After trending up all year, Houston VC activity drops in Q3

by the numbers

During the third quarter of 2024, Houston-area companies saw a 15 percent decrease of VC investment compared to the third quarter of 2023. Photo via Getty Images

New data from the PitchBook/NVCA Venture Monitor reveals a seesaw pattern in the Houston area’s venture capital funding.

VC fundraising by Houston-area companies climbed during the first part of this year compared with the same period last year, according to the latest PitchBook/NVCA Venture Monitor. But from 2023 to 2024, the region’s third-quarter VC haul fell by a double-digit percentage.

In the first three quarters of 2024, Houston-area companies collected $1.24 billion in venture capital, the PitchBook/NVCA Venture Monitor shows. That’s up eight percent from the $1.15 billion raised in the first three quarters of 2023.

A look at third-quarter data tells a different story. During the third quarter of 2024, Houston-area companies reaped $529.45 million in VC funding. That’s down 15 percent from $623 million in the third quarter of 2023.

The U.S. saw VC funding rise from $123.5 billion in the first nine months of 2023 to $131.8 billion during the same period in 2024, PitchBook/NVCA data shows. That works out to a 6.7 percent increase. However, Texas experienced a five percent drop — from $5.4 billion in the first nine months of 2023 to $5.13 billion during the same period in 2024.

“While we see some promising signals with lower rates and platform shifts related to AI, we expect the overall VC landscape to [remain] uncertain and strained for the time being,” says Nizar Tarhuni, executive vice president of research and market intelligence at PitchBook.

The new PitchBook/NVCA report forecasts that VC deal value in the U.S. will hit $175.2 billion this year. This figure is shy of annual fundraising totals during the peak of ultra-low interest rates but exceeds the sum for the pandemic year of 2020.

“Venture deal counts seem to have bottomed, but a meaningful market rebound has yet to occur,” says the report.

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In the first six months of this year, Houston-area startups attracted $760.55 million in VC funding, which is up 17.7 percent from the same time last year. Photo via Getty Images

Report: Amid difficult market, Houston sees uptick in VC funding

seeing green

Houston-area startups saw a healthy increase in venture capital funding during the first half of 2024 compared with the same period last year, new data shows.

In the first six months of this year, Houston-area startups attracted $760.55 million in VC funding, according to the latest PitchBook-NVCA Venture Monitor. That’s up 17.7 percent from the $645.99 million collected in the first six months of 2023.

Keep in mind that these figures might not match previously reported numbers. That’s because PitchBook regularly adjusts data as new information becomes available.

In light of various factors, such as the ongoing hype over artificial intelligence, fundraising will likely continue to be challenging for U.S. startups as a whole, according to Nizar Tarhuni, vice president of institutional research and editorial at PitchBook, a provider of VC data.

Nonetheless, Bobby Franklin, president and CEO of the National Venture Capital Association (NVCA), points out that American venture capital “is finding its footing in 2024.”

Across the country, VC funding for startups in the first half of 2024 totaled $93.4 billion, up 6.5 percent from the $87.7 billion raised during the same period last year, according to the PitchBook-NVCA Venture Monitor.

“With steadily increasing deal values, especially across early-stage investments, more first-time financings, and increased crossover investor participation, [the second quarter of 2024] was a good one for VC,” says Franklin. “Now it’s up to founders, investors, and regulators to support, rather than stifle, these green shoots as the market heads toward a recovery.”

In the second quarter alone, VC funding in the U.S. jumped from $35.4 billion in 2023 to $55.6 billion in 2024. That’s an increase of 57 percent.

By contrast, the Houston area’s VC funding went in the opposite direction. Startups in the region scored $231.79 million in VC during the second quarter of 2024 vs. $333.17 million during the same period a year earlier. That’s a drop of 30 percent.

So far in 2024, Houston-based Fervo Energy dominates VC hauls for startups in the metro area. In March, the provider of geothermal power announced it had secured $244 million in funding, with Oklahoma City-based oil and gas company Devon Energy leading the round.

