an opportunity to think of ways to engage new investors and expand our audience. We're excited to increase opportunities for our finalists and grow our network of investors," event co-chair Matt Wilson says in a statement.

Past competitors have run the gamut, including the likes of oil and gas drone operating company Trumbull Unmanned (which was named a Top 25 Veteran-Founded Startup by Forbes) as well as skin care lines, a body armor manufacturer, ready-to-wear boots, and a health-conscious sauces company. Several have gone on to represent small businesses at the White House.

Last year, YouMeMine, Capsulomics Inc, and Feildcraft were named finalists at the virtual event. In 2019, at a in-person competition, Amor Oral, Welcome Connect and FeedMe Fitness took the stage.

Other partners for the 2021 competition include the U.S. Small Business Administration, Bunker Labs, University of St. Thomas, Houston Community College, and Warrior Rising—a nonprofit for veterans and veteran families which will be hosting education, training, and one-on-one mentorships during the event.

To apply, applicants must submit a business plan on the competition website, vetbizbattle.org, by Feb. 5, according to a release. Businesses must have an honorably discharged veteran or active duty founder and equity holder who is running the venture. Finalists will be invited to make their business pitch at Rice University.

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2 Houston startups selected by US military for geothermal projects

hot new recruits

Two clean energy companies in Houston have been recruited for geothermal projects at U.S. military installations.

Fervo Energy is exploring the potential for a geothermal energy system at Naval Air Station Fallon in Nevada.

Meanwhile, Sage Geosystems is working on an exploratory geothermal project for the Army’s Fort Bliss post in Texas. The Bliss project is the third U.S. Department of Defense geothermal initiative in the Lone Star State.

“Energy resilience for the U.S. military is essential in an increasingly digital and electric world, and we are pleased to help the U.S. Army and [the Defense Innovation Unit] to support energy resilience at Fort Bliss,” Cindy Taff, CEO of Sage, says in a news release.

A spokeswoman for Fervo declined to comment.

Andy Sabin, director of the Navy’s Geothermal Program Office, says in a military news release that previous geothermal exploration efforts indicate the Fallon facility “is ideally suited for enhanced geothermal systems to be deployed onsite.”

As for the Fort Bliss project, Michael Jones, a project director in the Army Office of Energy Initiatives, says it’ll combine geothermal technology with innovations from the oil and gas sector.

“This initiative adds to the momentum of Texas as a leader in the ‘geothermal anywhere’ revolution, leveraging the robust oil and gas industry profile in the state,” says Ken Wisian, associate director of the Environmental Division at the U.S. Bureau of Economic Geology.

The Department of Defense kicked off its geothermal initiative in September 2023. Specifically, the Army, Navy, and Defense Innovation Unit launched four exploratory geothermal projects at three U.S. military installations.

One of the three installations is the Air Force’s Joint Base San Antonio. Canada-based geothermal company Eavor is leading the San Antonio project.

Another geothermal company, Atlanta-based Teverra, was tapped for an exploratory geothermal project at the Army’s Fort Wainwright in Alaska. Teverra maintains an office in Houston.

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This article originally ran on EnergyCapital.

Houston investor calls for all angels to move the ecosystem forward

houston innovators podcast episode 233

One of the biggest components of a well-functioning startup ecosystem is inarguably access to capital, and Mitra Miller is dedicated to enhancing education around investment and growing Houston's investor base.

As vice president and board member of the Houston Angel Network, the oldest angel network in Texas and one of the most active angel networks in the country, Miller strives to provide guidance to new and emerging angel investors as well as founders seeking to raise money from them.

"Most founders have no idea or understanding of how investors think — we are not an ATM," Miller says on the Houston Innovators Podcast. "We are really partners you are getting married to for the next 5, 8, 10 years — sometimes longer. We need to bring your allies in every sense of the word."

HAN, a nonprofit, provides a unique opportunity for its members, as Miller explains. The group consists of around 100 individuals from all business backgrounds, so evaluating companies together brings more than just a wealth of capital — but also a wealth of knowledge.

"What HAN provides is access to investments," Miller says, adding that members have the benefit in evaluating companies together with people from different backgrounds. "Inside a group like HAN, we have extraordinary expertise."

In addition to educating both founders and investors in the process, Miller has dedicated herself to providing opportunities for students in low-income parts of Houston to learn about the startup world. Eight years ago, she founded Eagle Investors, an organization that provides a year-long program that culminates in a group of students participating as judges for the Rice Business Plan Competition.

"They spend a year learning about innovation, entrepreneurship, and investing by meeting local investors, entrepreneurs, and service providers. They go around Houston to get to visit and ... experience all of the ecosystem," Miller says.

At RBPC, the cohort of high school students evaluate the pitches and select a company to provide a $5,000 prize.

Miller herself has been a judge at RBPC for 20 years now, and she's had a front row seat for watching Houston develop as an ecosystem. She's seen the city make real progress, but has one major call to action.

"The piece that I am most aware of that I would like to see grow is activating more accredited investors who are interested in this asset class of early-stage companies and plugging in," Miller says. "They can also invest their time and knowledge to help companies in our region grow and scale."

Report: Houston secures spot on list of top 50 startup cities

by the numbers

A new ranking signals great promise for the growth of Houston’s startup network.

Houston ranks among the world’s top 50 startup cities on a new list from PitchBook, a provider of data and research about capital markets. In fact, Houston comes in at No. 50 in the ranking. But if you dig deeper into the data, Houston comes out on top in one key category.

The city earns a growth score of 63.8 out of 100 — the highest growth score of any U.S. city and the seventh highest growth score in the world. In the growth bucket, Houston sits between between Paris (64.4) and Washington, D.C. (61.7).

The PitchBook growth score reflects short-term, midterm, and long-term growth momentum for activity surrounding venture capital deals, exits, and fundraising for the past six years.

PitchBook’s highest growth score (86.5) goes to Hefei, a Chinese manufacturing hub for electric vehicles, solar panels, liquid crystal displays, home appliances, and Lenovo computers.

The overall ranking is based on a scoring system that relies on proprietary PitchBook data about private companies. The system’s growth and development scores are based on data related to deals, exits, fundraising and other factors.

Houston earns a development score of 34.1 out of 100, which puts it in 50th place globally in that regard. This score measures the size and maturity of a city’s startup network.

Topping the overall list is San Francisco, followed by New York City and Beijing. Elsewhere in Texas, Austin appears at No. 16 and Dallas at No. 36.

The ranking “helps founders, operators, and investors assess locations when deciding where to expand or invest,” says PitchBook.

“Network effects matter in venture capital: Investors get more than half of their deals through referrals, according to research led by Harvard professor Paul Gompers,” PitchBook goes on to say. “So it stands to reason that dealmakers should seek these networks out when deciding where to do business.”

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