After trending up all year, Houston VC activity drops in Q3

by the numbers

During the third quarter of 2024, Houston-area companies saw a 15 percent decrease of VC investment compared to the third quarter of 2023. Photo via Getty Images

New data from the PitchBook/NVCA Venture Monitor reveals a seesaw pattern in the Houston area’s venture capital funding.

VC fundraising by Houston-area companies climbed during the first part of this year compared with the same period last year, according to the latest PitchBook/NVCA Venture Monitor. But from 2023 to 2024, the region’s third-quarter VC haul fell by a double-digit percentage.

In the first three quarters of 2024, Houston-area companies collected $1.24 billion in venture capital, the PitchBook/NVCA Venture Monitor shows. That’s up eight percent from the $1.15 billion raised in the first three quarters of 2023.

A look at third-quarter data tells a different story. During the third quarter of 2024, Houston-area companies reaped $529.45 million in VC funding. That’s down 15 percent from $623 million in the third quarter of 2023.

The U.S. saw VC funding rise from $123.5 billion in the first nine months of 2023 to $131.8 billion during the same period in 2024, PitchBook/NVCA data shows. That works out to a 6.7 percent increase. However, Texas experienced a five percent drop — from $5.4 billion in the first nine months of 2023 to $5.13 billion during the same period in 2024.

“While we see some promising signals with lower rates and platform shifts related to AI, we expect the overall VC landscape to [remain] uncertain and strained for the time being,” says Nizar Tarhuni, executive vice president of research and market intelligence at PitchBook.

The new PitchBook/NVCA report forecasts that VC deal value in the U.S. will hit $175.2 billion this year. This figure is shy of annual fundraising totals during the peak of ultra-low interest rates but exceeds the sum for the pandemic year of 2020.

“Venture deal counts seem to have bottomed, but a meaningful market rebound has yet to occur,” says the report.

From Your Site Articles
In the first six months of this year, Houston-area startups attracted $760.55 million in VC funding, which is up 17.7 percent from the same time last year. Photo via Getty Images

Report: Amid difficult market, Houston sees uptick in VC funding

seeing green

Houston-area startups saw a healthy increase in venture capital funding during the first half of 2024 compared with the same period last year, new data shows.

In the first six months of this year, Houston-area startups attracted $760.55 million in VC funding, according to the latest PitchBook-NVCA Venture Monitor. That’s up 17.7 percent from the $645.99 million collected in the first six months of 2023.

Keep in mind that these figures might not match previously reported numbers. That’s because PitchBook regularly adjusts data as new information becomes available.

In light of various factors, such as the ongoing hype over artificial intelligence, fundraising will likely continue to be challenging for U.S. startups as a whole, according to Nizar Tarhuni, vice president of institutional research and editorial at PitchBook, a provider of VC data.

Nonetheless, Bobby Franklin, president and CEO of the National Venture Capital Association (NVCA), points out that American venture capital “is finding its footing in 2024.”

Across the country, VC funding for startups in the first half of 2024 totaled $93.4 billion, up 6.5 percent from the $87.7 billion raised during the same period last year, according to the PitchBook-NVCA Venture Monitor.

“With steadily increasing deal values, especially across early-stage investments, more first-time financings, and increased crossover investor participation, [the second quarter of 2024] was a good one for VC,” says Franklin. “Now it’s up to founders, investors, and regulators to support, rather than stifle, these green shoots as the market heads toward a recovery.”

In the second quarter alone, VC funding in the U.S. jumped from $35.4 billion in 2023 to $55.6 billion in 2024. That’s an increase of 57 percent.

By contrast, the Houston area’s VC funding went in the opposite direction. Startups in the region scored $231.79 million in VC during the second quarter of 2024 vs. $333.17 million during the same period a year earlier. That’s a drop of 30 percent.

So far in 2024, Houston-based Fervo Energy dominates VC hauls for startups in the metro area. In March, the provider of geothermal power announced it had secured $244 million in funding, with Oklahoma City-based oil and gas company Devon Energy leading the round.

Fervo’s latest pot of VC represents more than 30 percent of all Houston-area VC funding during the first six months of 2024.

Tim Latimer, co-founder and CEO of Fervo, says the $244 million investment enables his company “to continue to position geothermal at the heart of 24/7 carbon-free energy production.”

Fervo says the latest VC round will support development of its 400-megawatt geothermal project in Beaver County, Utah. The Cape Station facility is expected to start generating power for the grid in 2026.

VenoStent has raised additional funding. Image courtesy of VenoStent

Houston health tech startup secures $20M series A, NIH grant amid clinical trials

fresh funding

A clinical-stage Houston health tech company with a novel therapeutic device has raised venture capital funding and secured a grant from the National Institutes of Health.

VenoStent Inc., which is currently in clinical trials with its bioabsorbable perivascular wrap, announced the closing of a $20 million series A round co-led by Good Growth Capital and IAG Capital Partners. The two Charleston, South Carolina-based firms also led VenoStent's 2023 series A round that closed last year at $16 million.

