4 Houston finance leaders announce new $275M fund for small businesses

money moves

Four Houston investment professionals have joined forces to create a new fund. Photos via genesis-park.com

Four Houstonians, each with decades of finance experience under their belts, have teamed up to create a new fund to support growth of startups.

Curtis Hartman, Gina Luna, Paul Hobby, and Peter Shaper have joined forces to create GP Capital Partners, a new $275 million fund structured as a Small Business Investment Company that will provide funding for privately-held, lower middle market businesses. The fund, which received its SBIC license from the U.S. Small Business Administration last month, extends the Genesis Park private investment platform.

"The types of companies with which we plan to partner are the backbone of our regional economy. They create good jobs and are poised for growth," says Curtis Hartman, principal of the fund, in a news release. "While small businesses disproportionally drive economic growth and employment, they are underserved by traditional banks and other capital providers. We are here to support and accelerate their success."

The fund, which will target companies based in Texas, as well as the Gulf Coast and southern regions of the country, will make both debt and equity investments across industries. According to the release, the fund will focus on communications, information technology, business and industrial services, and advanced and tech-enabled manufacturing — all industries the founders of the fund have expertise in.

GP Capital Partners plans to make a total of 20 to 25 investments ranging from $5 million to $20 million. In addition to the capital deployed, the four fund founders will offer their experience across private equity, private credit, banking, professional services, and as operating company executives.

"This is not a one-sided deal where we make a loan or equity investment and sit-back, simply monitoring performance. We are in this to help these companies grow, transition and succeed," says GP Capital Partners Principal Gina Luna in the release. "I love working with owners and management teams and helping them take their company to the next level. That's what we have all done for most of our careers. We know that if our partners are successful, we are successful, and that drives us every day."

Texas Monthly has a new owner. Texas Monthly/Facebook

Houston billionaire energy exec buys Texas Monthly

Media on media

For the second time in less than three years, Texas Monthly has a new owner. Randa Duncan Williams, chairman of Houston-based midstream oil and gas company, Enterprise Products Partners LP, has purchased the Austin-based magazine. The terms of the sale were not disclosed.

The magazine will become a part of Enterprise Products Company (EPCO), "a privately held company which owns interests in commercial real estate and ranching, as well as a substantial interest in Enterprise Products Partners L.P., a publicly traded midstream energy company," says a release.

"I have been an avid Texas Monthly reader since I was a teenager," says Duncan Williams, chairman of Texas Monthly, LLC, and of EPCO, in the release. "My family is delighted to provide the resources to support this iconic Texas institution which is nationally recognized for its editorial flair."

Williams is the daughter of EPP's late founder, Dan L. Duncan. She has a net worth of $6.2 billion, according to Forbes.

In TM's official statement, president Scott Brown is quoted as saying Duncan Williams wants to own the magazine "forever."

Forever may be what the magazine needs, following a tumultuous era for Texas Monthly, considered to be both a beacon of Texas culture and a shining example of long-form magazine journalism. In 2016, it was purchased from Emmis Communications by Genesis Park, a private investment firm led by Paul Hobby of the famed Houston-based Hobby family. Following that purchase, Hobby took over the role of chairman and CEO of the magazine, launching an arguably rocky tenure for Texas Monthly.

In February 2017, Hobby announced that Tim Taliaferro would be taking over the editor in chief position from Brian Sweany, a longtime TM staffer who climbed the ladder from intern in 1996 to taking the editor position following Jake Silverstein's departure for The New York Times Magazine in 2014. About a dozen notable writers left after Sweany's departure, though it's unfair to say it was a result of the masthead shakeup.

Just a few weeks into the Hobby-Taliaferro regime, journalism watchdog Columbia Journalism Review reported that Texas Monthly, a 13-time National Magazine Award winner, was going in a lifestyle direction. Reader reaction — not to mention the response from the journalism world — was swift, forcing the magazine to backpedal.

