"There's something magical happening in Houston, and [VCs] want a piece of it." Photo via Getty Images

Houston's seen a growth in startup and venture investment — even amid the pandemic — and a group of Houston innovators sat down for a virtual event to discuss what's lead to this evolution.

The Greater Houston Partnership hosted an installment of its Houston Industry Series focused on Digital Tech on Thursday, September 24. The panel of experts, moderated by Krisha Tracy of Google Cloud, discussed how they've observed the paradigm shift that's occurred in Houston over the past few years — and why.

Missed the discussion? Here are some significant overheard moments from the virtual event.

“I think there really is an interest for venture capital here, both locally and also welcoming it from outside of Houston. … There’s something magical happening in Houston, and [VCs] want a piece of it. I think that magical piece is a renewed interest in collaborating.”

Stephanie Campbell, managing director of Houston Angel Network and co-founder of The Artemis Fund. "I think a lot [of this progress] is due to the GHP, Houston Exponential, and the founding of the HX Venture Fund to bring those venture funds to Houston to say, 'what's happening here?'" Campbell adds, saying that this connectivity and collaboration that's happening in Houston VC is unique.

“I think there’s a misconception around all we do is oil and gas and life science in Houston, but when you think about what VC-backable companies look like, they’re tech, they’re B2B SaaS, they’re highly scalable, and they don’t tend to be capital-intensive types of things we see corporate venture backing.”

Campbell says, adding "the connectivity and the interest in VC is really taking off. It's an exciting time to be in Houston and Texas in general."

“Plug and Play’s ventures team is based in Silicon Valley and one thing they enjoy about meeting Houston-based founders is valuations tend to be more reasonable than in the Bay Area."

Payal Patel, director of Plug and Play Tech Center in Houston. "There are gems to be found," she adds.

“I don’t know what it is — if it’s something in the water or just Texans being very friendly, but the investors here share deal flow. It takes a village, and I think we all understand a rising tide lifts all boats."

Patel says on the collaborative nature of Houston. "It's really magical."

“What you’re witnessing is a city that has been waiting for industrial innovation to reach the point where it can be adopted at a really high scale, and that happened around 2017.”

Jon Nordby, managing director at MassChallenge Texas in Houston. Nordby adds that MassChallenge in Houston hasn't been keen on consumer tech, or the "grilled cheese delivery apps," as he describes. "We like companies that are in love with problems, not so much in love with solutions. … We build really meaningful tech."

“Over the last year or two, we’ve seen that sleeping giant get awoken. Open and external innovation is newly adopted by more legacy industries where it wasn’t before — and that’s just created a mountain of opportunities for startups and investors alike.”

Nordby says on the shift toward this meaningful, problem-solving technology, which Houston is full of, as he observes.

The SEC expanded its definition of accredited investors, so now is the time for potential venture capitalists and angels to step up. Pexels

Here's what the new SEC accredited investor definition means for potential Houston VCs

guest column

This month. the Security and Exchange Commission, or SEC, modified the definition of "accredited investor," with the effect of dramatically increasing the number of people eligible to participate in non-publicly traded investments.

The SEC definition of accredited investor establishes requirements for who may invest in private deals, startups, and private funds. These rules are meant to protect individuals from investing in assets that are high risk and have little publicly accessible information.

Historically, accredited investor status was limited to those that met certain wealth or income thresholds — specifically, a net worth of $1 million excluding primary residence, or $200,000 in annual income for an individual or $300,000 combined annual income for married couples. The SEC's thinking was that higher net worth individuals or higher earners likely have the sophistication to evaluate the risks and the ability to financially withstand potentially losing money they invested in a private investment.

However, with fewer companies going public and an increased interest in participating in private deals, startups, and funds many have suggested the accredited investor rule appeared more and more antiquated.

The SEC's new definition adds individuals with certain professional certifications (Series 7, Series 65, or Series 82 license) and "knowledgeable employees" at private funds, regardless of an individual's level of wealth or income.

Now, individuals with heavy involvement in and responsibility for investment activities and those with financial certifications are assumed to have the financial sophistication and ability to assess the risks of private investments. The SEC also added the clients and employees of family offices, which are investment arms of high net worth families. In addition, the SEC also expanded the married couples' income calculation to include "spousal equivalent" to capture non-married couples.

