Abbott highlights Texas AI boom, with Houston projects on the horizon

An aerial view of Stargate’s AI data center in Abilene. Photo courtesy OpenAI.

AI investments are booming in Texas, Gov. Greg Abbott says. And Houston is poised to benefit from this surge.

At a recent Texas Economic Development Corp. gathering in the Dallas-Fort Worth area, Abbott said AI projects on the horizon in the Lone Star State would be bigger than the $500 billion multistate Project Stargate, according to the Dallas Business Journal. So far, Stargate includes three AI data centers in Texas.

Stargate, a new partnership among OpenAI, Oracle, Softbank, and the federal government, is building AI infrastructure around the country. The project’s first data center is in Abilene, and the center’s second phase is underway. Once the second phase is finished, the 875-acre site will host eight buildings totaling about 4 million square feet with a power capacity of 1.2 gigawatts. An additional 600 megawatts of capacity might be added later.

On Sept. 23, Stargate announced the development of another five AI data centers in the U.S., including a new facility in Shackelford County, Texas, near Abilene. That facility is likely a roughly $25 billion, 1.4-gigawatt AI data center that Vantage Data Centers is building on a 1,200-acre site in Shackelford County.

Another will be in Milam County, between Waco and Austin. In conjunction with Stargate, OpenAI plans to occupy the more than $3 billion center, which will be situated on a nearly 600-acre site, the Austin Business Journal reported. OpenAI has teamed up with Softbank-backed SB Energy Global to build the facility.

Abbott said several unannounced AI projects in Texas — namely, data centers — will be larger than Stargate.

“Bottom line is ... when you look at diversification, the hottest thing going on right now is artificial intelligence,” Abbott said.

The Houston area almost certainly stands to attract some of the projects teased by the governor.

In Houston, Taiwanese tech manufacturer Foxconn already is investing $450 million to make AI servers at the 100-acre Fairbanks Logistics Park, which Foxconn recently purchased for a reported $142 million. The park features four industrial buildings totaling one million square feet. It appears Foxconn will manufacture the servers for Apple and Nvidia, both of which have announced they’ll open server factories in Houston.

The Foxconn, Apple, and Nvidia initiatives are high-profile examples of Houston’s ascent in the AI economy. A report released in July by the Brookings Institution identified Houston as one of the country’s 28 “star” hubs for AI.

The Greater Houston Partnership says the Houston area is undergoing an "AI-driven data revolution."

“As Houston rapidly evolves into a hub for AI, cloud computing, and data infrastructure, the city is experiencing a surge in data center investments driven by its unique position at the intersection of energy, technology, and innovation,” the partnership says.

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Houston's favorite gymnast is the chief impact officer on a California-based tech company that's raised $462M. Photo via getcerebral.com

Houston superstar Simone Biles snags C-suite position in SoftBank-backed company

flipping into tech

Less than two months after Olympic gymnastics star Simone Biles of Spring joined mental health startup Cerebral as chief impact officer, the company has raised $300 million in venture capital — a sum that vaulted it to a valuation of $4.8 billion.

San Francisco-based Cerebral announced the $300 million round December 8. SoftBank Vision Fund 2 led the Series C round, with participation from Prysm Capital, Access Industries, WestCap Group, and ARTIS Ventures.

Launched in January 2020, Cerebral has raised a total of $462 million from investors, including an undisclosed amount from Biles.

Biles, a 4-foot, 8-inch gymnastics powerhouse, has won 32 Olympic and World Championship medals. But it was her off-the-mat moves at this year’s Summer Olympics in Tokyo that drew worldwide attention. Biles contended in just one event in Tokyo after withdrawing from all other competition to concentrate on her mental health.

Two months after the Olympics, Biles agreed to become Cerebral’s chief impact officer, serving as the face of the brand.

Cerebral was an official sponsor of Biles’ Gold Over America Tour, which took place from September to November, and is an official sponsor of the 2022 Simone Biles International Invitational, a gymnastics competition that will be held January 27-30 at Houston’s George R. Brown Convention Center. The Spring-based World Champions Centre, Biles’ home gym, stages the invitational.

