Houston tech ecosystem ranks as No. 5 in the world for emerging startup hubs

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Houston's ranking on this global report improved 14 spots between now and last year. Photo via Getty Images

As a startup hub, Houston is movin’ on up.

In a new report from Startup Genome and the Global Entrepreneurship Network, Houston ranks fifth among the world’s top 100 emerging ecosystems for startups. Last year, the groups’ report put Houston at No. 19 in the same category.

Ahead of Houston on the list of the top emerging ecosystems for startups are first-ranked Detroit; second-ranked Hong Kong; third-ranked Dublin, Ireland; and fourth-ranked Minneapolis.

Further bolstering Houston’s status as a rising startup hub, Bayou City ranks third among the top North American challengers to traditional startup anchors like Silicon Valley, Boston, and Seattle. Joining Houston on the challengers’ list are first-ranked Detroit; second-ranked Minneapolis; third-ranked Research Triangle, North Carolina; and fifth-ranked Pittsburgh.

A recent report from Houston Exponential, which was recently acquired by InnovationMap's parent company, emphasizes Houston’s position as the third fastest-growing tech ecosystem in the U.S. for early-stage startups. Houston sits behind Miami (No. 2) and Bridgeport-Stamford-Norwalk, Connecticut (No. 1).

Houston startups at all stages raised $2.34 billion in 2021, setting a record for the region’s annual VC haul, the HX report says. Of that total, early-stage startups collected $618.9 million in 46 deals.

Health and information technology startups dominate the VC landscape in Houston, with each accounting for 30 percent of VC deals in 2021, according to the HX report.

Elsewhere in Texas, Austin ranks 25th among the world’s top 100 ecosystems for startups, while Dallas ties for 31st place, according to the Startup Genome and Global Entrepreneurship Network report. San Antonio is wedged into the 91-to-100 range in the ranking of the world’s top 100 ecosystems.

“The importance and dispersal of tech startups have amplified the influence — for both good and ill — of geopolitics,” the report notes. “Where once the sector was sufficiently small to avoid the kind of pressures experienced by large industries such as energy and travel, those garage-spawned entrepreneurs have grown into a major economic force. Keeping their heads down is no longer an option.”

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According to a new report, Houston is among the top emerging ecosystems. Photo by Zview/Getty Images

Houston rise in the ranks of the top emerging ecosystems in the world

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If you need evidence that Houston's startup ecosystem is flourishing, look no further than a new report from Startup Genome and the Global Entrepreneurship Network.

This year's Global Startup Ecosystem Report, released September 22, places Houston at No. 19 among the world's top 100 emerging startup ecosystems. Furthermore, it puts Houston at No. 4 among the top regional challengers in North America. Last year's report lumped Houston with other emerging startup ecosystems in the 31-to-40 ranking range.

Mumbai, India, appears at No. 1 among the world's top 100 emerging startup ecosystems this year, while Miami lands at No. 1 among the top regional challengers in North America.

According to Houston Exponential, the city's startup ecosystem "is experiencing a growth spurt that appears to show no signs of abating."

Case in point: Houston startups raised more than $1 billion in the first six months of 2021, surpassing all annual totals from previous years. In 2020, Houston startups reaped a record-high $753 million in venture capital.

"Venture capital invested in Houston startups has nearly quadrupled since 2016," according to a recent Houston Exponential report. "The sustained level of progress we've seen in startup formation and growth over the past four years shows that Houston has what it takes to build a vibrant, healthy innovation economy with an emphasis on equity."

Collectively, the health care and information technology sectors accounted for nearly 60 percent of Houston's VC deals in the first half of 2021, the report says.

Another sign of the expansion of Houston's startup ecosystem: the rising number of workspaces, incubators, and accelerators designed to foster startups.

"These key institutions create density and drive collisions among founders, investors, and talent, significantly increasing the rate of startup formation and growth," according to the Greater Houston Partnership.

Those institutions include The Ion entrepreneurial hub, the Greentown Labs climate-tech incubator, and the DivInc startup accelerator. All are new arrivals on the Houston startup scene.

"DivInc is about broadening the startup ecosystem by making it more authentically diverse, equitable, and inclusive of underrepresented entrepreneurs," Preston James II, CEO of DivInc, said in April. "When we, as a community, do this successfully, we optimize our opportunities for economic GDP growth, we can help reduce racial/gender wealth divide, and drive greater innovation."