It remains to be seen whether these additions to the definition of accredited investors will add a significant number of new angel investors, as many of the individuals with such certifications already meet the previous net worth or income requirements. The startup ecosystem, however, has welcomed the move away from wealth and income criteria, as a good first step toward opening the private offering markets to more qualified individuals.

If you now find yourself meeting any of these qualifications of accredited investor, what now? The Houston Angel Network is a great resource to help you navigate these new waters, by providing a framework and network to learn how to evaluate investment opportunities. A common rule of thumb is that nine out of ten startups fail and will return zero dollars to investors. It is prudent to invest in several startups or through a fund with experienced and capable managers to get the needed diversification to expect a return on your investment in this asset class.

Angel networks throughout the country exist to educate accredited investors and provide a network of sophisticated and experienced individuals across industries to support due diligence. By working together and learning from experienced investors, newly accredited investors can avoid common investment mistakes and can develop skills to evaluate non-public investment opportunities.

The upshot of the expansion of accredited investors is that the SEC still expects such investors to be sophisticated and well educated about investment opportunities with high risks and rewards. Investors new to non-public markets should consider joining a network like the Houston Angel Network, where they can see hundreds of startups a year and learn from experienced investors.

Additionally, new accredited investors can engage in the local startup community by volunteering their services as a mentor at a local startup development organization like the Ion, Rice Alliance, Capital Factory, Mass Challenge, Plug and Play and many more. If you are considering investing in startups or a fund, please reach out to us at the Houston Angel Network for more ways to get involved and learn.

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Stephanie Campbell is managing director of Houston Angel Network and co-founder of The Artemis Fund.

Lenny Saizan — along with three other Houston innovation leaders — founded Urban Capital Network to increase diversity and inclusion within the venture capital space. Photo via urbancapitalnetwork.com

This investor is democratizing access to venture capital deals in Houston while promoting inclusion

HOUSTON INNOVATORS PODCAST EPISODE 47

The Urban Capital Network, which launched in Houston earlier this year, gets the best of both worlds. Not only is the group working with venture capital firms as a limited partner, but, operating as a hybrid investor, UCN also is funding startups directly — using both avenues to promote diversity and inclusion.

"We can be described as a hybrid between an angel investment group and a small VC firm," says Lenny Saizan, co-founder and managing partner of Urban Capital Network. "Our mission is to democratize access to premium VC-backed investments."

By forming relationships with VC funds — specifically ones that value UCN's diversity and inclusion platform — the group's network of investors can form syndicates, or group investments, to work with these funds on deals they otherwise couldn't afford to invest into. The VCs benefit in that they have access to new limited partners.

Saizan says UCN has raised $3 million in six months, and all that's been invested.

"We take a portion of our proceeds and invest in entrepreneurs of color, and we also donate to nonprofits that provide support resources for those entrepreneurs," Saizan says on this week's episode of the Houston Innovators Podcast. "We're completing the cycle. We find that it's easier to go to a VC and offer to give them money and also help them diversify their investor portfolio."

Saizan has three business partners, who each provides their own expertise to UCN: Heath Butler, network partner at Houston-based Mercury Fund; Felix Chevalier, founder of The Chevalier Law Firm; and Dr. Eric S. Tait president of Vernonville Asset Management.

Saizan discusses some of the challenges and opportunities the pandemic has provided UCN and where he and his co-founders are planning to take the investment group 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.

Here's what interactive, virtual events to log on to this month. Getty Images

10+ can't-miss virtual business and innovation events in Houston for September

Where to be online

While September 1 might mean nearing fall to some, here in Houston we've got several more weeks of summer weather. However, encroaching fall also means the beginning of many annual events that happen in the Houston innovation ecosystem. This year, they'll be pivoting to virtual programming as social distancing continues to be encouraged in light of the pandemic.

With that in mind, here are over 10 Houston innovation events you can attend virtually via online meetings. Be sure to register in advance, as most will send an access link ahead of the events.

September 3 — Going From Target to Drug Candidate: A Protocol for Early Drug Development

Join TMC's ACT program to discuss the step-by-step considerations when designing an early stage drug molecule, led by Entrepreneur in Residence Sarah Hein, PhD. This session will give an overview of the early discovery process, including considerations before starting. Attendees are encouraged to dialogue throughout the session, and to bring their own real-life examples and challenges.

The event will take place online on Thursday, September 3, at 6 pm. Register here.

