Houstonian fosters collaboration and mentorship for women in venture capital

HOUSTON INNOVATORS PODCAST EPISODE 46

Sandy Guitar — along with other Houston female venture capitalists — are gathering virtually to promote networking and friendship amid the pandemic. Photo courtesy of Sandy Guitar

When Sandy Guitar saw that Austin had a group of women in venture capital group that promoted collaboration and networking, she knew Houston had to have one too.

Guitar, who is the managing director of the HX Venture Fund, connected with the Austin group, picked their brains and asked for advice on starting a local iteration, and recruited a few fellow female VC experts in town — and the rest is history.

"There's a part of us as women that understands necessarily that work and life combine," Guitar says on this week's episode of the Houston Innovators Podcast. "Our lives as women don't allow us to segment our lives. The truth is those parts of our lives come together. The more we can do that, the more we can build networks that help us achieve everything we want both professionally and personally."

Now, over a year later, the Women Investing in VC in Houston group has grown to over 30 members — so much that their virtual visits are broken into smaller groups. The group boasts diversity and has representatives across types of funds. To join, women must simply live in Houston and be a venture capital investor. Other than that, the group is unstructured and casual, which fosters an environment where members are allowed to ask a stupid question or speak up on something personal, as Guitar says.

"When you have no dues and very little formality, no structure, no pressure to attend — it's in that setting that you actually build trust. Organically, the friendships come together," she says. "That's what it's really about."

While the group had pre-pandemic beginnings, the model of mentorship and networking is more relevant now than ever. Men and women alike, Guitar says, are not able to silo work and life as we work from home and practice social distancing.

"COVID has made us vulnerable in an entirely new set of ways," she says. "We use our support groups — whatever they are — to help us."

Guitar discusses the group and how what the venture capital industry needs to do to evolve into a more welcoming space for women in the episode of the podcast. You can listen to the full interview below — or wherever you stream your podcasts — and subscribe for weekly episodes.


The Women Investing in VC in Houston group has pivoted to virtual events since the start of COVID-19. Photo courtesy of Sandy Guitar

HX Venture Fund recently hosted a virtual panel on how the tide has turned in Houston when it comes to tech investment. Getty Images

Overheard: Experts discuss why Houston is the next hub for tech investing

eavesdropping in Houston

When Joe Alapat, co-founder and CEO of Liongard, was first getting started on his company, he says a few people recommended he go to Austin or one of the coasts to give his software company a better chance.

"For me, the thought process never really entered my mind that Houston was a place where I would be challenged in doing what I do well. My network is here," Alapat shared on a virtual panel hosted by the HX Venture Fund.

Turns out, it was a good decision. Liongard recently closed a $17 million series B round led by Updata Partners, a portfolio fund of HXVF. Moderated by Brian Richards of Accenture's Houston innovation hub, the panel asked Alapat, Sandy Guitar of HXVF, and Carter Griffin of Updata why Houston is the next hub for tech investing. Here are some key moments from the discussion.

“We’re cautious when we go into places — like Austin and Boston — where there’s a lot of activity both on the company side and the investor side. We’d rather find the opportunities where things aren’t as competitive and frothy, and you’re really dealing with people trying to build a real business, serve customers, and build value in the right way, and not just catch lightning in a bottle and build the next unicorn.”

—says Griffin about Updata's strategy of looking at cities like Houston in the middle of the country.

“A lot has changed in the past couple of years — the thought process, the awareness, as well as the willingness for folks to think about Houston as a place where you can build a startup.”

— says Alapat about how Houston's startup ecosystem has evolved since he started Liongard in 2015. He later notes that Houston's innovation leaders have done well to not copy other metros, but listen and learn from the successes and mistakes of other innovation cities.

“There was this feeling that we needed to be uniquely Houston — we couldn’t replicate Silicon Valley or Austin, we needed to be us. But we were going to have to do things differently. We couldn’t keep doing the same things and expecting this [change.]”

— Richard says, noting the corporate mindset, among other aspects of the ecosystem, shifted to be more focused on startups.

“The VCs are very interested in engaging in this model. So, we’re spoiled for choices is one way of saying it.”

— Guitar says on interest from venture funds in HXVF, noting that the VCs see an opportunity for their portfolio startups to connect with HXVF's corporate partners.

The HX Venture Fund reached a proof point of its model — one that arrived much earlier than expected. Getty Images

Houston's fund of funds expands its portfolio and team after reaching benchmark with local investment

money moves

When a Houston software startup closed a $17 million series B funding round, it was a big win for more than just the startup. Not only was the deal among the few Houston venture capital deals to happen amid the COVID-19 outbreak, but it represented a proof of concept for Houston's fund of funds.