Elsewhere in Texas, Austin ranks 20th among the leading startup ecosystems in the Global Startup Ecosystem Report, down from No. 19 last year, and Dallas repeats its 31st-place tie. Silicon Valley tops the global list.

The report says North America represents half of the top 30 ecosystems in the world.

"Entrepreneurs, policymakers, and community leaders in North America have been working hard to build inclusive innovation ecosystems that are engines of economic growth and job creation for all," JF Gauthier, founder and CEO of Startup Genome, says in a news release.

San Francisco-based Startup Genome is a research and advisory firm specializing in startup ecosystems.

A new hub on Rice University campus, Houston receives national rankings, and more local innovation news. Photo courtesy of Rice University

Shell commits to $10M carbon initiative with Rice University, Houston startup acquired by Honeywell, and more innovation news

Short Stories

Even toward the end of the year and amid the holiday season, Houston's innovation news can be a lot to keep up with. Here are seven short stories of Houston innovation — from an exit for a Houston startup and a multimillion-dollar clean energy commitment from Shell to new national recognitions for Houston and 2020 plans unveiled for MassChallenge in Houston.

Shell commits $10 million to new Carbon Hub at Rice University

Matteo Pasquali will lead the new hub at Rice University. Courtesy of Rice University

Rice University has introduced its Shell-backed Carbon Hub — a research initiative to innovate zero-emissions technologies. According to a news release, Shell has committed to a $10 million arrangement for the hub.

"Trying to address climate change is like playing whack-a-mole; you think you're making something better, and you realize that made something else get worse," says Carbon Hub director, Matteo Pasquali, in the release. "For example, you make cars more fuel efficient by removing weight, and then realize you've increased CO2 emissions by using more aluminum and carbon fibers. Or you try to fix CO2 into a useful product, and you realize you now need much more energy than you had gotten by making the CO2 in the first place."

The plan is to "fundamentally change how the world uses hydrocarbons," reads the release. Rather than burning hydrocarbons for fuel, creating carbon dioxide, the hydrocarbons "will be split to make clean-burning hydrogen fuel and solid carbon materials that can be used to make buildings, cars, clothing and more."

Through the partnership with Shell — and other potential partners — the hub will help fund and lead $100 million of science and engineering initiatives. The inaugural meeting for the hub is expected to be early next year and will be hosted by The Center for Energy Studies at Rice's Baker Institute for Public Policy.

"Providing energy to the world's population in an economically and environmentally sustainable manner is the global energy challenge," says Ken Medlock, senior director of the Center for Energy Studies, in the release. "In part, this will require new technologies and forward-looking, creative thinking, which is exactly what Carbon Hub offers."

Houston-based Rebellion Photonics acquired by Honeywell

Photo via rebellionphotonics.com

Innovative gas monitoring technology company, Rebellion Photonics, founded by Allison Sawyer and Robert Kester in Houston in 2009, has been acquired by Honeywell for an undisclosed amount.

The business will be rolled into Honeywell's Safety and Productivity Solutions business, as well as through Honeywell's Performance Materials and Technologies business, according to a press release.

"Honeywell is an amazing company and a recognized leader in our industry. We are excited to be part of their world-class family," Kester, who serves as CEO of Rebellion Photonics, says in the release. "Automated visual monitoring is the future of gas leak detection. Combining our products with Honeywell's platform will make this the new industry standard for safety and environmental monitoring globally."

MassChallenge to announce details of its second Houston cohort

Photo courtesy of MassChallenge

MassChallenge Texas has released new details of its second cohort in Houston. The zero equity startup accelerator based in downtown will run its second cohort from June to September of next year. Up to 100 startups will be selected for the Houston program, and another cohort of up to 100 startups will run along the same timeline in Austin.

On the line for prizes this year is six months of free office space, experts and mentors, the MassChallenge curriculum, access to top corporate leaders, as well as cash prizes and in-kind support — valued at over $500,000.

Both Austin and Houston will celebrate the launch of the two programs on January 29 — Houston's event will take place at the Four Seasons Hotel (1300 Lamar St.) from 5:30 to 7:30 pm.

MassChallenge recently announced its new home in The Cannon's Downtown Launch Pad in partnership with Amegy Bank.

Houston named in Inc.'s top 50 cities to start a business

houston skyline

Getty Images

Houston just made it onto the list of the top 50 cities to start a business, according to Surge Cities index, Inc., and Startup Genome. Coming in at No. 45, the Bayou City ranked behind Austin (No. 1) and Dallas (No. 29).

