Houston researchers find alternate data for loan qualification

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Grocery purchase data can accurately predict credit risk for individuals without traditional credit scores, potentially broadening the pool of qualified loan applicants. Photo via Unsplash

Millions of consumers who apply for a loan to buy a house or car or start a business can’t qualify — even if they’re likely to pay it back. That’s because many lack a key piece of financial information: a credit score.

The problem isn’t just isolated to emerging economies. Exclusion from the financial system is a major issue in the United States, too, where some 45 million adults may be denied access to loans because they don’t have a credit history and are “credit invisible.”

To improve access to loans and peoples’ economic mobility, lenders have started looking into alternative data sources to assess a loan applicant’s risk of defaulting. These include bank account transactions and on-time rental, utility and mobile phone payments.

A new article by Rice Business assistant professor of marketing Jung Youn Lee and colleagues from Notre Dame and Northwestern identifies an even more widespread data source that could broaden the pool of qualified applicants: grocery store receipts.

As metrics for predicting credit risk, the researchers found that the types of food, drinks and other products consumers buy, and how they buy them, are just as good as a traditional credit score.

“There could be privacy concerns when you think about it in practice,” Lee says, “so the consumer should really have the option and be empowered to do it.” One approach could be to let consumers opt in to a lender looking at their grocery data as a second chance at approval rather than automatically enrolling them and offering an opt-out.

To arrive at their findings, the researchers analyzed grocery transaction data from a multinational conglomerate headquartered in a Middle Eastern country that owns a credit card issuer and a large-scale supermarket chain. Many people in the country are unbanked. They merged the supermarket’s loyalty card data and issuer’s credit card spending and payment history numbers, resulting in data on 30,089 consumers from January 2017 to June 2019. About half had a credit score, 81% always paid their credit card bills on time, 12% missed payments periodically, and 7% defaulted.

The researchers first created a model to establish a connection between grocery purchasing behavior and credit risk. They found that people who bought healthy foods like fresh milk, yogurt and fruits and vegetables were more likely to pay their bills on time, while shoppers who purchased cigarettes, energy drinks and canned meat tended to miss payments. This held true for “observationally equivalent” individuals — those with similar income, occupation, employment status and number of dependents. In other words, when two people look demographically identical, the study still finds that they have different credit risks.

People’s grocery-buying behaviors play a factor in their likelihood to pay their bills on time, too. For example, cardholders who consistently paid their credit card bill on time were more likely to shop on the same day of the week, spend similar amounts across months and buy the same brands and product categories.

The researchers then built two credit-scoring predictive algorithms to simulate a lender’s decision of whether or not to approve a credit card applicant. One excludes grocery data inputs, and the other includes them (in addition to standard data). Incorporating grocery data into their decision-making process improved risk assessment of an applicant by a factor of 3.11% to 7.66%.

Furthermore, the lender in the simulation experienced a 1.46% profit increase when the researchers implemented a two-stage decision-making process — first, screening applicants using only standard data, then adding grocery data as an additional layer.

One caveat to these findings, Lee and her colleagues warn, is that the benefit of grocery data falls sharply as traditional credit scores or relationship-specific credit histories become available. This suggests the data could be most helpful for consumers new to credit.

Overall, however, this could be a win-win scenario for both consumers and lenders. “People excluded from the traditional credit system gain access to loans,” Lee says, “and lenders become more profitable by approving more creditworthy people.”

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This article originally ran on Rice Business Wisdom based on research by Rice University's Jung Youn Lee, Joonhyuk Yang (Notre Dame) and Eric Anderson (Northwestern). “Using Grocery Data for Credit Decisions.” Forthcoming in Management Science. 2024: https://doi.org/10.1287/mnsc.2022.02364.


Using biased statistics in hiring makes it more difficult to predict job performance. Photo via Getty Images

Houston research finds race, gender ineffective predictors of employee productivity

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The Latin phrase scientia potentia est translates to “knowledge is power.”

In the world of business, there’s a school of thought that takes “knowledge is power” to an extreme. It’s called statistical discrimination theory. This framework suggests that companies should use all available information to make decisions and maximize profits, including the group characteristics of potential hires — such as race and gender — that correlate with (but do not cause) productivity.