A year later, the magazine faced another misstep, this one involving Bumble and an alleged pay-for-play on social media. The somewhat salacious story also broke in the Columbia Journalism Review and eventually led to Taliaferro being moved into the newly created role of chief innovation officer. Thus began a year-long search that ended with Dan Goodgame being named editor in January 2019.

It's not breaking news to say it's an uncertain time for journalism, and Texas Monthly has clearly not survived unscathed. But hopefully Duncan Williams' purchase will help move the "national magazine of Texas" into a new era, one with a clear and bold vision.

For the sake of one of the nation's best magazines, we hope so.

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This article originally ran on CultureMap.

Capital Factory's Texas Startup Roadshow made a pit stop in Houston to discuss investment. Photo by Tim Leviston/Getty Images

Houston still needs capital, talent, and success stories to grow its innovation ecosystem, according to a panel of experts

Show me the money

While Houston has increased its number of capital investments in startups over the recent years, there's more work to be done.

A panel of experts at Capital Factory and J.P. Morgan's Texas Startups Roadshow discussed what the city still needs if it is going to accomplish its mission of being a vibrant, successful place for innovation.

For Blair Garrou, managing director of Mercury Fund, Houston has experienced a growth in the number of opportunities for deals, but his firm can only do so much.

"There's more activity going on right now than my 20 years here — it's coming," Garrou says. "And we don't have enough capital to support it."

Garrou says out-of-Houston firms want to invest in deals here, but they don't want to lead a round — they want Mercury Fund to, and they'll follow. For Garrou, that indicates a credibility problem that needs to be addressed.

Houston Exponential is attempting to right the course on this issue with its HX Venture Fund, says Sandy Wallis, managing director. The fund of funds puts money into non-Houston VCs in hopes that those VCs turn around and invest back into Houston.

"The number one problem I'm trying to help with, which I hear a lot from entrepreneurs, is getting more venture here, Wallis, who co-founded Weathergage Capital, says. "What we're trying to do is make sure that our entrepreneurs are meeting with VCs — not just the ones HX invests in, but all the ones that get into town."

She wants to connect the dots for startups — both to visiting VCs and local corporations, which, she says, are already engaged and interested.

"You can see the fluid activation of our corporates here," Wallis says. "Those corporates are engaging directly with the innovation going on in Houston, and we have our headliner tech companies in place."

One of the things that would spir interest and investment into Houston companies is more success stories coming out of Houston, says Paul Hobby, founding partner at Genesis Park. Focusing on talent — developing leadership, recruitment, and retention — is what the city needs to get there. It has all the other ingredients, he says.

"In Houston, we have the means, the opportunity, the will, the capital, and the risk tolerance to solve our own problems," Hobby says to the crowd.

Houston has been working on developing talent and providing resources for entrepreneurs for the past couple years, and many of those accelerator and incubator programs — like Station Houston, The Cannon, Impact Hub Houston, MassChallenge Texas, etc. — have launched to serve startups.

"We probably have 12 to 15 startup development organizations all with different flavors," Garrou says. "And in doing that, we're still looking to the outside for best practices, like Capital Factory, to ask how we could do this better."

The focus on improving resources for startups will continue, he says, and even more will deliver. However, not every single effort will see success, but that's OK, Garrou says.

"All of these are grand visions that Houston has to keep building," Garrou says. "Some of that won't pan out, but the fact that it's all happening and if 50 percent is successful, then I think we've done our jobs to meet entrepreneurs where they are."

Wallis agrees — in capitalism, you can't win it all.

"Developing Houston is going to have failures and successes, and it's about failing successfully," she says.

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Baylor center receives $10M NIH grant to continue rare disease research

NIH funding

Baylor College of Medicine’s Center for Precision Medicine Models received a $10 million, five-year grant from the National Institutes of Health last month that will allow it to continue its work studying rare genetic diseases.