The HX Venture Fund was founded in October of 2018 to encourage investment into local startups by raising corporate funds and investing into a portfolio of non-Houston venture capital funds that show an interest in Houston. HXVF hit a milestone last month when Liongard, a software-as-a-service company based in Houston, closed its fundraising round led by Updata Partners — one of HXVF's portfolio funds.

To date, the HXVF has reviewed over 150 venture capital funds and invested in eight: Austin-based LiveOak Venture Partners and Next Coast Ventures, Washington D.C.-based Updata Partners, Chicago-based Baird Capital, San Francisco-based VenBio, and Boston-based .406 Ventures, OpenView Venture Partners, and Material Impact Fund. Since each investment, those funds have invested in over 30 startups that are also included in the greater HXVF portfolio.

These HXVF portfolio funds represent various stages — from seed to growth stages, like Liongard — and across industries, from software and hardware to life sciences — "the whole gamut," says Sandy Guitar, managing director of HXVF.

"What that means now is there is over $2 billion of venture capital that actively has Houston on its radar right now," Guitar tells InnovationMap.

The Liongard investment represents a proof point for the fund of funds — one that comes earlier than expected. HXVF invested in Updata less than six months before Liongard closed its round with Updata's lead investment. Guitar says she expected to get to this milestone within 18 to 24 months of the fund of funds deploying capital — and it's happened in just nine months.

"You have this trickle down effect, where it can easily take two to three years to get your capital at work," Guitar says, explaining that HXVF first has to raise funds from its corporate partners, then vet and invest in the VCs, and, finally, wait to see how those funds invest.

Of course, the pandemic has not exactly helped the growth of Houston's startup and venture capital sectors. While COVID-19 has allowed growth in some sectors — telemedicine, for instance — it has limited the opportunities for startups to test the market.

"To build great startups, a startup has to do what I call 'run into walls.' They have to test the market, get it wrong, and pivot. The problem right now is there are no walls to run into," Guitar says. "You have to have an actively running economy and market for proof points of what's working and what's not working."

Meanwhile, Guitar observes, VC investors have limited their activity to their own networks due to the inability to meet face-to-face with unfamiliar startups. Comparing the VC-startup relationship to a marriage, you wouldn't meet and marry someone you've never met in person just like investors wouldn't fund an entrepreneur they have only ever met via Zoom.

"A lot of VCs are staying in their known networks in the short term," says Guitar, while, in the long term, VCs are going to rely on introductions to entrepreneurs from their network.

With this benchmark secured, HXVF is continuing to grow its portfolio — as well as its team. Recently, Guitar — who runs the fund with Guillermo Borda — brought on Houston native Aleece Hobson as venture partner.

"Aleece joining is a phenomenal step for us — a dedicated resource and venture partner on activation," says Guitar on the hire. "I think it speaks to the seriousness of purpose we have to make this not just an investment platform, but one that moves the needle on Houston."

Guitar says HXVF is also growing its limited partners with the addition of Rice University, which joins the likes of HEB, Shell, Chevron, and Houston Methodist — to name a few.

"We're going to be getting even closer to our limited partners' needs and introducing them to the 34 portfolio companies," Guitar says "and creating meaningful collisions between those two groups."

Aleece Hobson joined the HX Venture Fund as venture partner. Photo courtesy of HXVF

Sandy Wallis, managing director of the HX Venture Fund, has seen investing in Houston change over her 20-year career. Courtesy of Sandy Wallis

HX Venture Fund leader talks investment trends in Houston and plans for 2020

HOUSTON INNOVATORS PODCAST EPISODE 13

After 20 years in the venture capital world, Sandy Guitar Wallis has seen the evolution of investing — on both coasts and here in Houston as well.

Now, as managing director of the HX Venture Fund, Wallis is playing the long game. The fund of funds acts as a broker to other venture funds, raising money from limited partners and then strategically doling out investments to non-Houston venture funds, with the hope that those funds circle back into the Houston innovation ecosystem with a multiplier effect.

"We have raised a fund of funds with the HX Venture Fund, and we're deploying that capital across probably 10 venture capital funds over time," Wallis explains on the most recent episode of the Houston Innovators Podcast. "Each one of those funds, will invest in 15 to 20 underlying private companies. So, at the end of the day, HX Venture Fund 1 will have exposure to 10 VC funds, as an example, and — by virtue of those investments — maybe 300 private companies."

The HX Venture Fund is aiming to raise between $50 million and $70 million for its first fund. Last year, HXVF made six investments, and Wallis says she expects another three to five investments in 2020. Ultimately, Wallis says, HXVF is looking to get a wide range of of firms involved — from early stage to later, growth stages — as well as a diversity in industries of focus.

Beyond the money, HXVF is opening up the discussion on a national scale, with visiting VCs and potential investors.