"Houston wants to be known as the Third Coast, a place that is both a business and cultural hub," the blurb on Inc. reads. "A place where people want to be. And this city, one of the most diverse in the country, is well on its way."

The report highlights Houston's historic hold on the oil and gas industry, the Texas Medical Center's established presence, and the space innovation happening at NASA. Roger Griesmeyer, a partner at Hunton Andrews Kurth, says in the article that Houston has low regulations and taxes coupled with "a highly educated populace, great weather, and a bunch of money."

"There's such diversity and a confluence of talent and opportunity in one place," says Griesmeyer in the article. "Houston is selling a lifestyle brand with all the resources to bear."

Houston was ranked highly on three factors:

  • No. 23 for job creation
  • No. 20 for wage growth
  • No. 25 for population growth

Accenture announces finalists for Houston-based competition

Courtesy of Accenture

In February, Accenture's Houston innovation hub will host the fourth annual Accenture HealthTech Innovation Challenge. Eleven companies have been named finalists and are headed to Houston in the new year.

"This annual HealthTech challenges creates an exciting opportunity to connect healthcare incumbents with emerging businesses to drive health system evolution focused on improving the lives of consumers and clinicians by enhancing access, affordability, quality and experience," says Brian Kalis, managing director of digital health and innovation services at Accenture, in the news release. "We are all looking forward to the final round and awards ceremony on February 6, 2020 in Houston when the finalists will present to an exclusive panel of healthcare executive judges."

No Texas companies were selected as finalists. The 11 selected startups are: New York-based Capital Rx, Minneapolis-based Carrot Health, San Francisco-based Cleo, Boston-based DynamiCare Health, San Francisco-based InsightRX, United Kingdom-based Lantum, Washington, D.C.-based Mira, Denver-based Orderly Health, New York City-based Paloma Health, St. Louis-based TCARE, and Seattle-based Xealth.

Houston area ranked the 18th best-paying city for software developers

Chart via heytutor.com

According to a new report from HeyTutor.com, the Houston-The Woodlands-Sugar Land metroplex is the 18th best-paying city for software developers. The report factored in salary and employment statistics for Houston and other U.S. metropolitan areas using data from the U.S. Bureau of Labor Statistics Occupational Employment Statistics.

Houston's mean adjusted software developer salary is $107,672 annually, according to the report. Here are some other interesting statistics regarding the Houston area from the data:

  • Mean software developer salary (adjusted): $107,672
  • Mean software developer salary (unadjusted): $109,503 — compared to $109,914 nationally
  • Mean salary across all occupations (unadjusted): $54,290 — compared to $51,960 nationally
  • Number of software developer jobs: 20,400 — compared to $51,960 nationally
  • Median home price: $205,600 — compared to $226,800 nationally

Business idea competition calls for applications

Photo courtesy of LILIE

The Liu Idea Lab for Innovation and Entrepreneurship has announced the applications for the 2020 H. Albert Napier Rice Launch Challenge business idea competition, which will take place on March 25. On the line is $60,000 in prize money to the teams, and the applications are open to Rice-affiliated teams until 11:59 pm on January 20.

To apply, click here.

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Houston health care institution secures $100M for expansion, shares renderings

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Baylor College of Medicine has collected $100 million toward its $150 million fundraising goal for the college’s planned Lillie and Roy Cullen Tower.

The $100 million in gifts include:

  • A total of $30 million from The Cullen Foundation, The Cullen Trust for Health Care, and The Cullen Trust for Higher Education.
  • $12 million from the DeBakey Medical Foundation
  • $10 million from the Huffington Foundation
  • More than $45 million from members of Baylor’s Board of Trustees and other community donors, including the M.D. Anderson Foundation, the Albert and Margaret Alkek Foundation, and The Elkins Foundation.

“The Cullen Trust for Health Care is very honored to support this building along with The Cullen Foundation and The Cullen Trust for Higher Education,” Cullen Geiselman Muse, chair of The Cullen Trust for Health Care, says in a news release. “We cannot wait to see what new beginnings will come from inside the Lillie and Roy Cullen Tower.”