Statistical discrimination theory suggests that if there's a choice between equally qualified candidates — let's say, a man and a woman — the hiring manager should use gender-based statistics to the company's benefit. If there's data showing that male employees typically have larger networks and more access to professional development opportunities, the hiring manager should select the male candidate, believing such information points to a more productive employee.

Recent research suggests otherwise.

A peer-reviewed study out of Rice Business and Michigan Ross undercuts the premise of statistical discrimination theory. According to researchers Diana Jue-Rajasingh (Rice Business), Felipe A. Csaszar (Michigan) and Michael Jensen (Michigan), hiring outcomes actually improve when decision-makers ignore statistics that correlate employee productivity with characteristics like race and gender.

Here's Why “Less is More”

Statistical discrimination theory assumes a correlation between individual productivity and group characteristics (e.g., race and gender). But Jue-Rajasingh and her colleagues highlight three factors that undercut that assumption:

  • Environmental uncertainty
  • Biased interpretations of productivity
  • Decision-maker inconsistency

This third factor plays the biggest role in the researchers' model. “For statistical discrimination theory to work,” Jue-Rajasingh says, “it must assume that managers are infallible and decision-making conditions are optimal.”

Indeed, when accounting for uncertainty, inconsistency and interpretive bias, the researchers found that using information about group characteristics actually reduces the accuracy of job performance predictions.

That’s because the more information you include in the decision-making process, the more complex that process becomes. Complex processes make it more difficult to navigate uncertain environments and create more space for managers to make mistakes. It seems counterintuitive, but when firms use less information and keep their processes simple, they are more accurate in predicting the productivity of their hires.

The less-is-more strategy is known as a “heuristic.” Heuristics are simple, efficient rules or mental shortcuts that help decision-makers navigate complex environments and make judgments more quickly and with less information. In the context of this study, published by Organization Science, the heuristic approach suggests that by focusing on fewer, more relevant cues, managers can make better hiring decisions.

Two Types of Information "Cues"

The “less is more” heuristic works better than statistical discrimination theory largely because decision makers are inconsistent in how they weight the available information. To factor for inconsistency, Jue-Rajasingh and her colleagues created a model that reflects the “noise” of external factors, such as a decision maker’s mood or the ambiguity of certain information.

The model breaks the decision-making process into two main components: the environment and the decision maker.

In the environment component, there are two types of information, or “cues,” about job candidates. First, there’s the unobservable, causal cue (e.g., programming ability), which directly relates to job performance. Second, there's the observable, discriminatory cue (e.g., race or gender), which doesn't affect how well someone can do the job but, because of how society has historically worked, might statistically seem connected to job skills.

Even if the decision maker knows they shouldn't rely too much on information like race or gender, they might still use it to predict productivity. But job descriptions change, contexts are unstable, and people don’t consistently consider all variables. Between the inconsistency of decision-makers and the environmental noise created by discriminatory cues, it’s ultimately counterproductive to consider this information.

The Bottom Line

Jue-Rajasingh and her colleagues find that avoiding gender- and race-based statistics improves the accuracy of job performance predictions. The fewer discriminatory cues decision-makers rely on, the less likely their process will lead to errors.

That said: With the advent of AI, it could become easier to justify statistical discrimination theory. The element of human inconsistency would be removed from the equation. But because AI is often rooted in biased data, its use in hiring must be carefully examined to prevent worsening inequity.

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This article originally ran on Rice Business Wisdom based on research by Rice University's Diana Jue-Rajasingh, Felipe A. Csaszar (Michigan) and Michael Jensen (Michigan). For more, see Csaszar, et al. “When Less is More: How Statistical Discrimination Can Decrease Predictive Accuracy.”

As corporate debt markets continue to grow in importance, it will become crucial for investors and regulators to understand the nuanced factors influencing their liquidity. Photo via Getty Images

Rice research on bond and stock market differences, earnings variations

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At the end of every quarter, publicly traded companies announce their profits and losses in an earnings report. These updates provide insight into a company’s performance and, in theory, give investors and shareholders clarity on whether to buy, sell or hold. If earnings are good, the stock price may soar. If they’re down, the price might plunge.

However, the implications for the stock price may not be immediately clear to all investors. In the face of this uncertainty, sellers will ask for high prices, and buyers will offer low ones, creating a significant “bid-ask spread.” When this happens, it becomes more costly to trade, and the stock becomes less liquid.

