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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UTHealth Houston team joins NASA initiative to protect border drinking water

water watch

Climate change means far more to public health than living with hotter days. Transformations in our weather are contributing to challenges in accessing safe drinking water in some communities.

One of the most dire situations is along the US–Mexico border. The National Aeronautics and Space Administration (NASA) is seeking to address that issue with its Water Quality Applications program. An 11-researcher project led by a UTHealth Houston School of Public Health faculty member has been selected to participate.

“Drinking water is one of the most fundamental public health protections, but producing safe drinking water involves a delicate balance,” Yun Hang, assistant professor of environmental and occupational health sciences, said in a news release. Her team’s proposal was one of 93 that were submitted for funding through NASA’s Research Opportunities in Space and Earth Sciences (ROSES)-2025 program.

This is the first time that NASA has worked with a team devoted to water quality applications. The group, which includes researchers from across the nation, will use satellite observations of Earth, as well as hydrologic modeling, to potentially anticipate and act on water quality conditions as they change. Challenges addressed over the course of the three-year program, which kicked off in June, might include problems with water quality due to climate variability and increased pressure on water resources.

Hang’s team will focus on a pair of borderlands: Paso del Norte and the Rio Grande Valley.

“Working closely with El Paso Water ensures that our research addresses real operational needs while helping utilities better prepare for climate-related water quality changes and continue providing safe drinking water to communities across the Texas border region,” Hang added in the release.

She and the team will use data gathered by NASA on both past and future Earth-observing missions, which will allow them to track environmental changes that may affect source water quality. Combined with past water treatment records and hydrologic models, the team will also utilize artificial intelligence to develop predictive tools that aim to stop issues before they become larger hurdles to water safety.

Another one of the project’s goals is to create visualization tools and source water summaries that can be utilized by those without scientific expertise. The tools will be produced in English and Spanish to further broaden their accessibility.

The hope is that the materials made by the team will also go far beyond the border, with protocols that can be adapted or adopted by other areas dealing with water quality issues.

U.S. News declares Houston hospital No. 1 in Texas for the 15th year

Top of the Chart

Houston Methodist Hospital and over a dozen more Houston-area hospitals have earned bragging rights in U.S. News & World Report's newly released rankings of the Best Hospitals for 2026-2027.

Every year, U.S. News annually evaluates nearly 4,500 U.S. hospitals to determine which meet the publication's rigorous standards and offer the best care for patients across 14 adult specialties and 23 procedures and conditions. New to this year's batch of rankings, U.S. News introduced regional rankings in cancer; cardiology; heart and vascular surgery; orthopedics; and rehabilitation.

Houston Methodist Hospital was the only Texas institution named on U.S. News' Best Hospitals Honor Roll, a prestigious list of the 20 best medical centers in the country. Houston Methodist also reigns as Texas' best hospital for the 15th consecutive year.

The hospital also shines among the nation’s best in 10 specialties:

No. 5 – Gastroenterology and GI Surgery
No. 7 – Obstetrics and Gynecology
No. 10 – Cardiology, Heart, and Vascular Surgery
No. 11 – Pulmonology and Lung Surgery
No. 13 – Neurology and Neurosurgery
No. 19 – Cancer
No. 21 – Orthopedics
No. 23 – Diabetes and Endocrinology
No. 24 – Geriatrics
No. 43 – Urology

Houston Methodist also earned high performing distinctions across one regional specialty (Rehabilitation) and 21 procedures and conditions.

"This recognition reflects the remarkable dedication of our physicians and employees and their tireless focus on delivering unparalleled care to our patients," said Houston Methodist president and CEO Marc L. Boom, M.D. in a press release. "While we are honored by this recognition, its true significance lies in what it represents — an unwavering commitment to putting patients first."

Elsewhere in Houston, The University of Texas MD Anderson Cancer Center ranked as the No. 1 best cancer hospital in the nation for the 12th year in a row.

"This ranking is a tremendous honor, and it reflects our unwavering commitment to continue making progress in our mission to end cancer," said UT MD Anderson president Peter WT Pisters, M.D. "We are deeply grateful to everyone who made this recognition possible: our faculty and staff, volunteers, donors, and the patients and families we are honored to serve."

MD Anderson also earned national rankings in two specialties — Urology (No. 6) and Gastroenterology and GI Surgery (No. 16) — and it received high performing distinctions in six procedures and conditions: Colon Cancer Surgery; Ear, Nose, and Throat Surgery; Gynecological Cancer Surgery; Leukemia, Lymphoma, and Myeloma Treatment; Lung Cancer Surgery; and Prostate Cancer Surgery.

The additional Houston hospitals that ranked among the best in Texas for 2026-2027 are:

No. 3 – Houston Methodist Sugar Land Hospital (tied with Baylor University Medical Center Dallas)
No. 5 – Baylor St. Luke's Medical Center, Houston
No. 6 – Memorial Hermann Hospital, Houston
No. 7 – Houston Methodist The Woodlands Hospital
No. 10 – Memorial Hermann Greater Heights Hospital (tied with St. David's Medical Center, Austin)
No. 14 – Houston Methodist Baytown Hospital
No. 15 – Memorial Hermann Memorial City Medical Center, Houston
No. 21 – Houston Methodist Clear Lake Hospital, Nassau Bay; St. Luke's Health-The Woodlands Hospital; University of Texas Medical Branch, Galveston (also tied with six more Texas hospitals)
No. 30 – Memorial Hermann Sugar Land Hospital (tied with five other Texas hospitals)
No. 36 – HCA Houston Healthcare Kingwood (tied with Parkland Health-Dallas)

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This article originally appeared on CultureMap.com.

Houston helps power Texas’ rise as AI infrastructure hub, new report finds

eyes on ai

Houston plays a major role in Texas’ rapidly evolving AI economy, a new report indicates.

The report from Build American AI, a pro-AI advocacy group, notes Houston’s growing AI presence includes:

A factory being built by AI chipmaker NVIDIA and electronics manufacturer Foxconn that will produce AI supercomputers and infrastructure systems
Houston Methodist’s use of ambient AI to listen to health care providers’ conversations with patients, eliminating the need for manual notetaking
An abundance of AI products and services for the energy sector

Across the state, billions of dollars in new AI investments are fueling advancements in construction, manufacturing, energy production, logistics, and health care, according to the report.

“Texas is not merely a place where AI products will be used. Texas is becoming one of the places where the AI economy is being assembled,” the report says.

Particularly noteworthy are four major AI-related projects around the state representing an investment of more than $140 billion, including Google’s $40 billion buildout of AI data centers.

“While California had a headstart in building the software era, Texas will build the infrastructure era,” says the report. “That is not a slogan. Economic research has revealed for decades that innovation happens where the local conditions make building and collaboration possible, and Texas is positioned to be a central hub.”

According to the report, components of Texas’ infrastructure era include:

Energy leadership
Top-tier hospitals
Semiconductor investments
Construction capabilities
Data center growth
Major companies and universities

On the workforce front, Stanford University’s 2026 AI Index found Texas had 80,547 AI job postings in 2025, accounting for 8 percent of the national total.

“Texas no longer needs to ask whether AI will reshape the economy. It already has,” the report concludes. “The question is whether Texas will merely host part of that future or lead it.”

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