Fervo’s latest pot of VC represents more than 30 percent of all Houston-area VC funding during the first six months of 2024.

Tim Latimer, co-founder and CEO of Fervo, says the $244 million investment enables his company “to continue to position geothermal at the heart of 24/7 carbon-free energy production.”

Fervo says the latest VC round will support development of its 400-megawatt geothermal project in Beaver County, Utah. The Cape Station facility is expected to start generating power for the grid in 2026.

Geothermal investment is up, but health tech is down — plus more data-backed VC trend from 2024 so far. Photo via Getty Images

Report: Houston's VC trends so far in 2024 and what to watch for the rest of the year

by the numbers

Houston-based geothermal company Fervo Energy accounted for more than half of the venture capital raised by Houston-area startups in the first quarter of 2024.

The region’s VC haul in the first quarter totaled $462.4 million, according to the PitchBook-NCVA Venture Monitor. That’s up from $290.4 million during the same period in 2023 and from $285.8 million in the fourth quarter of last year. Click here to see the Q1 rounds as reported by InnovationMap.

Fervo’s latest funding round, announced in February, represented $244 million (52 percent) of the region’s VC total for the first quarter of 2024.

A report released in March by PitchBook indicated that VC funding last year for geothermal power reached $431 million across 21 deals. As of late February 25 — four days ahead of the Fervo announcement — $165.5 million in VC funding had been pumped into the geothermal sector this year, according to PitchBook.

“The recent VC deal activity with the geothermal power sector underscores a vibrant and evolving market, but still one that garners far less VC than other renewables,” says the report.

In all, Houston-area startups made 38 VC deals in this year’s first quarter, the PitchBook-NVCA Venture Monitor says. That’s down from 42 in the fourth quarter of 2023 and 43 in the first quarter of 2023. Nationwide, the deal count fell sharply in the first quarter of 2024 vs. the first and fourth quarters of last year.

The PitchBook-NVCA Venture Monitor report shows that nationwide, the $36.6 billion in VC investments recorded during the first quarter of 2024 “remained relatively on pace with the past year.”

“However, it would be a mistake to hyperfocus on the results of a single quarter whose results were a bit farther left on the bell curve than usual. The venture capital … business cycle effectively reset in recent years, and as of early 2024, it still appears to be searching for its level,” says the report.

“It is too early to tell where 2024 is going, but the game is on, and America’s VCs are ready for it,” the report adds. “In 2022, our world changed; in 2023, we accepted it was not changing back; and in 2024, we are building what is next.”

In a bit of good news for the Houston area, the report cites cleantech/energy as one of two sectors that venture capitalists should not overlook. The other sector: cybersecurity.

But in a bit of not-so-good news for the region, the report notes a slowdown in VC deals in the healthcare sector over the past two years in the wake of “pandemic-fueled capital exuberance.”

“Yet the healthcare sector differentiates itself from the rest of the market by demonstrating many unmet needs that could have a profound impact on society, particularly around disease diagnosis and treatment,” the report goes on to say. “On top of the immense opportunity set for disruption within healthcare, investor enthusiasm around AI adoption in drug development further speaks to the demand for better solutions in biotech through groundbreaking innovations.”

Houston was deemed a top startup city, but the Bayou City has a gap to other Texas cities that it can work on narrowing. Photo via Getty Images

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.”

Houston startups raised a combined $380 million in venture funding last quarter. Photo via Getty Images

Here's what Houston startups have raised in funding so far in 2024

Q1 2024 VC ACTIVITY

Seven Houston startups have started the new year strong with over $380 million in venture funding — most of which from one mega deal for a geothermal company.

According to InnovationMap reporting, Houston's VC activity in the first quarter of 2024 spanned industry and stage — from pre-seed to series E. It's a large chunk of money raised in Houston for one quarter — but not in terms of deals closed, at least compared to the previous quarter, in which startups raised over $170 million but across nine deals.