Additionally, the company secured a $3.6 million Small Business Innovation Research (SBIR) Phase II Grant from NIH, which will help fund its multi-center, 200-patient, randomized controlled trial in the United States.

Tim Boire, VenoStent CEO and co-founder, describes 2024 so far as "a momentous year" so far for his company.

"In the span of a few months, we initiated our first clinical sites, enrolled the first patients in our large RCT and closed our Series A with Norwest," Boire says in a news release. "We also received the NIH grant, which enables us to execute our trial with the highest degree of quality and rigor to make it as scientifically robust and impactful to patients as possible.

'Each of these are major company milestones that collectively represent many years of intensive and fruitful R&D and collaboration," he continues. "These recent milestones will propel our company forward to an exciting next phase."

Tim Boire is the CEO and co-founder of VenoStent. Photo via LinkedIn

The company's innovation, the SelfWrap, goes around arteriovenous (AV) access sites at the time of AV fistula creation surgery. The device is intended "to accelerate the usability and increase the durability of the fistula sites for chronic kidney disease (CKD) patients requiring hemodialysis," reads the release, "mimicking the arterial environment in veins, which experience a 10x increase in pressure and flow during AV creation and causes the veins to become unusable in dialysis."

Along with the investment, VenoStent announced two new board observers. Norwest General Partner Dr. Zack Scott and Investor Dr. Ehi Akhirome are bringing their expertise to the growing company.

"Norwest's investment is tremendous validation for VenoStent, and we are thrilled to have both Zack and Ehi joining the company's board," VenoStent COO and Co-Founder Geoffrey Lucks adds in the release. "Zack and Ehi have extensive knowledge in our space, and their added value will match the capital and cache of Norwest dollar-for-dollar."

Last year at the same time VenoStent announced its last funding round, the SelfWrap was approved by the U.S. Food and Drug Administration to begin its U.S. Investigational Device Exemption (IDE) study.

"Over half a million people in the U.S. rely on hemodialysis to survive and require an arteriovenous fistula creation surgery in order to receive the treatment. However, the AV fistula procedure has a one-year failure rate of more than 60 percent, which significantly impacts patients' survival rates and quality of life," Scott says in the release. "VenoStent's groundbreaking technology for AV fistula formation, SelfWrap, has the potential to significantly improve these odds. We look forward to working with the VenoStent team as it proves the efficacy of this breakthrough technology in order to improve the lives of hundreds of thousands of CKD patients."

Last summer, Boire told InnovationMap on the Houston Innovators Podcast that he's looking to launch the product in 2026.

The Bayou City has made progress on an international ranking of startup ecosystems. Photo via Getty Images

Report: Houston snags spot on worldwide ranking of top startup ecosystems in 2024

on the rise

Houston is moving up in the startup world.

The city rises to No. 48 on StartupBlink’s list of the world’s top startup ecosystems for 2024. That’s four spots higher than Houston’s No. 52 ranking on the 2023 list. StartupBlink is an economic research platform.

The Greater Houston Partnership recently noted the ascent of Houston’s ecosystem for startups.

“Houston’s tech scene has made many strides in recent years to set a foundation for startups to thrive, from founding to late stage, across industries,” the partnership says. “With a wealth of incubators coming online and a sharp uptick in venture capital funding, startups now have more landing spots and opportunity for growth in Houston than ever before.”

Elsewhere in Texas:

  • Austin lands at No. 17, up four spots from last year.
  • Dallas-Fort Worth appears at No. 25, up one spot from last year.

The world’s three top-ranked startup ecosystems are the San Francisco Bay Area, New York City, and London.

“As we navigate through 2024, it is undeniably a challenging year for the global startup ecosystem,” Eli David Rokah, CEO of StartupBlink, says in the report. “The funding landscape has entered deeper into a ‘winter,’ signaling a significant

tightening in capital availability for startups. This financial constriction coincides with heightened geopolitical tensions and a noticeable retreat from globalization.”

In this climate, the decision about where to nurture a startup ecosystem is more important than ever, says Rokah.

“As the bubble bursts, and capital becomes increasingly concentrated in specific geographic regions, startups must strategically select their locations to access essential resources and funding opportunities,” he says.

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

Property Showcase

Houston's Ion District to expand with new research and tech space, The Arc

coming soon

Houston's Ion District is set to expand with the addition of a nearly 200,000-square-foot research and technology facility, The Arc at the Ion District.

Rice Real Estate Company and Lincoln Property Company are expected to break ground on the state-of-the-art facility in Q2 2026 with a completion target set for Q1 2028, according to a news release.

Rice University, the new facility's lead tenant, will occupy almost 30,000 square feet of office and lab space in The Arc, which will share a plaza with the Ion and is intended to "extend the district’s success as a hub for innovative ideas and collaboration." Rice research at The Arc will focus on energy, artificial intelligence, data science, robotics and computational engineering, according to the release.