The Center for Precision Medicine Models creates customized cell, fly and mouse models that mimic specific genetic variations found in patients, helping scientists to better understand how genetic changes cause disease and explore potential treatments.

The center was originally funded by an NIH grant, and its models have contributed to the discovery of several new rare disease genes and new symptoms caused by known disease genes. It hosts an online portal that allows physicians, families and advocacy groups to nominate genetic variants or rare diseases that need further investigation or new treatments.

Since its founding in 2020, it has received 156 disease/variant nominations, accepted 63 for modeling and produced more than 200 precision models, according to Baylor.

The center plans to use the latest round of funding to bring together more experts in rare disease research, animal modeling and bioinformatics, and to expand its focus and model more complex diseases.

Dr. Jason Heaney, associate professor in the Department of Molecular and Human Genetics at BCM, serves as the lead principal investigator of the center.

“The Department of Molecular and Human Genetics is uniquely equipped to bring together the diverse expertise needed to connect clinical human genetics, animal research and advanced bioinformatics tools,” Heaney added in the release. “This integration allows us to drive personalized medicine forward using precision animal models and to turn those discoveries into better care for patients.”

Houston institutions launch Project Metis to position region as global leader in brain health

brain trust

Leaders in Houston's health care and innovation sectors have joined the Center for Houston’s Future to launch an initiative that aims to make the Greater Houston Area "the global leader of brain health."

The multi-year Project Metis, named after the Greek goddess of wisdom and deep thought, will be led by the newly formed Rice Brain Institute, The University of Texas Medical Branch's Moody Brain Health Institute and Memorial Hermann’s comprehensive neurology care department. The initiative comes on the heels of Texas voters overwhelmingly approving a ballot measure to launch the $3 billion, state-funded Dementia Prevention and Research Institute of Texas (DPRIT).

According to organizers, initial plans for Project Metis include:

  • Creating working teams focused on brain health across all life stages, science and medical advances, and innovation and commercialization
  • Developing a regional Brain Health Index to track progress and equity
  • Implanting pilot projects in areas such as clinical care, education and workplace wellness
  • Sharing Houston’s progress and learnings at major international forums, including Davos and the UN General Assembly

The initiative will be chaired by:

  • Founding Chair: Dr. Jochen Reiser, President of UTMB and CEO of the UTMB Health System
  • Project Chair: Amy Dittmar, Howard R. Hughes Provost and Executive Vice President of Rice University
  • Project Chair: Dr. David L. Callender, President and CEO of Memorial Hermann Health System

The leaders will work with David Gow, Center for Houston’s Future president and CEO. Gow is the founder and chairman of Gow Media, InnovationMap's parent company.

“Now is exactly the right time for Project Metis and the Houston-Galveston Region is exactly the right place,” Gow said in a news release. “Texas voters, by approving the state-funded Dementia Prevention Institute, have shown a strong commitment to brain health, as scientific advances continue daily. The initiative aims to harness the Houston’s regions unique strengths: its concentration of leading medical and academic institutions, a vibrant innovation ecosystem, and a history of entrepreneurial leadership in health and life sciences.”

Lime Rock Resources, BP and The University of Texas MD Anderson Cancer Center served as early steering members for Project Metis. HKS, Houston Methodist and the American Psychiatric Association Foundation have also supported the project.

An estimated 460,000 Texans are living with dementia, according to the Alzheimer’s Association, and more than one million caregivers support them.

“Through our work, we see both the immense human toll of brain-related illness and the tremendous potential of early intervention, coordinated care and long-term prevention," Callender added in the release. "That’s why this bold new initiative matters so much."

Texas launches cryptocurrency reserve with $5 million Bitcoin purchase

Money Talks

Texas has launched its new cryptocurrency reserve with a $5 million purchase of Bitcoin as the state continues to embrace the volatile and controversial digital currency.

The Texas Comptroller’s Office confirmed the purchase was made last month as a “placeholder investment” while the office works to contract with a cryptocurrency bank to manage its portfolio.