This is a well-documented effect on equity stock markets. However, according to research by Stefan Huber (Rice Business), Chongho Kim (Seoul National University) and Edward M. Watts (Yale SOM), the corporate bond market responds differently to earnings news. This is because bond markets differ from stock markets in a significant way.

Stocks v. Bonds: What Happens When Earnings Are Announced?

Equities are usually traded on centralized exchanges (e.g., New York Stock Exchange). The exchange automatically queues up buyers and sellers according to the quote they’ve entered. Trades are executed electronically, and the parties involved are typically anonymous. A prospective buyer might purchase Microsoft shares from someone drawing down their 401(k) — or they could be buying from Bill Gates himself.

Corporate bond markets work differently. They are “over-the-counter” (OTC) markets, meaning a buyer or seller needs to find a counterparty to trade with. This involves getting quotes from and negotiating with potential counterparties. This is an inherent friction in bond trading that results in much higher costs of trading in the form of wider bid-ask spreads.

Here’s what Huber and his colleagues learned from the research: Earnings announcements prompt many investors to trade. And on OTC markets, potential buyers and sellers become easier to find and negotiate with.

A Stronger Bargaining Position for Bonds

According to Huber, “When earnings information comes out, a lot of people want to trade. In bond markets, that makes it much easier to find someone to trade with. The more options you have to trade, the stronger your bargaining position becomes, and the lower your trading costs go.”

He compares the process to shopping in a market with a flexible approach to pricing.

“Let's say you're at a farmers market and you want to buy an apple,” Huber says. “If there is only one seller, you buy the apple from that person. They can ask for whatever price they want. But if there are multiple sellers, you can ask around, and there is potential to get a better price. The price you get depends on the number of options you have in trading partners.”

What’s at Stake?

Although bonds receive less attention than equities, the stakes are high. There is about $10 trillion in outstanding corporate debt in the U.S., and more than $34 billion in average daily trading volume.

A detailed record of bond trades is available from the Financial Industry Regulatory Authority (FINRA), which requires that trades be reported via their Trade Reporting and Compliance Engine (TRACE).

The study from Huber and co-authors uses an enhanced version of TRACE to examine trades executed between 2002 and 2020. The team analyzed the thirty-day periods before and after earnings announcements to gather data about volume, bid-ask spreads and other measures of liquidity.

They find that, like on the stock market, there are more investors and broker-dealers trading bonds around earnings announcements. However, unlike on the stock market, transaction costs for bonds decrease by 6 to 7 percent in the form of bid-ask spreads.

What Sets This Research Apart?

“Taking a purely information asymmetry-based view would predict that what happens to stock liquidity would also happen to bonds,” Huber says. “A piece of information drops, and some people are better able to work with it, so others price protect, and bid-ask spreads and the cost of trading go up.”

“But if you consider the search and bargaining frictions in bond markets, you get a more nuanced picture. While information asymmetry increases, like it does on stock markets, the information prompts more investors into bond trading, which makes it easier to find counterparties and get better transaction prices. Consequently, bid-ask spreads go down. This search and bargaining friction does not really exist on equities exchanges. But we cannot ignore it in OTC markets.”

As corporate debt markets continue to grow in importance, it will become crucial for investors and regulators to understand the nuanced factors influencing their liquidity. This study provides a solid foundation for future research.

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This article originally ran on Rice Business Wisdom. For more, see “Earnings News and Over-the-Counter Markets.” Journal of Accounting Research 62.2 (2024): 701-35.

Putting students and families at the center of strategy will optimize resources and improve academic outcomes. Photo via Getty Images

Houston expert: How adopting business strategies in the education sector can improve results

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It’s no secret: K-12 public schools in the U.S. face major challenges. Resources are shrinking. Costs are climbing. Teachers are battling burnout. Student outcomes are declining.

There are many areas of concern.

Some difficulties are intangible, inescapable and made worse by crises like the COVID-19 pandemic. Some can be fixed or alleviated by wisely allocating resources. And others — like a lack of strategic focus — can be avoided altogether.