On the national side, it's not too different of a story. According to a quarterly report from PitchBook, the United State's VC activity for the start of the year "showed to be one of the slowest areas of the venture market during the quarter." Only $9.3 billion in capital was raised in the U.S. last quarter, which is only 11.3 percent of the total raised in the already slowed market of 2023.

"While dry powder remains high, slowed fundraising portends to LP hesitancy toward VC, and should predict a more difficult dealmaking environment down the road," reads an email from PitchBook. "During the past few years, large mega-funds drove fundraising trends, but Q1 VC fundraising shows there may be no appetite for such vehicles in today’s market."

These are the seven startup VC deals closed in Houston so far this year, according to reporting on InnovationMap.

Fervo Energy raises $244M in latest funding round

Fervo Energy scored a $244 million round of funding thanks to existing and new investors. Photo via Fervo Energy

An Oklahoma-based shale oil and gas leader has backed Fervo Energy's latest round of funding, supporting the startup's geothermal technology yet again.

Fervo announced its latest round of funding this week to the tune of $244 million. The round was led by Devon Energy, a company that's previously backed the startup.

“Demand for around-the-clock clean energy has never been higher, and next-generation geothermal is uniquely positioned to meet this demand,” Tim Latimer, Fervo CEO and co-founder, says in a news release. “Our technology is fully derisked, our pricing is already competitive, and our resource pipeline is vast. This investment enables Fervo to continue to position geothermal at the heart of 24/7 carbon-free energy production.” Read more about the round.

Procyrion secures $57.7M series E

Procyrion has announced the closing of its series E round of funding. Photo via Getty Images

Houston-born and bred medical device company, Procyrion, has completed its series E with a raise of $57.7 million, including the conversion of $10 million of interim financing.

Procyrion is the company behind Aortix, a pump designed to be placed in the descending thoracic aorta of heart failure patients, which has been shown to improve cardiac performance in seriously ill subjects. The money raised will allow the company to proceed with a the DRAIN-HF Study, a pivotal trial that will be used for eventual FDA approval and commercialization.

The Aortix is the brainchild of Houston cardiologist Reynolds Delgado. According to Procyrion’s CSO, Jace Heuring, Delgado, gained some of his experience with devices for the heart working with legendary Texas Heart Institute surgeon O.H. “Bud” Frazier. He filed his first patents related to the Aortix in 2005. Read more about the round.

Welligence Energy Analytics raises $41M series B

Houston-based Welligence Energy Analytics specializes in data and intelligence for the oil and gas markets, greenhouse gas emissions sector, and CCUS projects. Photo via Getty Images

A group of investors has chipped in $41 million to purchase a minority stake in Houston-based Welligence Energy Analytics, a provider of energy data and intelligence.

Boston-based venture capital firm Elephant Partners led the series B round, with participation from Veriten, a Houston-based, energy-focused research, investing, and strategy firm, and EDG, a Metairie, Louisiana-based energy consulting firm. Several executives from the energy, information services, and software sectors also contributed to the round.

Founded in 2016, Welligence specializes in data and intelligence for the oil and gas markets, greenhouse gas emissions sector, and carbon capture, storage, and utilization (CCUS) projects. Clients include major oil and gas companies, as well as large investment banks. Read more about the round.

Motif Neurotech secures nearly $19M series A

Motif Neurotech, which develops minimally invasive bioelectronics for mental health treatment, closed its series A round with an oversubscribed $18.75 million. Photo via Rice.edu

A health tech startup based out of a newly formed accelerator program at Rice University has raised venture funding.

Motif Neurotech closed its series A round with an oversubscribed $18.75 million. The company, which develops minimally invasive bioelectronics for mental health treatment, was formed out of the Rice Biotech Launch Pad that launched last fall.

The round was led by Arboretum Ventures, with participation from new investors KdT Ventures, Satori Neuro, Dolby Family Ventures, re.Mind Capital and existing investors Divergent Capital, TMC Venture Fund, PsyMed Ventures, Empath Ventures and Capital Factory. Read more about the round.

