Texas sees significant growth in VC investments for Q1, but Houston falls short

Following the money

When it comes to venture capital invested in the first quarter of 2019, Houston raked in less than 10 percent of what Austin reported, but the state as a whole has seen an increase, according to Crunchbase. Getty Images

While the state marked significant growth in first quarter venture capital investments year over year, Houston fell far behind its Texas sister cities. Houston startups received just 10 percent of what Austin startups reported, and Houston lost its lead it's had on Dallas for two quarters, according to Crunchbase data.

Texas had a reported $790.4 million in Q1, per Crunchbase, which is up from Q4 2018's $530.6 million as well as being up year over year from $587.2 million in Q1 of 2018. The number of deals for the state was cut almost by half — 64 Q1 2019 deals compared to 118 in Q1 of 2018 — "indicating larger investment sizes as the state's startup market continues to mature," according to Crunchbase's Mary Ann Azevedo.

Meanwhile in Houston, the city's startups received $44.7 million of that reported investment last quarter, which is down from the $121.4 million reported in Q4 2018. Austin raked in $493.8 million — more than 10 times that of Houston — and Dallas reported $245.4 million, which more than doubles what they reported for Q4 of 2018.

Houston lost its lead it had on Dallas for the past two quarters. In Q4 of 2018, Houston outdid Dallas with $121 million in venture capital investment, according to Crunchbase. Before that, Houston crushed Dallas in the third quarter too with $138.8 million compared to Dallas' $38.1 million. That quarter was when Houston came close to Austin's VC funding.

The largest deal in Houston was for biotech startup, Solugen, which closed its $13 million Series A in March, Cruncbase reported, and Y Combinator contributed to the round.

The Crunchbase report mentioned a few huge deals that tipped the scale this time around for Austin and Dallas. Dallas-based Peloton Therapeutics closed a $150 million Series E round in February. In Austin, Disco — a company founded in Houston but relocated to Austin — closed a $83 million Series E round, and Austin's Billd drew in $60 million in a Series A.

Houston's cut shrinks

Houston's piece of the Texas VC pie continues to shrink. In Q3 2018, the city had a third of the funds and, in Q4, had over 20 percent.Via Crunchbase News

Dallas is back at No. 2

Dallas came back with a vengeance after being outdone by Houston for the past two quarters.Via Crunchbase News

LiveOak Venture Partners, an Austin-based firm, is the first recipient of Houston Exponential's fund of funds. Courtesy of LiveOak

Houston venture fund of funds doles out $5 million in Austin firm in its first investment

money moves

After closing its initial round of funding last year, Houston Exponential's fund of funds, called the HX Venture Fund, has closed its first investment on March 29. Austin-based LiveOak Venture Partners received a $5 million investment from the fund.

The HX Venture Fund raised $30 million after launching in October of last year. The fund's goal is to invest in out-of-Houston venture funds in the hopes that they reinvest that money into Houston startups.

"We invested in LiveOak Venture II because of the firm's compelling investment track record, expertise and vigor of the general partners, their extensive network of relationships with proven entrepreneurs, and their focus on capital efficient early stage technology companies in Texas," says Guillermo Borda, managing partner at HX Venture Fund, in a release. "LiveOak's team is committed to making a significant impact in the Houston startup ecosystem."

The HX investment is a part of LiveOak's Fund II, which was oversubscribed and closed at $105 million, the company announced today. According to a release from LiveOak, Fund II is a continuation to the firm's dedication to Texas entrepreneurship. The fund will focus on funding within the state's four largest tech hubs — Austin, Houston, Dallas and San Antonio — and have initial investments ranging from $2 million to $4 million, the release states.

The firm's portfolio focuses on seed and series A funding, and most of its investments are Austin-based, with the exception of three Dallas companies. LiveOak invested in Houston-founded CS Disco, an AI-enabled tool for legal business, but the company has since moved to Austin, according to a public relations representative. LiveOak also invested in San Antonio-founded Infocyte, but the company also relocated to Austin.

Houston has been a strategic market for LiveOak, says managing partner, Krishna Srinivasan, in the release, citing the city's recent entrepreneurial activity.

"We are excited to partner with HX Venture Fund and its strategic investment partners, comprising multiple leading Houston based corporations, to catalyze and grow this activity," says Srinivasan, in the release. "Given LiveOak's investment strategy of being the leading source of capital for entrepreneurs across Texas, we view this investment as highly synergistic with our efforts to enable world-class, category dominating companies coming out of Houston."