It’s this final area, strategic focus, that researchers Vikas Mittal (Rice Business) and Jihye Jung (UT-San Antonio) address in a groundbreaking study. According to Mittal and Jung, superintendents and principals misallocate vast amounts of time and resources trying to appease their many stakeholders — students, parents, teachers, board trustees, community leaders, state evaluators, college recruiters, potential employers, etc.

Instead, Mittal and Jung show, administrators need to put their entire focus on one key stakeholder — the “customer,” i.e. students and families.

It may sound strange to call students and families “customers” in the context of public education. After all, 5th-period Spanish isn’t like buying an iPhone or fast food. The classroom is not transactional. Students and caregivers are part of a broader relational context that most directly involves teachers and peers. And students are expected to contribute to that context.

But K-12 public funds are tied to enrollment and attendance numbers. This means the success or failure of a school or school district ultimately comes down to “customer” satisfaction.

Beware the Stakeholder Appeasement Trap

Here’s what happens when students and families become dissatisfied with their school:

As conditions deteriorate, families (who can afford to) may choose to homeschool or move their children to private or better-performing public schools. As a result, enrollment revenue decreases, which forces administrators to cut costs. Cut costs lead to worsened performance and lower satisfaction among students and families. Lower satisfaction leads to further enrollment loss, which leads to more cost-cutting. And so on. (Schools need about 500-600 students to break even.)

It’s a vicious downward spiral, and it’s not unusual for schools to become trapped in it. To avoid this vortex, administrators end up adopting a “spray and pray” or “adopt and hope” approach, pursuing various stakeholder agendas in hopes that one of them will be the key to institutional success. Group A wants stronger security. Group B wants improved internet access. Group C wants better facilities. Group D wants to expand athletics.

It’s an understandable impulse to make everyone happy. However, Mittal and Jung find that the “stakeholder appeasement” approach dilutes strategic focus, wastes resources and creates a bloat of ineffective initiatives.

Initiative bloat isn't a benign problem. The labor of implementing programs inevitably falls on teachers and frontline staff, which can result in mediocre performance and burnout. As initiatives multiple over time, communication lines become strained and, distracted by the administration's efforts to please everyone, teachers and frontline staff fail to satisfy students and families.

Pay Attention to Lift Potential

Using data from administrator interviews and more than 10,000 parent surveys, Mittal and Jung find that students and families only value a few strategic areas. By far the most important is family and community engagement, followed by academics and teachers. The least important, somewhat surprisingly, is extracurriculars like athletics programs.

The assumption that athletics would be high on the list of student and family priorities raises a crucial point in the study. Mittal and Jung note that it’s a serious error to assume that the more a strategic area is mentioned the more it drives customer value.

“Conflating the two — salience and lift potential — is the single biggest factor that can mislead strategy planning,” the researchers say.

A customer-focused strategy prioritizes lift potential — meaning it allocates budgets, people and time to the areas that have the highest capacity to increase customer value, as measured by customer satisfaction. If family and community engagement is the most important strategic area, then savvy administrators will invest in the “execution levers” that improve it.

For instance, Mittal and Jung find that allowing input on school policies is the most effective lever for demonstrating family and community engagement. Another important strategic area is improving the quality of teachers, and one of the most effective ways of doing this is to emphasize their academic qualifications.

Just as important as instituting effective customer-focused initiatives is de-emphasizing those that are ineffective. It can be a difficult process to stop and de-emphasize initiatives, however ineffective. But ultimately, the benefit is that teachers and frontline staff will be able to concentrate on the execution levers that matter.

This strategic transformation can’t happen overnight. Developing the framework will require a school district 18 to 24 months, Mittal and Jung estimate. Embedding it into practice can take an additional 12 to 18 months. For example, it would involve changing the way senior administrators, school principals and teachers are held accountable. Instead of emphasizing standardized test scores, which do not add to customer satisfaction, it’s more effective to concentrate on input factors that directly impact the quality of academics and learning.

To help schools develop and implement a customer-focused strategy, future research can focus on frameworks for guiding schools to maximize the areas of value that students and families care about most.

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This article originally ran on Rice Business Wisdom. For more, see Mittal and Jung, “Revitalizing educational institutions through customer focus.” Journal of the Academy of Marketing Science (2024): https://doi.org/10.1007/s11747-024-01007-y.