September 8 — Prophetic City Lecture with Dr. Steven L. Klineberg

Join The Ion and Stephen L. Klineberg, founding director of the Kinder Institute for Urban Research, for a discussion on how Houston exemplifies the trends that are transforming the social and political landscape across America. Klineberg recently released his book, Prophetic City: Houston on the Cusp of a Changing America, that explores over 30 years of research on Houston.

The event will take place online on Tuesday, September 8, at noon. Register here.

September 8 — Capital Factory's Latinx in Tech Summit

Capital Factory welcomes you to its first virtual Latinx in Tech Summit. Attendees can look forward to a keynote chat from a serial entrepreneur or investor, insightful discussion sessions, a startup showcase pitch competition, Epic Office Hours, and panels on relevant topics facing the tech ecosystem.

The event will take place online on Tuesday, September 8, at noon. Register here.

September 10 — HXTV| VC Ask Me Anything Virtual Event featuring Texas HALO Fund

Get some virtual face time with Texas HALO Fund's four managing directors at this free, livestreamed event.

The event will take place online on Thursday, September 10, at 1 pm. Register here.

September 14-18 — General Assembly's Shift[ED] Summit

Now more than ever Texans need to be able to shift in their careers. From the current rate of unemployment due to COVID-19 to the rising need to be able to learn new technologies, careers aren't linear any more. Learn to shift your skill set through a week long of programming with experts across the Lone Star State from General Assembly.

This event will take place online from Monday, September 14, to Friday, September 18. Register here.

September 15-17 — 18th Annual Rice Alliance Energy Tech Venture Forum

Meet the future of energy tech at the annual Rice Alliance Energy Tech Venture Forum. For three days, 40 companies will pitch virtually across energy technology, from power storage and carbon modeling to hydrogen innovations and solar energy.

The event will take place online from Tuesday, September 15, to Thursday, September 17. Register here.

September 17 — Now What? Resilience and Transformation Strategies for Small Businesses

The landscape of how business gets done has undeniably changed in the era of COVID-19 - quite likely for years to come. Going digital means more than just digital calls, but instead requires a transformation in how companies should grow and ensure business continuity. Join The Ion and its guest speakers as they discuss how they've adapted to this brave new digital world and what companies can do not only to survive but thrive within it.

The event will take place online on Thursday, September 17, at 1 pm. Register here.

September 22 — Venture Debt Workshop

The Houston Angel Network has teamed up with Silicon Valley Bank to explore venture debt and how it can support your investments and company.

The event will take place online on Tuesday, September 22, at 11:30 am. Register here.

September 23 — Why Venture Capitalists are Investing in "Software Beyond the Screen"

Software has had an amazing decade, as it has transitioned from desktop computers into the cloud and onto smartphones. In the process, entrepreneurs and venture capitalists have smartly capitalized on this trend. The next decade will focus on software making an even more important jump: moving beyond the screen and into the real world around us. In this talk hosted by Rice University's Liu Idea Lab for Innovation and Entrepreneurship (Lilie), Sunil Nagaraj of Ubiquity Ventures will explore how software is beginning to animate, understand and navigate the real world with profound implications.

The event will take place online on Wednesday, September 23, at 4 pm. Register here.

September 25 — Design Thinking for Tech and Innovation Workshop | Idea Generation

Join The Ion and speaker Tanveer Chaudhary to get a hands on lesson on how to generate ideas to solve your problem and how to express the finer details of the ideas to gain more clarity.

The event will take place online on Tuesday, September 29, at 7 pm. Register here.

September 29 — Startups and Venture Capital Investing in a Pandemic Environment

Join the Liu Idea Lab for Innovation & Entrepreneurship, Rice's Computer Science department, and featured Rice alumni as we discuss how COVID19 has affected launching and investing in startups.

The event will take place online on Friday, September 25, at 11:30 am. Register here.

COVID-19 might have thrown a wrench in this health tech startup's fundraising plans, but it found a way to close an oversubscribed round anyways. Photo via Getty Images

How this startup leveraged friends and family investment for an oversubscribed round of funding

guest column

When I wrote about fundraising early this year, I knew that I would be raising a round shortly, but had no idea I would be doing it in a changed COVID-19 world. I have experienced two unexpected recessions as an entrepreneur — in 2001 and 2008 — and each time causing huge struggles for entrepreneurs to raise funds. That is when I developed the mindset of acting like a desert rat, surviving with little help, learning to tap into the resources around you to survive and even thrive. Little did I know what was coming in March when the COVID-19 shutdown started.