The Baylor campus is next to Texas Medical Center’s Helix Park, a 37-acre project. Rendering courtesy of BCM

The Lillie and Roy Cullen Tower is set to open in 2026. The 503,000-square-foot tower is the first phase of Baylor’s planned Health Sciences Park, an 800,000-square-foot project that will feature medical education and research adjacent to patient care at Baylor Medicine and Baylor St. Luke’s Medical Center on the McNair Campus.

The Baylor campus is next to Texas Medical Center’s Helix Park, a 37-acre project that will support healthcare, life sciences, and business ventures. Baylor is the anchor tenant in the first building being constructed at Helix Park.

“To really change the future of health, we need a space that facilitates the future,” says Dr. Paul Klotman, president, CEO, and executive dean of Baylor. “We need to have a great building to recruit great talent. Having a place where our clinical programs are located, where our data scientists are, next to a biotech development center, and having our medical students all integrated into that environment will allow them to be ready in the future for where healthcare is going.”

In the 1940s, Lillie and Roy Cullen and the M.D. Anderson Foundation were instrumental in establishing the Texas Medical Center, which is now the world’s largest medical complex.

“Baylor is the place it is today because of philanthropy,” Klotman says. “The Cullen family, the M.D. Anderson Foundation, and the Albert and Margaret Alkek Foundation have been some of Baylor’s most devoted champions, which has enabled Baylor to mold generations of exceptional health sciences professionals. It is fitting that history is repeating itself with support for this state-of-the-art education building.”

The Cullen Foundation donated $30 million to the project. Rendering courtesy of BCM

5 most popular innovation stories in Houston this week

what's trending

Editor's note:Another week has come and gone, and it's time to round up the top headlines from the past few days. Trending Houston tech and startup news on InnovationMap included overheard advice from corporates to startups, a rising hub for innovation at UH, and more.

University of Houston plans to build new central campus innovation hub

The University of Houston will construct a new hub for innovation on its main campus. The building is planned to be adjacent to the M.D. Anderson Library. Photo via uh.edu

Over a year ago, the University of Houston got the greenlight from the state of Texas to create a central hub for innovation on campus, Ramanan Krishnamoorti, vice president of energy and innovation at the University of Houston, tells InnovationMap.

“We asked the state two years ago for appropriations to create an innovation hub at the University of Houston,” Krishnamoorti says on this week's episode of the Houston Innovators Podcast. “We are now in the process of creating an innovation hub central to the campus at the University of Houston."

While the project is still in its early stages, the university has revealed some details on the building, which is slated to open in 2025 next to the M.D. Anderson Library on UH's main campus. It will be around 70,000 square feet and will house a makerspace, the Cyvia and Melvyn Wolff Center for Entrepreneurship, the Energy Transition Institute, innovation programs, and Presidential Frontier Faculty labs and offices. Read more.

Overheard: What Houston corporates are looking for from startups

At its annual Activation Festival, the Ion hosted a conversation about the relationship between corporates and startups. Photo courtesy of Shannon O'Hara/the Ion

Hundreds of innovators from Houston and beyond flocked to the Ion's annual Activation Festival, and one of the topics discussed at the series of programming was the relationship between corporates and startups.

One of Houston's points of pride is having the third most Fortune 500 companies headquartered here, but how can the city's innovation ecosystem take advantage of that market? And, on the other side of it, how can corporates make the most of Houston innovators?

At a panel on May 17 entitled "Corporate-Startup Partnerships: How to Build Them, Sustain Them, and How They’re Key to Fast-Tracking Innovation and Growth," three corporate leaders explained how they navigate relationships with startups and how cultivating these opportunities is key to the future of business. Read more.

Houston bank opens new innovation hub within its location in The Woodlands

The new space allows for Amegy Bank employees as well as North Houston innovators to work collaboratively. Photo via Amegy Bank

Amegy Bank renovated it banking center in The Woodlands to add a hub for innovation, technology, and entrepreneurship.

The office, located at 4576 Research Forest Dr., now houses a refurbished space from The Cannon, a co-working and entrepreneurship hub with locations across Houston. The Cannon creates and manages spaces where startup founders, business owners, investors, and more can meet on common ground to collaborate on their entrepreneurial endeavors.

“Amegy Bank has served the needs of business owners and families across Houston for over 30 years,” Amegy Bank-Houston President Dave Stevenson says in a news release. “The banking center’s refreshed design, with The Cannon onsite, will revolutionize North Houston’s access to localized financial resources tailored for entrepreneurs and small-to-mid-size businesses."Read more.