Temporary gatherings — like conferences and hackathons — are essential to attracting third-party developers. Photo via Getty Images

Rice expert: Why tech companies should sponsor hackathons

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Companies like Amazon, Microsoft and Apple depend on third-party developers to create applications that improve the user experience on their platforms. However, given the many options available, developers face a daunting task in deciding which platform to focus their efforts on.

“Developers are faced with imperfect information,” says Rice Business assistant professor Tommy Pan Fang. “They don’t have an overview of the entire technology landscape.”

A team of researchers, consisting of Fang, Andy Wu (Harvard University) and David Clough (University of British Columbia), set out to investigate how temporary gatherings like “hackathons” — in-person software development competitions — might influence a developer’s choice of software platform.

Hackathons like Rice University’s annual HackRice draw developers looking to pick up new skills and create applications with teammates. Many of these events are sponsored by software platform companies.

The research team conjectured that hackathon attendees are more likely to adopt a particular platform if any of the following conditions are true:

  • A high number of fellow attendees have already embraced it.
  • A fellow attendee has built an award-winning hackathon project on it.
  • The platform that sponsors the hackathon is already popular.

To test their theories, the researchers followed 1,302 software developers participating in 167 hackathons from January 2014 to May 2017. Twenty-nine different platforms sponsored the hackathons. Fang and his colleagues tracked developers’ platform choices before and after the in-person events.

The researchers found that temporary gatherings — like hackathons, conferences and trade fairs — make a difference.

Developers with greater technical expertise were more likely to use a platform widely embraced by fellow hackathon attendees. And with every 10% increase in the number of hackathon attendees already using a given platform, other attendees were 1.2% more likely to try out that platform themselves the following year.

They also found that platforms benefit from sponsoring temporary gatherings, like hackathons.

Developers who attended a hackathon sponsored by a particular platform were 20.4% more likely to adopt that platform in the following year, compared to developers who either did not attend any hackathon or attended one without a sponsor.

Part of the reason for the findings is that developers at hackathons exert social influence on each other, both during organized hackathon events like competitions and workshops, as well as informal ones including ping pong tournaments or nights playing video games.

“The social interaction and seeing their peers be successful with the tools and what’s fashionable impacts the tools they decide to adopt,” says Fang. “For developers trying to figure out what technology to adopt in a world with imperfect information and uncertainty, having a gathering can be a beacon.”

Interviews with hackathon organizers, sponsors and developers in the U.S. and Canada backed up the researchers’ findings. Interviewees shared how they learned from their interactions with fellow developers during hackathons.

“When I’m walking around, it becomes noticeable what technologies people are using,” said a veteran of 15 hackathons. Another noted that if more people use a certain application programming interface, “it’s lower risk because it will be usable.” They added, “Most people just follow others.”

The study has implications for both developers and software platform companies alike. Results suggest hackathons can be a valuable venue for developers, not only to pick up new skills, but also to help them identify which platforms to use in the first place. For software companies, the lesson is simple: Sponsoring hackathons can be good for business.

Future research could look at how other types of events like conferences, tournaments and world’s fairs might impact how people end up adopting technologies, especially emerging ones, Fang says. For example, a company like OpenAI could use these types of in-person events to garner support and build momentum for its products.

“Companies that may have taken a step back during Covid should reevaluate in-person events to get people excited and regain momentum for their platforms,” Fang says. “The take-home message is, go out there and sponsor these events.”

This article originally ran on Rice Business Wisdom. For more, see Fang, et al. “Platform diffusion at temporary gatherings: Social coordination and ecosystem emergence.” Strategic Management Journal 42.2 (2021): 233-272. https://doi.org/10.1002/smj.3230.

In emerging markets, pricing — not reputation — drives the partnership between underwriter and IPO. Photo via business.rice.edu

How to evaluate an IPO, according to Houston researchers

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Many investors assume they can judge the strength of an IPO based on the reputation of the underwriter supporting it.

However, a recent study by Rice Business professors Anthea Zhang and Haiyang Li, along with Jin Chen (Nottingham University) and Jing Jin (University of International Business and Economics), proves this is only sometimes true — depending on how mature the stock exchange is.

Getting your company listed on the stock market is a big step. It opens new opportunities to raise money and grow the business. But it also means facing increased regulations, reporting requirements and public scrutiny.