“Mental health is just as important as physical health, but for far too long the stigma of mental health has prevented too many people from seeking help,” Biles says in a Cerebral news release. “I have my own challenges with mental health, and therapy has been very empowering for me as I try to be the best person that I can be. I believe everyone should have access to mental health resources, and Cerebral gives me the ability to personalize my mental health care experience.”

Cerebral bills itself as a one-stop online shop for mental health care and wellness. The company offers counseling, therapy, and medication delivery and management online for conditions such as depression, anxiety, and substance abuse.

Cerebral boasts that the $300 million round makes it the world’s largest and fastest-growing online provider of mental health services.

“Cerebral’s growth in the last year shows just how much the world needs affordable and accessible mental health care. It’s important to us that we not only improve access to mental health care through a convenient platform and affordable plans, but to also improve patient outcomes,” says Kyle Robertson, co-founder and CEO of Cerebral.

The pandemic ramped up the use of telehealth services, including those delivered by Cerebral. According to Fortune Business Insights, the U.S. market for behavioral health grew 11.3 percent in 2020, with pandemic-fueled mental health concerns helping drive up demand. Fortune Business Insights estimates the U.S. market will expand from $77.62 billion in 2021 to $99.4 billion in 2028.

Globally, the mental health market is projected to jump from $383.31 billion in 2020 to $537.97 billion by 2030, according to Allied Market Research.

Digital health startups like Cerebral are benefiting from the mushrooming market for mental health. Rock Health, an investment and advisory firm, says that through the first nine months of 2021, investors pumped $21.3 billion into U.S. digital health startups. That compares with $14.6 billion in all of 2020.

Cerebral says its $300 million cash infusion will enable it to undertake a global expansion, as well develop strategic partnerships and explore M&A opportunities. Today, Cerebral comprises a network of over 2,300 clinicians practicing in all 50 states.

“Roughly half of the American population is affected by mental health issues. However, obstacles like cost, limited provider availability, and fear of judgment remain in the way of getting the treatment they need,” says Priya Saiprasad, a partner at SoftBank Investment Advisers, which manages SoftBank’s venture capital funds.

After relocating its headquarters to Houston, Katerra has filed for bankruptcy. Photo via Getty Images

New-to-Houston construction tech company files for Chapter 11 bankruptcy

bad news

Construction startup Katerra, which only recently moved its North American headquarters from Silicon Valley to Houston, filed for Chapter 11 bankruptcy June 6 — five days after news reports indicated the company was shutting down most of its U.S. operations.

Katerra's filings in U.S. Bankruptcy Court in Houston show the company and various affiliates have between $1 billion and $10 billion in liabilities and only $500 million to $1 billion in assets. In a June 6 news release, Katerra says it lined up $35 million in financing from a unit of Japan's SoftBank Group, the startup's largest investor.

Katerra recently notified its key stakeholders that many of its U.S. projects will be "demobilizing," according to the news release.

In an email sent June 1 to employees, Katerra said it would be winding down the majority of its U.S. operations and would lay off most of its U.S. employees. News website The Information first reported about the email. Globally, Katerra employs about 7,500 people.

Aside from letting go thousands of employees, Katerra is likely to walk away from dozens of construction projects it had agreed to build, The Information reported. As part of the bankruptcy case, Katerra plans to sell its renovation and Lord Aeck Sargent architecture businesses to unidentified buyers.

Katerra has been hemorrhaging money for months. In December, SoftBank pumped $200 million into Katerra, in addition to its previous investment of roughly $2 billion. Five months after Katerra received that cash infusion, Paal Kibsgaard stepped down as CEO, a role he'd held since July 2020. Kibsgaard is former chairman and CEO of Houston-based Schlumberger.

"The rapid deterioration of the company's financial position is the result of the macroeconomic effects of the COVID-19 pandemic on the construction industry, inability to procure bonding for construction projects following the unexpected insolvency proceedings of Katerra's former lender, and unsuccessful attempts to secure additional capital and business," according to the news release announcing the bankruptcy proceedings.