Sage Geosystems closes $17M series A 

Houston-based Sage Geosystems announced the first close of $17 million round led by Chesapeake Energy Corp. Photo via sagegeosystems.com

A Houston geothermal startup has announced the close of its series A round of funding.

Houston-based Sage Geosystems announced the first close of $17 million round led by Chesapeake Energy Corp. The proceeds aim to fund its first commercial geopressured geothermal system facility, which will be built in Texas in Q4 of 2024. According to the company, the facility will be the first of its kind.

The venture is joined by technology investor Arch Meredith, Helium-3 Ventures and will include support from existing investors Virya, LLC, Nabors Industries Ltd., and Ignis Energy Inc.

“The first close of our Series A funding and our commercial facility are significant milestones in our mission to make geopressured geothermal system technologies a reality,” Cindy Taff, CEO of Sage Geosystems, says in a news release. “The success of our GGS technologies is not only critical to Sage Geosystems becoming post-revenue, but it is an essential step in accelerating the development of this proprietary geothermal baseload approach. Read more about the round.

Ema raises $2M round of bridge funding

Ema, which operates as a health and wellness-focused, AI-based chat for women, has raised additional funding. Screenshot courtesy of Ema

A Houston-based startup that's improving health and wellness for women with its artificial intelligence-backed platform has raised a bridge round of funding.

Ema closed its latest bridge round, bringing its total funding to nearly $2 million. The company received investment from Kubera's Venture Capital and Victorum Capital, which joined existing investors Hearst Labs, Wormhole Capital, Acumen America, and Techstars.

Ema strives to deliver "personalized, empathetic, and evidence-based support" to its users through its generative AI technology. The platform has more than 100,000 users, and has expanded into the B2B sector with $100,000 in contracts within just 30 days after pivoting to this model, according to the company. Read more about the round.

TrueLeap Inc. raises oversubscribed $610,000 pre-seed round

The edtech company offers a comprehensive approach to shrinking the digital divide with a suite of technology including software, hardware, and more. Photo courtesy of TrueLeap

An edtech startup has just secured funding to further its mission of increasing accessibility to education.

TrueLeap Inc., global digital education startup addressing the digital divide in education, has raised $610,000, which is over its target of $500,000. The round was led by United Kingdom-based Maya Investments Limited.

"This oversubscribed funding round, led by Maya Investments Limited, is a testament to the urgent need for innovative educational technologies in emerging markets. Our commitment to providing affordable and integrated solutions is stronger than ever," says Sandip Bordoloi, CEO and Co-Founder of TrueLeap, in a news release. Read more about the round.

Despite its VC growth over the past few years, Houston startups saw a setback in funding in 2023. Photo via Getty Images

Report: Houston sees significant dip in VC activity in 2023

by the numbers

The amount of venture capital pumped into Houston-area companies shriveled in 2023, dropping to its lowest level since the pandemic year of 2020.

The latest PitchBook-NVCA Venture Monitor shows Houston-area businesses collected nearly $1.5 billion in venture capital in 2023, down from more than $2.2 billion in 2022 and over $2.6 billion in 2021. The amount of venture capital fell below $1 billion in both 2019 and 2020.

Houston-based Axiom Space accounted for the biggest chunk of the region’s VC haul in 2023 — a series C round worth $350 million. According to InnovationMap reporting, other local startups leading the way last year in VC were:

Here are Houston area’s full VC numbers for the past five years, according to the PitchBook-NVCA report:

  • 2023 — $1.478 billion
  • 2022 — $2.207 billion
  • 2021 — $2.625 billion
  • 2020 — $718.94 million
  • 2019 — $950.76 million

Across the country last year, $170.6 billion was invested in private companies, says the report — down $71.6 billion from 2022 and roughly half the sum invested in 2021.

In the report, Bobby Franklin, president and CEO of NVCA, notes that while the continued drop in U.S. venture capital activity “does not lend itself to optimism, it would be a mistake to declare the market in crisis. Rather, the market has changed. From interest rates to foreign conflict, the world looks very different than it did two years ago, and a new set of problems needs to be solved for.”

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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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