To successfully launch an initial public offering (IPO), most companies hire “underwriters” — financial services firms — to guide them through the complex process. Because underwriters have expertise in valuations, filing paperwork and promoting to investors, they play a crucial role in ushering companies onto the market.

In well-established markets like the New York Stock Exchange (NYSE), an underwriter’s reputation carries immense weight with investors. Top-tier banks like Goldman Sachs have built their reputations by rigorously vetting and partnering with only the most promising companies. When Goldman Sachs takes on the role of underwriter, it sends a strong signal to potential investors that the IPO has met stringent standards. After all, a firm of Goldman’s caliber would not risk tarnishing its hard-earned reputation by associating with subpar companies.

Conversely, IPO firms recognize the value of having a prestigious underwriter. Such an association lends credibility and prestige, enhancing the company’s appeal. In a mature market environment, the underwriter’s reputation correlates to the IPO’s potential, benefiting both the investors who seek opportunities and the companies wanting to make a strong public debut.

However, assumptions about an underwriter’s reputation only hold true if the stock exchange is mature. In emerging or less developed markets, the reputation of an underwriter has no bearing on the quality or potential of the IPO it pairs with.

In an emerging market, the study finds, investors should pay attention to how much the underwriter charges a given IPO for their services. The higher the fee, the riskier it would be to invest in the IPO firm.

To arrive at their findings, the researchers leveraged a unique opportunity in China’s ChiNext Exchange. When ChiNext opened in 2009, regulations were low. Banks faced little consequence for underwriting a substandard IPO. Numerous IPOs on ChiNext were discovered to have engaged in accounting malpractice and inaccurate reporting, resulting in financial losses for investors and eroding confidence in the capital markets. So, for 18 months during 2012-2013, ChiNext closed. When it reopened, exchange reforms were stricter. And suddenly, underwriter reputation became a more reliable marker of IPO quality.

“Our research shows how priorities evolve as markets mature,” Zhang says. “In a new or developing exchange without established regulations, underwriter fees paid by IPO firms dictate the underwriter-company partnership. But as markets reform and mature, reputation and quality become the driving factors.”

The study makes a critical intervention in the understanding of market mechanisms. The findings matter for companies, investors and regulators across societies, highlighting how incentives shift, markets evolve and economic systems work.

The research opens the door to other areas of inquiry. For example, future studies could track relationships between underwriters and companies to reveal the long-term impacts of reputation, fees and rule changes. Research along these lines could help identify best practices benefiting all market participants.

“In the future, researchers could explore how cultural norms, regulations and investor behaviors influence IPO success,” says Li. “Long-term studies on specific underwriter-firm pairs could reveal insights into investor confidence and market stability. Understanding these dynamics can benefit companies, investors and policymakers alike.”

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This article originally ran on Rice Business Wisdom and was based on research from Yan “Anthea” Zhang, the Fayez Sarofim Vanguard Professor of Management – Strategic Management at Rice Business, and Haiyang Li, the H. Joe Nelson III Professor of Management – Strategic Management at Rice Business.

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Houston biotech biz to merge with public co., set local HQ

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Houston-based Tvardi Therapeutics and Cara Therapeutics announced the companies have entered into a definitive merger agreement to combine in an all-stock transaction. Once completed, Houston will house the headquarters.

Tvardi is a clinical-stage biopharmaceutical company that focuses on the development of novel, oral, and small molecule therapies that target STAT3 to treat fibrosis-driven diseases. Tvardi will merge with a wholly owned subsidiary of Cara.

Once complete, the pre-merger Cara Therapeutics stockholders are expected to own approximately 17 percent of the combined company and pre-merger Tvardi Therapeutics investors are expected to own 83 percent of the combined company. Prior to adjustment from the issuance of the shares in the recently completed Tvardi financing and assuming Cara, which went public in 2014, has net cash at closing of between $22.9 million and $23.1 million with the percentage of the combined company that pre-merger Cara stockholders and pre-merger Tvardi stockholders will own upon the closing of the merger, which is subject to further adjustment if Cara’s net cash balance falls outside of the range.

“As we approach meaningful value inflection points next year, including two Phase 2 readouts of our lead program in idiopathic pulmonary fibrosis, followed by the readout in our hepatocellular carcinoma program, this merger, the recently completed financing, and becoming a publicly traded company give us access to the critical funding required to further advance our promising pipeline programs that address significant unmet needs,” Imran Alibhai, CEO of Tvardi Therapeutics, says in a news release.