Solenic Medical Inc. is a medical device company developing an innovative non-invasive treatment for infected metallic implants in the body. Using technology invented at the University of Texas Southwestern, Solenic will leverage the unique properties of alternating magnetic fields generated from external coils to eradicate biofilm on the surface of medical implants.

This non-invasive treatment addresses a major complication of various surgeries, such as knee and hip replacements, as well as in trauma related implants such as plates and rods. There are certainly challenges to fundraising for medical device companies, but each technology arena has its own challenges that I won't go into here.

The Solenic Medical team knew we needed to raise a round early this year, building upon the progress achieved since our founding investment in early 2019. The question was what type and size a round to raise.

We knew we were close to taking some valuable steps, but needed a just a little more time and funding to get there, at which point we figured we would be able to step up our valuation greatly. We decided on a modest $500,000 convertible note round, to help us accomplish at least a portion of the following items:

  • Recruit a reputable outside board member
  • Complete a planned large animal study stepping up from previous mice studies
  • Complete submission of a Breakthrough Device application to the FDA
  • Close our $1.3 million NIH grant and/or other non-dilutive funding
  • Fine tune simulation approaches to optimize the transducer design
  • File new intellectual property

We knew that some combination of these would occur in the succeeding months and would make it easier for Solenic to raise further funds.

The first domino was the on-boarding of an experienced technology executive from Virginia to join our board. The large animal study was delayed when the COVID-19 shutdown started, but our Breakthrough application and the grant application review started as the team went into virtual work mode. Progress was made on the simulations and drafting our next patent. The dominos were starting to fall in spite of the shutdown.

My philosophy was to treat the round as five different type of efforts, in pretty much five equal portions.

  • The first 20 percent in a round is always the hardest, even in closely held friends and family round. The first check regardless of size is always hard as often investors very interested in the round will wait for others to move first.
  • The second 20 percent is not much easier, still requiring a leap of faith by the investor.
  • The magic starts happening at 40 percent, where momentum picks up as you approach halfway and beyond.
  • At 60 percent you reach real momentum, where those investors who may have been waiting to move for a while now start moving.
  • At 80 percent you pick up investors who move quickly worried about missing out before the round closes.
  • With luck, you get enough momentum to oversubscribe the round and have to make the call to go beyond your target funds. For a quick hint on where I standard at that point, there's a saying that you never turn down money.

It was strange picking up the fundraising activity via zoom meetings, and it got off to a slow start as the initial circumstances of the new COVID-19 world settled in. Following my own advice from the January article, I started strategizing my communications, who might be the first check and first movers in first 20 percent, then the next 20 percent and so forth. For a friends and family round you start with your board as champions for the round, founders and management. No one is likely to be more committed and likely to get things started generally, much less in unusual financial times like a pandemic shutdown.

With an institutional co-founder like VIC Technology Venture Development and a passionate board we were able to jumpstart the round the round with $110,000 in commitments. This was quickly followed $100,000 from friends and family of board or management team members. Note that "quickly" in a pandemic was three months that in normal times might have taken only a month or so. Now that we had crossed that magic 40 percent hurdle, things started picking up speed, where members of the VIC Investor Network added individual investments totaling $140,000 to pass the next hurdle of 60 percent within another six weeks of individual presentations and discussions.

Momentum accelerated with friends and family and management team members stepping up to get us to 80 percent within few weeks. At the time of this article we are over-subscribed with more decisions to come. That is a great problem to have as things really picked up speed recently.

Though the final tally is to be determined the mix for this friends and family round looks to be pretty typical to past experiences

  • Board & Management – 27 percent
  • Family – 27 percent
  • Friends – 22 percent
  • Others – 25 percent

Because of the shutdown, this pandemic round has been unusual and at times frustrating, with some highly vocal and interested prospects going strangely silent as soon as the shutdown started, while others moved more slowly than originally expected. Regardless of how things transpired, it turned out largely familiar. As usual, the people you know the best and that know and trust you the most are the ones that are mostly likely come through for you. Building your network to increase the size of that pool is what you do far before a round starts.