"We are getting a lot of interest in coastal VCs who want to invest here," Wallis says on the podcast.

Wallis, who is a co-founder of Weathergage Capital, got her MBA at Northwestern University's Kellogg School of Management, but has been in Houston for most of her career — traveling to each coast for business. Wallis shares her expertise, discussing everything from why the IPO process has slowed to what startups need to know about venture capital.

Listen to the full episode below — or wherever you get your podcasts — and subscribe for weekly episodes.


Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

Houston is poised to lead 5G growth in Texas, according to a new report

leading the stream

Based on one key measure, Houston sits at the forefront of a telecom revolution that could spark a regional economic impact of more than $30 billion.

Data published recently by the Texas Comptroller's Office points out that as of last November and December, Houston led all cities in Texas for the number of so-called "small cells." Small cells are a key component in the rollout of ultra-high-speed 5G wireless communication throughout the Houston area and the country.

As the Texas Comptroller's Office explains, small cells are low-powered antennas that communicate wirelessly via radio waves. They're usually installed on existing public infrastructure like street signs or utility poles, instead of the big communication towers that transmit 4G signals.

The comptroller's tally shows Houston had approved 5,455 small-cell sites as of the November-December timeframe. That dwarfs the total number of sites (1,948) for the state's second-ranked city, Dallas.

"Houston is in the vanguard of small cell permitting in Texas, and not just because it's the state's largest city; advocates have lauded its proactive approach to 5G. Other cities, particularly smaller ones, are lagging well behind," the Comptroller's Office notes.

According to CTIA, a trade group for the wireless communications industry, 5G holds the promise to deliver an economic impact of $30.3 billion in the Houston area and create 93,700 jobs. The group says industries such as health care, energy, transportation, e-commerce, and logistics stand to benefit from the emergence of 5G.

"Maintaining world-class communications infrastructure is a requirement for success in a rapidly changing global economy. Small cells and fiber technology are the key foundational components for network densification and robust 5G. Cities like Houston that have embraced the need for this infrastructure will see the benefits of 5G faster than others," Mandy Derr, government affairs director at Houston-based communications infrastructure REIT Crown Castle International Corp. and a member of the Texas 5G Alliance, tells InnovationMap.

Derr says leaders in Houston have embraced the importance of small-cell technology through "reasonable and effective" regulations and processes aimed at boosting 5G capabilities. Three major providers of wireless service — AT&T, T-Mobile, and Verizon — offer 5G to customers in the Houston area.

"More small cells and fiber provide greater and faster access for the masses, enabling the connectivity that is essential to our businesses today — whether it's accepting payments on a mobile card reader, completing a sale on the go, or reliably reaching consumers where they are," Derr says.

In a blog post, Netrality Data Centers, which operates a data center in Houston, proclaims that Houston is shaping up to be a hub of 5G innovation.

"Houston has always been on the frontline," Mayor Sylvester Turner said during a 5G roundtable discussion in 2019. "It is who we are. It is in our DNA. We are a leading city. We didn't wait for somebody else to go to the moon. Or to be the energy capital of the world. Or the largest medical center in the world. But you don't stay at the front if you don't continue to lead."

Houston lands on list of nation's top spots for millennials on the move

migration destination

The Bayou City is shining as an attractive destination for young people on the move.

According to the fifth-annual study from SmartAsset, millennials are fleeing cities like Los Angeles and Chicago and migrating to other areas in search of work and a better quality of life, with Houston landing as the No. 18 spot for young professionals age 25 to 39.

In order to compile the list, SmartAsset dug into U.S. Census Bureau data from all 50 states, the District of Columbia, and 180 specific cities. According to the findings, 18,035 millennials moved in to Houston in 2019, while 15,838 moved out. That makes a net migration of 2,197, per the study.

When it comes to migrating millennials, the Lone Star State is tops, landing at No. 1 for states where millennials are moving, with more than 187,000 young people heading to Texas in the pre-pandemic year. Though some 154,000 millennials left Texas during the same time period, this results in a net gain of more than 33,000 millennial residents, the biggest net gain for the group in the country, giving Texas the lead in millennial migration for the second year in a row.

In news that is hardly shocking, Austin landing as the No. 4 hot spot overall.

While Austin ranks as the top Texas city where millennials are moving, one other Texas spot landed in the top 10, the Dallas suburb of Frisco (No. 6), with a net migration of 3,516 out-of-state millennials in 2019.

Dallas just missed the top 10, landing at No. 11 on the list, with a net millennial migration of 2,525 in 2019. San Antonio (No. 22) showed a net migration of 1,865 millennials.

The top city overall for millennial migration in 2019 was Denver, followed by Seattle.

------

This article originally ran on CultureMap.