Also, Tvardi has completed an approximately $28 million private financing from a syndicate of new and existing institutional investors. With the cash from both companies at closing and the proceeds of this financing, the post-merger company plans to have cash to fund its operating expenses and capital expenditure requirements into the second half of 2026.

“I am grateful to the Cara Board, leadership team, and shareholders who share our vision of Tvardi that is well-positioned to introduce effective, new treatment options to patients suffering from serious, chronic, fibrosis-driven diseases,” Alibhai continues.

In 2021, Tvardi emerged from stealth and closed a $74 million series B funding round led by New York-based Slate Path Capital, Florida-based Palkon Capital, Denver-based ArrowMark Partners, and New York-based 683 Capital, with continued support and participation by existing investors, including Houston-based Sporos Bioventures.

Looking back: Top 5 most-read Houston space tech articles of 2024

year in review

Editor's note: As 2024 comes to a close, InnovationMap is looking back at the year's top stories in Houston innovation. In the Space City, there were dozens of space tech stories, from experts' thoughts on commercialization to the IPO of a Houston company. Here are five Houston space tech-focused articles that stood out to readers this year — be sure to click through to read the full story.

Houston space tech co. rolls out futuristic lunar rover for NASA's Artemis missions

Intuitive Machine unveiled its RACER lunar terrain vehicle at Space Center Houston. Photo courtesy of Intuitive Machines

Houston-based space exploration company Intuitive Machines just unveiled its version of a lunar terrain vehicle that’s designed to be used by astronauts in NASA’s Artemis moon discovery program.

Intuitive Machine recently rolled out its RACER lunar terrain vehicle (LTV) at Space Center Houston. RACER stands for Reusable Autonomous Crewed Exploration Rover.

The rover can accommodate two astronauts and nearly 900 pounds of cargo. In addition, it can pull a trailer loaded with almost 1,800 pounds of cargo. Continue reading.

Axiom Space CEO steps down, search begins for replacement

Axiom Space Co-founder Michael Suffredini is stepping down as CEO. Photo courtesy of Axiom Space

Houston-based space exploration company Axiom Space is searching for a new CEO.

Co-founder Mike Suffredini stepped down effective August 9 as CEO. He cites unidentified personal reasons for his transition from CEO to company advisor. Suffredini remains a board member of Axiom Space.

Co-founder Kam Ghaffarian, the company’s executive chairman, is serving as interim CEO until Axiom Space taps Suffredini’s permanent successor.

“We are grateful for Mike’s invaluable contributions to human space exploration and the remarkable growth of Axiom Space,” Ghaffarian says in a news release. “He will continue to offer his unique perspective and expertise as we advance our mission.” Continue reading.

Houston space tech company secures $116.9M NASA contract

The $116.9 million agreement will task Intuitive Machines with delivering six science and technology payloads to the moon. Photo courtesy of Intuitive Machines

NASA is again entrusting a Houston space business with lunar deliveries.

Intuitive Machines (Nasdaq: LUNR, LUNRW) has secured its fourth contract with NASA’s Commercial Lunar Payload Services, or CLPS, program. The $116.9 million agreement will task Intuitive Machines with delivering six science and technology payloads, which will include one European Space Agency-led drill suite to the Moon’s South Pole.

“Over the last several years, we’ve witnessed NASA’s successful Artemis I mission and the campaign’s progress toward sustainably returning humans to the surface of the Moon, highlighting the importance of autonomous missions that advance humanity’s understanding of the Moon and the commercial services required to support the industry,” Intuitive Machines CEO Steve Altemus says in a news release. “Intuitive Machines looks forward to working closely with the NASA team to deliver mission success once again.” Continue reading.

Houston Spaceport takes off with second phase of development

The next phase of the Houston Spaceport will build out connectivity and workforce training. Rendering via Houston Airports

Since the Houston Spaceport secured the 10th FAA-Licensed commercial spaceport designation in 2015, the development's tenants have gone on to secure billions in NASA contracts. Now, the Houston Spaceport is on to its next phase of growth.