HX modeled its fund after the Renaissance Venture Capital Fund in Michigan, from which 10 outside venture capital firms benefitted. Renaissance Fund reported positive results from the fund of funds and Chris Rizik, CEO and fund manager of Renaissance, serves as a member of the investment committee.

Texas venture capital deals had its first spike in volume last year since 2013. Getty Images

Report finds Houston venture capital firm has made the most Texas deals since 2010

At the top

When it comes to tracking venture capital deals coming out of Texas since 2010, a Houston fund tops the list — but just barely. Houston Angel Network edged out Austin-based Central Texas Angel Network by one deal.

The report by PitchBook counted deals from 2010 up to March 4 that were made with Texas companies. Ten VC funds were listed and, aside from HAN, Mercury Fund was the only other Houston VC. The other eight funds are located central Texas — with the exception of Right Side Capital Management, which has invested in 45 Texas companies since 2010.

"Texas is currently in a transition powered by high-tech investments that lie in contrast to the slow-paced cattle ranches spread throughout the rural areas of the country's 28th state," the report states. "Partly as a result of the relatively new tech scene, Texas was home to three of the 10 fastest-growing cities in the United States in 2018, according to Forbes."

According to the data, VC funding had been on a downward trend since 2013, when the state raked in $2.83 billion in 536 deals. However, 2018 marked a turn for the state with $3.11 billion in 461 deals — a smaller deal count compared to 2013.

Despite this VC deal growth, compared to the rest of the country, Texas ranks fourth when it comes to VC investment market share. California holds over 52 percent of the market, New York has over 10 percent, and Massachusetts has almost 10 percent itself, per PitchBook data. Meanwhile, Texas reportedly holds only 3.43 percent of the market.

PitchBook also identified the top 10 VC deals investing in Texas companies closed since the beginning of 2018 — none of which were into Houston companies. The list's top three had nine-figure investments — Austin-based Bungalo with a $250 million Series A, Dallas-based Peloton Therapeutics with a $150 million Series E, and Richardson, Texas-based Hedera Hashgraph with a $101 million Seed round.

Graph via PitchBook

Texas startups should be getting funded with Texas money, and here's why. Getty Images

Why it's important for Texas startups to get funding within the Lone Star State

Stay local

When you set out to disrupt a long-standing industry, one of the most important aspects is figuring out where you are going to get the money. Odds are, you are going to be OK with breaking the mold on other traditional practices such as forgoing the venture capitalist firms for smaller companies who share your innovative vision and want to invest in it.

That philosophy works well in Texas seeing as the big venture capitalists tend to stay on the East and West Coasts.

There are dozens of things to think about when starting a company. Funding can be the most important, and there are many ways to approach raising funding for your startup. Here are a few things to consider.

Think local

They say everything is bigger in Texas, and one thing is for certain, the Texas economy is thriving and historically very stable. Five of the top 10 fastest-growing cities in the U.S. are in Texas, and a recent Federal Reserve Bank of Dallas report found that Texas is the top state for corporate relocations due to our business-friendly climate.

Benefits of the Texas economy

Business owners and investors alike are noticing the rapid job growth, low tax rates, minimal regulation, successful economic development, and the fact that Texas is the largest exporting state in the nation.

It's important to explore and evaluate all of your options because there are investors everywhere – big and small. I explored fundraising in other states and had I gone that route, it most likely would have led to a successful fundraising campaign. However, it would have looked a lot different. I learned during the first round of fundraising that as much as the angel investment matters, the first meaningful investment might matter even more.

Explore family office investors — it's personal

Traditionally, companies looking for investors seek out the venture capitalist firms with deep pockets. You can joke that Texas is a venture capitalist desert. Compared to the "coasts," there are not many venture capitalist firms here.

I realized that what Texas does have plenty of, is family office investors. And I quickly learned that it was this type of organization that I truly desired. Why? Because local family offices are more likely to share your "homegrown" startup vision. They have true vested interest and it is really personal for them.

Also, the younger generations of these family businesses often lead the way in extending beyond oil wells, fracking, shopping centers and agriculture in seeking to invest in technology startups.

Expert tip: We used our personal connections to target regional investors such as Court Wescott; the founder of 1-800-Flowers; retired Hollywood Casinos CEO Jack Pratt; The Murchison Family; and residential real estate developer Phillip Huffines. We were able to successfully reach around $12 million in the Series A round of fundraising.

When we were ready for the next round of fundraising, we had everything we needed right here in Texas.

Great ideas get funded

Venture capitalists who put a lot of money into a lot of companies also delegate to those companies a lifespan, or a timeline for getting their money back.