How this Houston-based studio is tackling billion-dollar problems with internal innovation

Anu Puvvada, KPMG Studio leader, shares how her team is advancing software solutions while navigating hype cycles and solving billion-dollar-problems. Photo courtesy of KPMG

In 2021, KPMG, a New York-based global audit, accounting, and advisory service provider, formed a new entity to play in the innovation space. The Houston-based team finds innovative software that benefit KPMG's clients across industries.

"We're really focused on transformative businesses that we can offer our clients in the next three to five years to solve fairly large problems," Anu Puvvada, KPMG Studio leader, tells InnovationMap.

Now, almost two years later, KPMG Studio has spun out its first company, AI-based security startup Cranium, which has raised $7 million in a seed round led by SYN Ventures with support from KPMG.

Established to advance internal innovation, KPMG Studio's technologies don't always get spun out into startups like Cranium, but with support of the team, the early-stage ideas receive guidance from the company's resources with the potential to be rolled into KPMG's suite of services for its clients. Read more.

Houston startup with revolutionary battery technology opens new labs

TexPower's founders — Board Chairman Arumugam Manthiram, CTO Wangda Li, and CEO Evan Erickson, respectively — celebrated the opening of the company's new lab space. Photo courtesy of TexPower

A Houston startup founded off research out of a Texas university has cut the ribbon on its new lab space.

TexPower EV Technologies Inc. celebrated the opening of its 6,000-square-foot laboratory and three-ton-per-year pilot production line at a ribbon-cutting event last week. The Northwest Houston site is located at 6935 Brittmoore Rd.

The new space will help the company further commercialize its cobalt-free lithium-ion cathode, lithium nickel manganese aluminum oxide (NMA). The technology is game changing for the electrification of the United States, including the rapid adoption of electric vehicles.

Currently, the country is experiencing a supply chain crisis, says Evan Erickson, co-founder and CEO of the company, at the event. Most of the world's cobalt, a material traditionally used in lithium-ion cathodes, is sourced primarily from the Congo and refinement is mostly controlled by China, he explains.

For these reasons, Cathodes are the most expensive component of lithium-ion batteries. But TexPower has a unique technology to solve this supply chain issue, and now with its new labs, is one step closer to commercialization of its materials. Read more.

Texas angel investor group expands to make impact in Houston

angels flying in

An angel investment network founded in Austin has announced its entrance into the Houston market.

SWAN Impact Network, which focuses on funding early-stage, impact-driven startups, announced that Houston will be its next market expansion. Founded in 2016, the organization expanded to Dallas two years ago. Now, SWAN is hitting the Bayou City and is actively looking for potential angel investors to join its network.

"Houston is the logical place for us to go because a lot of our deep expertise we developed is grounded around life science, health and wellness, and environmental," Bob Bridge, executive director of SWAN, tells InnovationMap. "There's a lot of people in Houston in the spaces where we've spent most of our time and money."

SWAN, originally founded as the Southwest Angel Network, has grown from several investors to over 80 across Texas. The investors, who meet virtually, range from former entrepreneurs, seasoned investors, and first time angels.

Valerie Tompson, who's serving as the Houston market lead, is an example of someone who was drawn to SWAN's mission, even though she had never invested in startups before.

"I was intrigued by the idea of being able to invest in companies that are making a difference in the world — and it's not a charitable donation," she says, explaining that joining a network allowed for her to learn the ropes and understand the process.

Bridge says they are looking to add 20 Houston investors over the next year. He says they are also interested in adding on volunteer analysts to help in the diligence work of the group. Whether you're a frequent investor or just interested in learning more, SWAN's door is open.

"We encourage new angels not to invest at first — go with us for a ride for six months, learn how we think about companies, see a bunch of companies pitch," Bridge says. "Once they start to get the comfort level up, then they can start making investors. We're very much about helping new angels get comfortable."

Currently, SWAN has two Houston startups — Scriptly Rx and Eisana — in its investment portfolio. In addition to the investor network, SWAN, a nonprofit organization, also has its SWAN Impact Philanthropic Fund that also invests in impact-driven businesses.

SWAN is hosting an event at the Ion on Wednesday, May 31, at 6 pm to celebrate its new Houston expansion, as well as to host a panel discussing impact investing. The event is free to attend, and registration is open.

Valerie Tompson, Houston chapter lead, and Bob Bridge, executive director, will be at the May 31 event. Photos courtesy of SWAN

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