Later rounds will be quite different, but the same 20 percent momentum stages will apply. It's a matter of building and nurturing a network of prospects in advance. Larger rounds involve an "institutional" friends and family network that you have known for a while. That work begins long before you start developing them as prospect for an open investment round. By the time this article is published, we expect to have the final funds of this round in the bank but have already started building relationships for the next round. It never stops, but in some ways that is the fun part of it to meet new people to share your startup's story.

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James Y. Lancaster is the Texas branch manager for Arkansas-based VIC Technology Venture Development and interim CEO for Solenic Medical. Lancaster, who lives in College Station, oversees business there, in Dallas, and in Houston.

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

Houstonian fosters collaboration and mentorship for women in venture capital

HOUSTON INNOVATORS PODCAST EPISODE 46

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

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Houston's Brené Brown rises strong with new podcast and exclusive Spotify deal

now streaming

For two decades, renowned Houston thought leader and researcher Brené Brown has delved into the human condition, studying and exploring themes such as courage, vulnerability, empathy, and shame. Her work has made her a national figure as a five-time New York Times bestselling author and as a host of one of the most popular TED Talks of all time.

Now, Brown is leaping forward with her self-help work with an exclusive new multi-year deal with Spotify. The Houstonian will host a new podcast, "Dare to Lead," which will premiere exclusively on Spotify on October 19, according to a press release. Fans can also look for her beloved "Unlocking Us" podcast to move to Spotify in January 2021.

Brown said in a statement that it was "very important to me to build a podcast home where people could continue to listen for free."

In an added treat for those who love Yacht Rock (and who doesn't, frankly?), Brown is taking over Spotify's Yacht Rock Playlist and has added her favorite tunes (look for smart picks such as Christoper Cross, Doobie Brothers, TOTO, and more).

As for the podcast, "Dare to Lead" will feature conversations with "change-catalysts, culture-shifters and more than a few troublemakers who are innovating, creating, and daring to lead," according to a statement. It mirrors Brown's bestselling book of the same name.

"I've partnered with Spotify because I wanted a home for both podcasts," Brown added, "and I wanted it to be a place that felt collaborative, creative, adventurous, and full of music — like my actual house, where you'd find guitar stands in every room and framed pictures of everyone from Willie Nelson and Aretha Franklin to Freddy Fender, Mick Jagger, and Angus Young hanging on my walls."

When she's not overseeing her multimedia brand, podcasting, writing, hosting, and programming Spotify playlists, Brown serves as a research professor at the University of Houston where she holds the Huffington Foundation – Brené Brown Endowed Chair at The Graduate College of Social Work. She is also a visiting professor in management at The University of Texas at Austin McCombs School of Business.

She is also the author of four other No. 1 New York Times bestselling books, including The Gifts of Imperfection, Daring Greatly, Rising Strong, and Braving the Wilderness. Her 2010 "The Power of Vulnerability" TED Talk has consistently been rated one of the top five most-watched of all time, with more than 50 million views. She is also the first researcher to have a filmed talk on Netflix; her "The Call to Courage" debuted on the streaming service in 2019.

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This article originally ran on CultureMap.

Houston biotech company launches animal testing on a drug that could treat COVID-19

searching for a cure

A clinical stage pharmaceutical company based in Houston has entered into the next phase of testing out a drug that could be used to treat COVID-19.

Moleculin Biotech Inc. has tapped an independent lab to examine the antiviral activity of its WP1122 portfolio in a COVID-19 animal model. The drug was originally developed as a cancer-fighting glycolysis inhibitor and submitted for its COVID-19 treatment patent in April.

"With in vivo studies for the treatment of COVID-19 in such high demand, we are excited to begin an in vivo study involving our WP1122 portfolio," says Walter Klemp, chairman and CEO of Moleculin, in a press release. "Even though we may have initial observations earlier, having the final data readout in December will push the estimated window for filing an Investigational New Drug application into 2021.

"We are also planning to conduct other in vivo studies, intended to enable us to file a complete IND with the US Food and Drug Administration."

The in vivo study, which would use the lab's hamster model and SARS-CoV-2. Moleculin Biotech expects to have the data from the study in December.

"We are excited about the additional in vitro testing as this will involve more than one molecule from our WP1122 anitmetabolite portfolio against SARS-CoV-2 and other viruses," says Klemp.

Moleculin Biotech was founded by Klemp in 2007 and went public in 2016. The company is based in the Memorial Park area of Houston.