“Reflecting on its meteoric rise, the Spaceport has seen remarkable growth in a short span of time. From concepts on paper to the opening of Axiom Space, Collins Aerospace, and Intuitive Machines, the journey has been nothing short of extraordinary,” says Arturo Machuca, director of Ellington Airport and the Houston Spaceport, in a news release. “These anchor tenants, collectively holding about $5 billion in contracts with NASA and other notable aerospace companies, are not just shaping the future of space exploration but injecting vitality into Houston’s economy.” Continue reading.

Houston college lands $5M NASA grant to launch new aerospace research center

The five-year grant from NASA will go toward creating the NASA MIRO Inflatable Deployable Environments and Adaptive Space Systems Center at UH. Photo via UH.edu

The University of Houston was one of seven minority-serving institutions to receive a nearly $5 million grant this month to support aerospace research focused on extending human presence on the moon and Mars.

The $4,996,136 grant over five years is funded by the NASA Office of STEM Engagement Minority University Research and Education Project (MUREP) Institutional Research Opportunity (MIRO) program. It will go toward creating the NASA MIRO Inflatable Deployable Environments and Adaptive Space Systems (IDEAS2) Center at UH, according to a statement from the university.

“The vision of the IDEAS2 Center is to become a premier national innovation hub that propels NASA-centric, state-of-the-art research and promotes 21st-century aerospace education,” Karolos Grigoriadis, Moores Professor of Mechanical Engineering and director of aerospace engineering at UH, said in a statement. Continue reading.

3 Houston innovators to know this week

who's who

Editor's note: Every week, I introduce you to a handful of Houston innovators to know recently making headlines with news of innovative technology, investment activity, and more. This week's batch includes three innovators across sports tech, clean energy, and more.

Vibhu Sharma, founder and CEO of InnoVent Renewables

Vibhu Sharma of InnoVent Renewables joins the Houston Innovators Podcast. Photo via LinkedIn

Vibhu Sharma observed a huge sustainability problem within the automotive industry, and he was tired of no one doing anything about it.

"Globally, humans dispose 1 billion tires every year," Sharma says on the Houston Innovators Podcast. "It's a massive environmental and public health problem because these tires can take hundreds of years to break down, and what they start doing is leaking chemicals into the soil."

Today, 98 percent of all tires end up in landfills, Sharma says, and this waste contributes to a multitude of problems — from mosquito and pest infestation to chemical leaks and fire hazards. That's why he founded InnoVent Renewables, a Houston-based company that uses its proprietary continuous pyrolysis technology to convert waste tires into valuable fuels, steel, and chemicals. Continue reading.

Ashley DeWalt, managing director of DivInc

Ashley DeWalt shares news of DivInc's newest partnership. Photo courtesy of DivInc

DivInc, a Texas-based accelerator focused on uplifting people of color and women founders, is collaborating with the NBA Foundation to provide Black Houston youth with paid internships at tech startups.

Leveraging its expansive portfolio of startups, DivInc will pair 25 Houston-based undergraduate and graduate students (ages 18 to 24) with tech companies the nonprofit has mentored. The 10-week internship program will provide students with professional development workshops and firsthand entrepreneurial experiences. The program also ensures a symbiotic relationship as the startups’ founders gain access to an expanded talent pool and further development opportunities via DivInc.

"We are thrilled to partner with the NBA Foundation to bring this transformative opportunity to life," says Ashley DeWalt, managing director of DivInc. "Together, we are bridging the gap between talent and opportunity, creating meaningful experiences that empower Black youth to lead in their communities and beyond." Continue reading.

​Josh Teekell, founder and CEO of SmartAC.com

\u200bJosh Teekell, founder and CEO of SmartAC.com

Josh Teekell shares news of SmartAC's latest funding. Photo courtesy

Houston-based SmartAC.com, which provides a customer loyalty management platform for contractors, has raised a follow-on round from Mercury Fund and other investors. The dollar amount of the round wasn’t disclosed.

An October filing with the U.S. Securities and Exchange Commission (SEC) indicates SmartAC.com planned to raise $8.2 million in venture capital. Of that sum, about $4 million had already been raised, the company reported, and nearly $4.2 million remained to be raised.

“Growing a business in the trades is all about customer loyalty, and loyalty is driven by optimizing the customer’s experience,” Josh Teekell, founder and CEO of SmartAC.com, says in a news release. Continue reading.

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