“The Arc will offer Rice the opportunity to deepen its commitment to fostering world-changing innovation by bringing our leading minds and breakthrough discoveries into direct engagement with Houston’s thriving entrepreneurial ecosystem,” Rice President Reginald DesRoches said in the release. “Working side by side with industry experts and actual end users at the Ion District uniquely positions our faculty and students to form partnerships and collaborations that might not be possible elsewhere.”

Developers of the project are targeting LEED Gold certification by incorporating smart building automation and energy-saving features into The Arc's design. Tenants will have the opportunity to lease flexible floor plans ranging from 28,000 to 31,000 square feet with 15-foot-high ceilings. The property will also feature a gym, an amenity lounge, conference and meeting spaces, outdoor plazas, underground parking and on-site retail and dining.

Preleasing has begun for organizations interested in joining Rice in the building.

“The Arc at the Ion District will be more than a building—it will be a catalyst for the partnerships, innovations and discoveries that will define Houston’s future in science and technology,” Ken Jett, president of Rice Real Estate Company, added in the release. “By expanding our urban innovation ecosystem, The Arc will attract leading organizations and talent to Houston, further strengthening our city’s position as a hub for scientific and entrepreneurial progress.”

Intel Corp. and Rice University sign research access agreement

innovation access

Rice University’s Office of Technology Transfer has signed a subscription agreement with California-based Intel Corp., giving the global company access to Rice’s research portfolio and the opportunity to license select patented innovations.

“By partnering with Intel, we are creating opportunities for our research to make a tangible impact in the technology sector,” Patricia Stepp, assistant vice president for technology transfer, said in a news release.

Intel will pay Rice an annual subscription fee to secure the option to evaluate specified Rice-patented technologies, according to the agreement. If Intel chooses to exercise its option rights, it can obtain a license for each selected technology at a fee.

Rice has been a hub for innovation and technology with initiatives like the Rice Biotech Launch Pad, an accelerator focused on expediting the translation of the university’s health and medical technology; RBL LLC, a biotech venture studio in the Texas Medical Center’s Helix Park dedicated to commercializing lifesaving medical technologies from the Launch Pad; and Rice Nexus, an AI-focused "innovation factory" at the Ion.

The university has also inked partnerships with other tech giants in recent months. Rice's OpenStax, a provider of affordable instructional technologies and one of the world’s largest publishers of open educational resources, partnered with Microsoft this summer. Google Public Sector has also teamed up with Rice to launch the Rice AI Venture Accelerator, or RAVA.

“This agreement exemplifies Rice University’s dedication to fostering innovation and accelerating the commercialization of groundbreaking research,” Stepp added in the news release.

Houston team develops low-cost device to treat infants with life-threatening birth defect

infant innovation

A team of engineers and pediatric surgeons led by Rice University’s Rice360 Institute for Global Health Technologies has developed a cost-effective treatment for infants born with gastroschisis, a congenital condition in which intestines and other organs are developed outside of the body.

The condition can be life-threatening in economically disadvantaged regions without access to equipment.

The Rice-developed device, known as SimpleSilo, is “simple, low-cost and locally manufacturable,” according to the university. It consists of a saline bag, oxygen tubing and a commercially available heat sealer, while mimicking the function of commercial silo bags, which are used in high-income countries to protect exposed organs and gently return them into the abdominal cavity gradually.

Generally, a single-use bag can cost between $200 and $300. The alternatives that exist lack structure and require surgical sewing. This is where the SimpleSilo comes in.

“We focused on keeping the design as simple and functional as possible, while still being affordable,” Vanshika Jhonsa said in a news release. “Our hope is that health care providers around the world can adapt the SimpleSilo to their local supplies and specific needs.”

The study was published in the Journal of Pediatric Surgery, and Jhonsa, its first author, also won the 2023 American Pediatric Surgical Association Innovation Award for the project. She is a recent Rice alumna and is currently a medical student at UTHealth Houston.

Bindi Naik-Mathuria, a pediatric surgeon at UTMB Health, served as the corresponding author of the study. Rice undergraduates Shreya Jindal and Shriya Shah, along with Mary Seifu Tirfie, a current Rice360 Global Health Fellow, also worked on the project.

In laboratory tests, the device demonstrated a fluid leakage rate of just 0.02 milliliters per hour, which is comparable to commercial silo bags, and it withstood repeated disinfection while maintaining its structure. In a simulated in vitro test using cow intestines and a mock abdominal wall, SimpleSilo achieved a 50 percent reduction of the intestines into the simulated cavity over three days, also matching the performance of commercial silo bags. The team plans to conduct a formal clinical trial in East Africa.

“Gastroschisis has one of the biggest survival gaps from high-resource settings to low-resource settings, but it doesn’t have to be this way,” Meaghan Bond, lecturer and senior design engineer at Rice360, added in the news release. “We believe the SimpleSilo can help close the survival gap by making treatment accessible and affordable, even in resource-limited settings.”
View All Listings