Greensill Capital, the lender referenced in the news release, filed for insolvency protection in March. Like Katerra, Greensill is backed by SoftBank.

Katerra was founded in 2015 with the intent to capitalize on technology — such as automation and robotics — in order to streamline construction. Its projects have included hotels and apartment buildings. Last year, it posted nearly $2 billion in revenue.

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8+ can't-miss Houston business and innovation events in April

where to be

Editor’s note: Houston's weeklong innovation festival kicks off April, followed by Rice University's globally recognized pitch competition returning for its 26th year. Plus, find coworking pop-ups, industry meetups, pitch battles and even a crawfish boil on the calendar. Here’s what not to miss and how to register. Please note: this article might be updated to add more events.

March 30-April 4 — H-Town Roundup

Celebrate innovation, entrepreneurship and collaboration at Houston Exponential's sixth-annual H-Town Roundup. During the free event series, previously known as Houston Tech Rodeo, attendees can expect insightful talks, workshops and networking events at venues across the city.

This event began March 30. Register here.

April 2 — Industrious Coworking Day

Enjoy a complimentary day of cowering at Industrious and network with professionals at the Ion. Breakfast, snacks, wifi and workspace tours are included. Following the cowering day, Industrious will host happy hour at Second Draught from 4-6 p.m.

This event is Thursday, April 2, from 8:30 a.m.-5 p.m. at the Ion. Register here.

April 2 — Technology Summit for Women

The fourth annual Women in Tech Cummil will feature speakers across three core tracks: Transformation + Digital strategy, Cyber + Risk + Resilience, and AI in Practice. Pearl Chu, director of technical domains and university relations at SLB, will give the opening remarks. Other panelists come from CenterPoint Energy, BP, Technip Energies and other leading companies.

This event is Thursday, April 2, from 2-5 p.m. at the Ion. Register here.

April 8 — Veterans Business Battle

Hear pitches from veterans and entrepreneurs as they compete for more than $10 million in investments at Rice Businesses' 12th annual Veterans Business Battle. This year, the two-day event will also feature a Small Business Expo, which invites Houston-based, veteran-owned businesses to participate in education, networking and the opportunity to showcase their business. Moonshots Capital and Mercury Fund will also host a fireside chat.

This event begins Wednesday, April 8, at 11 a.m. at the Ion. Click here to register.

April 9-11 — Rice Business Plan Competition

The Rice Alliance for Technology and Entrepreneurship will host the 26th annual Rice Business Plan Competition this month. Forty-two student-led teams from around the world, including one team from Rice, will present their plans before more than 300 angel, venture capital, and corporate investors to compete for more than $1 million in prizes.

This event begins Thursday, April 9. Find more information here.

April 10 — BioHouston Chili Cookoff

Connect with Houston's life sciences community at BioHouston's 21st annual chili cookout. This event is geared toward startup founders, researchers and industry veterans alike.

This event is Friday, April 10, from noon-4 p.m. at Bayou City Event Center. Register here.

April 14 — Mercury Fund Day at the Ion: Agentic Commerce

Don’t miss the latest installment of Mercury Fund Day at the Ion, previously known as Software Day. The recurring monthly event features office hours (by application), a keynote and networking opportunities. This month's topic focuses on agentic commerce.

This event is Tuesday, April 14, from 3:30-7 p.m. at the Ion. Register here.

April 19 – UH Energy Industry Crawfish Boil

Head to the UH Cullen College of Engineering Green Space for the 35th annual UH Energy Industry Crawfish Boil. The event will include a student showcase, STEM activities, a kids zone, live music, networking and, of course, crawfish. Proceeds from the event will support the multidisciplinary capstone fund that aims to increase professional readiness for Cullen College engineering and technology students.

This event is Sunday, April 19, from 1-5 p.m. at the Cullen College of Engineering Green Space. Find more information here.