Since the family offices believed in our concept and understood what we were doing, we were seen as more of a long-term investment and therefore given a longer time horizon than we would if we had gone the more traditional route of fundraising.

Investors like to watch their investments grow and typically they have more money for second and third rounds of funding when you can prove your success in the first few years.

The bottom line: Investing in Texas companies is a beneficial strategy due to the Lone Star State's booming economy and investing in companies that you believe in makes for a more meaningful relationship, which helps everyone involved succeed.

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Alex Doubet is the CEO and founder of Door Inc., a Texas-based, tech-infused real estate platform.

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New report ranks Texas among top 10 states where AI could disrupt jobs

AI Workforce

A new nationwide report examining where AI could "reshape" the most jobs has ranked Texas No. 9 among the most at-risk states for AI job disruption.

The new SmartAsset report compared all 50 states and the District of Columbia to calculate the estimated percent of the workforce employed in the 26 occupations with the highest AI exposure, as determined by June 2026 research by the Virginia Economic Information and Analytics Division.

The findings revealed that 500,000 Texas workers, or 3.55 percent of the total workforce, are employed in occupations with "high exposure to potential AI disruption."

This also places the Lone Star State as the 9th most at-risk state in the U.S. where AI exposure can lead to "declining hiring demand, wage pressure, task automation, and other forms of disruption."

"States with larger concentrations of highly exposed occupations could experience more pronounced labor-market changes, particularly in roles where core tasks are more vulnerable to AI-driven restructuring," the report's author wrote.

Texas' biggest cities, like Houston and Austin, are known for their thriving tech and business industries, and the study noted that many of the occupations within those sectors are the most at risk. The Virginia Economic Information and Analytics Division said the top five most AI-exposed occupations in the U.S. are: mathematicians, proofreaders, correspondence clerks, court reporters, and media and communication workers. Additionally, computer programmers, database administrators, web developers, telephone operators, and communications equipment operators round out the top 10 most at-risk positions.

These are the 16 remaining occupations most exposed to AI disruption, in order:

Data Entry Keyers
Statistical Assistants
Office Support Workers
Interpreters and Translators
Database Architects
Software Quality Assurance Analysts
Medical Transcriptionists
Software Developers
Writers and Authors
Payroll Clerks
Web Designers
Miscellaneous Computer Occupations
Insurance Claims Processors
Telemarketers
Computer Numerically Controlled Tool Programmers
Bookkeeping and Accounting Clerks

A separate SmartAsset report from April 2026 found about 20.5 percent of Texas workers use AI to do their jobs in some capacity. That trend will continue to shift further as employers and employees choose to adopt — or reject — AI implementation.

Across the U.S., Washington topped the list as the state with the highest concentration of AI-exposed jobs, with nearly 5.7 percent of the state's workforce employed in the 26 most at-risk positions. SmartAsset said Washington's high prevalence of technology companies is a significant factor that skyrocketed the state to the top of the list.

"Home to major technology companies including Microsoft, Amazon, T-Mobile and Expedia, the state has large numbers of computer programmers and software developers, two occupations with high exposure," the report said.

Meanwhile, Mississippi ranked No. 51 with the lowest concentration of AI-exposed jobs in the nation. About 22,500 workers in Mississippi, or 1.93 percent of its workforce, are at risk for AI disruption.

The top 10 states where AI could reshape the most jobs are:

No. 1 – Washington
No. 2 – Virginia
No. 3 – District of Columbia
No. 4 – California
No. 5 – Utah
No. 6 – Maryland
No. 7 – Colorado
No. 8 – New Hampshire
No. 9 – Texas
No. 10 – North Carolina

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This article originally appeared on CultureMap.com.

UH lands $1.2M NIH grant to fight superbugs using AI, quantum sensing

drug defense

The fight against antibiotic-resistant bacteria like MRSA is getting science fiction-like upgrades at the University of Houston thanks to a new four-year, $1.26 million grant from the National Institutes of Health.

The university says the recent funding brings total federal support up to $3.5 million for 11 years for the project, which uses AI and quantum-sensing technology to better understand how bacterial proteins develop resistance to drugs.

Any medical professional will tell you that one of the worst things that can happen is almost killing an infection. Bacteria that survive attacks from conventional antibiotic treatments emerge tougher, more resistant and more aggressive than before–making them much harder to treat. A good example is the superbug methicillin-resistant Staphylococcus aureus (MRSA).