The purchase is one of the first of its kind by a state government, made during a year where the price of Bitcoin has exploded amid the embrace of the digital currency by President Donald Trump’s administration and the rapid expansion of crypto mines in Texas.

“The Texas Legislature passed a bold mandate to create the nation’s first Strategic Bitcoin Reserve,” acting Comptroller Kelly Hancock wrote in a statement. “Our goal for implementation is simple: build a secure reserve that strengthens the state’s balance sheet. Texas is leading the way once again, and we’re proud to do it.”

The purchase represents half of the $10 million the Legislature appropriated for the strategic reserve during this year’s legislative session, but just a sliver of the state’s $338 billion budget.

However, the purchase is still significant, making Texas the first state to fund a strategic cryptocurrency reserve. Arizona and New Hampshire have also passed laws to create similar strategic funds but have not yet purchased cryptocurrency.

Wisconsin and Michigan made pension fund investments in cryptocurrency last year.

The Comptroller’s office purchased the Bitcoin the morning of Nov. 20 when the price of a single bitcoin was $91,336, according to the Comptroller’s office. As of Friday afternoon, Bitcoin was worth slightly less than the price Texas paid, trading for $89,406.

University of Houston energy economist Ed Hirs questioned the state’s investment, pointing to Bitcoin’s volatility. That makes it a bad investment of taxpayer dollars when compared to more common investments in the stock and bond markets, he said.

“The ordinary mix [in investing] is one that goes away from volatility,” Hirs said. “The goal is to not lose to the market. Once the public decides this really has no intrinsic value, then it will be over, and taxpayers will be left holding the bag.”

The price of Bitcoin is down significantly from an all-time high of $126,080 in early October.

Lee Bratcher, president of the Texas Blockchain Council, argued the state is making a good investment because the price of Bitcoin has trended upward ever since it first launched in early 2009.

“It’s only a 16-year-old asset, so the volatility, both in the up and down direction, will smooth out over time,” Bratcher said. “We still want it to retain some of those volatility characteristics because that’s how we could see those upward moves that will benefit the state’s finances in the future.”

Bratcher said the timing of the state’s investment was shrewd because he believes it is unlikely to be valued this low again.

The investment comes at a time that the crypto industry has found a home in Texas.

Rural counties have become magnets for crypto mines ever since China banned crypto mining in 2021 and Gov. Greg Abbott declared “Texas is open for crypto business” in a post on social media.

The state is home to at least 27 Bitcoin facilities, according to the Texas Blockchain Council, making it the world’s top crypto mining spot. The two largest crypto mining facilities in the world call Texas home.

The industry has also come under criticism as it expands.

Critics point to the industry’s significant energy usage, with crypto mines in the state consuming 2,717 megawatts of power in 2023, according to the comptroller’s office. That is enough electricity to power roughly 680,000 homes.

Crypto mines use large amounts of electricity to run computers that run constantly to produce cryptocurrencies, which are decentralized digital currencies used as alternatives to government-backed traditional currencies.

A 2023 study by energy research and consulting firm Wood Mackenzie commissioned by The New York Times found that Texans’ electric bills had risen nearly 5%, or $1.8 billion per year, due to the increase in demand on the state power grid created by crypto mines.

Residents living near crypto mines have also complained that the amount of job creation promised by the facilities has not materialized and the noise of their operation is a nuisance.

“Texas should be reinvesting Texan’s tax money in things that truly bolster the economy long term, living wage, access to quality healthcare, world class public schools,” said state Sen. Molly Cook, D-Houston, who voted against the creation of the strategic fund. “Instead it feels like they’re almost gambling our money on something that is known to be really volatile and has not shown to be a tide that raises all boats.”

State Sen. Charles Schwertner, R-Georgetown, who authored the bill that created the fund, said at the time it passed that it will allow Texas to “lead and compete in the digital economy.”

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This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.

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