April 24 — Rice Business Healthcare Conference

Leading experts, innovators and the next generation of healthcare leaders will converge at the Rice Business Healthcare Conference. Hosted by the Rice Business Healthcare Association, the conference will explore AI's potential impact on the sector.

This event is Friday, April 24, from 8 a.m.-2 p.m. at McNair Hall on Rice University's campus. Find more information here.

Houston unicorn closes $421M to fuel first phase of flagship energy project

Heating Up

Houston geothermal unicorn Fervo Energy has closed $421 million in non-recourse debt financing for the first phase of its flagship Cape Station project in Beaver County, Utah.

Fervo believes Cape Station can meet the needs of surging power demand from data centers, domestic manufacturing and an energy market aiming to use clean and reliable power. According to the company, Cape Station will begin delivering its first power to the grid this year and is expected to reach approximately 100 megwatts of operating capacity by early 2027. Fervo added that it plans to scale to 500 megawatts.

The $421 million financing package includes a $309 million construction-to-term loan, a $61 million tax credit bridge loan, and a $51 million letter of credit facility. The facilities will fund the remaining construction costs for the first phase of Cape Station, and will also support the project’s counterparty credit support requirements.

Coordinating lead arrangers include Barclays, BBVA, HSBC, MUFG, RBC and Société Générale, with additional participation from Bank of America, J.P. Morgan and Sumitomo Mitsui Trust Bank, Limited, New York Branch.

“As demand for firm, clean, affordable power accelerates, EGS (Enhanced Geothermal Systems) is set to become a core energy asset class for infrastructure lenders,” Sean Pollock, managing director, project Finance at RBC Capital Markets, said in a news release. “Fervo is pioneering this step change with Cape Station, a vital contribution to American energy security that RBC is proud to support.”

The oversubscribed financing marks Cape Station’s shift from early-stage and bridge funding to a long-term, non-recourse capital structure, according to the news release.

“Non-recourse financing has historically been considered out of reach for first-of-a-kind projects,” David Ulrey, CFO of Fervo Energy, said in a news release. “Cape Station disrupts that narrative. With proven oil and gas technology paired with AI-enabled drilling and exploration, robust commercial offtake, operational consistency, and an unrelenting focus on health and safety, we have shown that EGS is a highly bankable asset class.”

Fervo continues to be one of the top-funded startups in the Houston area. The company has raised about $1.5 billion prior to the latest $421 million. It also closed a $462 million Series E in December.

According to Axios Pro, Fervo filed for an IPO that would value the company between $2 billion and $3 billion in January.

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This article first appeared on EnergyCapitalHTX.com.

Houston food giant Sysco to acquire competitor in $29 billion deal

Mergers & Acquisitions

Sysco, the nation's largest food distributor, will acquire supplier Restaurant Depot in a deal worth more than $29 billion.

The acquisition would create a closer link between Sysco and its customers that right now turn to Restaurant Depot for supplies needed quickly in an industry segment known as “cash-and-carry wholesale.”

Sysco, based in Houston, serves more than 700,000 restaurants, hospitals, schools, and hotels, supplying them with everything from butter and eggs to napkins. Those goods are typically acquired ahead of time based on how much traffic that restaurants typically see.

Restaurant Depot offers memberships to mom-and-pop restaurants and other businesses, giving them access to warehouses stocked with supplies for when they run short of what they've purchased from suppliers like Sysco.

It is a fast growing and high-margin segment that will likely mean thousands of restaurants will rely increasingly on Sysco for day-to-day needs.

Restaurant Depot shareholders will receive $21.6 billion in cash and 91.5 million Sysco shares. Based on Sysco’s closing share price of $81.80 as of March 27, 2026, the deal has an enterprise value of about $29.1 billion.

Restaurant Depot was founded in Brooklyn in 1976. The family-run business then known as Jetro Restaurant Depot, has become the nation's largest cash-and-carry wholesaler.

The boards of both companies have approved the acquisition, but it would still need regulatory approval.

Shares of Sysco Corp. tumbled 13% Monday to $71.26, an initial decline some industry analysts expected given the cost of the deal.

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