UH chemistry professors Yuhong Wang and Shoujun Xu are working on this issue. They know full well that fighting superbugs requires new technology and new approaches, which is what they aim to pioneer with their new grant.

“Drug-resistant bacterial infections such as MRSA are becoming harder to treat, creating an urgent need for faster ways to understand how antibiotics and other small molecules interact with bacterial proteins,” Wang said in a news release.

Wang and Xu’s work centers around GTP, a cellular fuel that can cause tiny changes to a cell's structure when it mutates. Sometimes, those shape changes make it easier for drugs to breach the wall and attack the cells.

The UH scientists are employing AlphaFold, an AI-powered tool that can scan large molecular libraries in seconds. From these models, they can see promising drug combinations for future testing.

Once identified, the team uses their invention, super-resolution force spectroscopy, to monitor the cells. Tiny magnetic beads are attached to genetic material, then magnified to see how strong that material is when pulled. They can measure this incredible microscopic process through an atomic magnetometer, typically used in quantum physics. Combined, all these tools allow a high-definition look at how each molecule might respond to new chemical approaches.

“We're the only chemists in the world that use an atomic magnetometer for biological research,” Xu said. “It's a technique developed by physicists, and there is usually a gap between techniques developed by physicists and biological applications. Yuhong and I have been bridging that gap together for the past 10 years.”

Eventually, Wang and Xu hope to develop powerful software that can be used by drug manufacturers to model cellular responses. With enough predictive data, the software could even get ahead of superbugs’ own mutation, allowing drugs to be developed before new strains arrive.

"We want an algorithm where you input a protein sequence, score the mutation hotspots, and develop new inhibitors before a drug-resistant species even emerges," Wang added.

SpaceX to get more than 700 acres of Texas wildlife refuge in land swap

Space News

A federal judge on Monday, September 21, refused to block the Trump administration from giving SpaceX more than 700 acres of wildlife refuge as part of a land swap in Texas, while environmental groups vowed to continue their legal challenge.

U.S. District Judge Fernando Rodriguez Jr. declined the plaintiffs' request for a preliminary injunction to prevent the parcel exchange, saying they failed to prove it would worsen ecological risks to a Gulf Coast region already transformed by billionaire Elon Musk’s rocket operations.

In June, the U.S. Fish and Wildlife Service approved moving forward with the deal with SpaceX, which would surrender 683 acres the company owns in exchange for the federal land in the Lower Rio Grande Valley National Wildlife Refuge. The 103,000-acre refuge spans four counties along the Texas border and is home to animal habitats and historical landmarks.

Maps show the land SpaceX would acquire would be closer to the company's launchpad near the U.S.-Mexico border.

The swap amounts to a gift of public lands to SpaceX, “clearing the way for bulldozers to tear into this wildlife refuge as soon as next week and turn a public treasure into a private payday,” said Laiken Jordahl, a spokesperson with the Center for Biological Diversity, which filed the lawsuit alongside other opponents including tribal groups. Jordahl said Monday that the litigation will continue even as the exchange goes forward.

“This court order is not the final word. These lands hold incredible spiritual, historical and conservation value for the people and wildlife of South Texas. We won’t stop fighting to keep this irreplaceable public wildlife refuge safe from SpaceX bulldozers,” Jordahl said in a statement.

The lawsuit asks the federal court to halt the exchange, which has worried SpaceX opponents in the area who have long criticized the company's expanding footprint over lost access to beaches and concerns over exploding rockets.

The Fish and Wildlife Service didn’t respond to a request for comment on Monday’s decision. Previously, a spokesperson had said the agency does not comment on ongoing litigation.

The agency issued a final environmental assessment report in June that determined the exchange would cause no significant impact to the area. The report said the federal government believed the acquisition would represent a “net conservation benefit” and provide “substantial long-term conservation value and improving landscape-scale habitat connectivity across refuges in South Texas.”

The judge said that the plaintiffs offered “relatively weak” evidence of environmental harm.

“While they rightfully argue that the preservation of wildlife and historical lands furthers the public interest, they present no evidence demonstrating that the Property will suffer aesthetic, environmental, cultural, or historical degradation during the pendency of this lawsuit,” Rodriguez wrote in his ruling.

In addition, the judge said a preliminary injunction would result in modifications to SpaceX’s development plans, “placing additional hardship on the company’s ability to meet milestones and contractual obligations.”

SpaceX did not return an email seeking comment on the judge's ruling.

The space exploration company first broke ground in Texas more than a decade ago and has expanded rapidly, so much that SpaceX employees last year voted to incorporate their own local government called Starbase.

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