Houston investor shares what startup founders need to prioritize in 2023

houston innovators podcast Episode 165

The future of Web3, investing in Houston, and how founders need to be prepared for 2023 — Samantha Lewis of Mercury joins the Houston Innovators Podcast. Photo courtesy of Mercury

Heading into the new year, startup founders in Houston and beyond need to focus on conserving and raising cash, says Samantha Lewis, principal of Houston-based venture capital firm Mercury.

“We all know it’s turbulent market times. We’re unsure where the market is going, and when there’s uncertainty in the public markets, that puts uncertainty in the private markets,” Lewis says on this week's episode of the Houston Innovators Podcast. “What I’ve been spending the past two quarters doing is working with our portfolio companies to just make sure our balance sheets are bulked up for what’s to come in 2023.”

She says Mercury's startup portfolio has focused on extending each company's runway financially through 2024 — and she recommends all startups to try to do the same. She advises on the show that even if a company raised funding within the past year, open on the same terms and valuation just to bridge the gap.

“In 2023, if things start to look up, great. But if things continue to be volatile, then we need to be prepared for it,” she says. “What we’re advising all of our startups to do is to get as much cash in the door right now as you can.”

She outlined a lot of this analysis in a report for Mercury looking back at the market in 2022. Lewis, who was named a member of the Class 27 of the Kauffman Fellows Program, a group of global innovation investors, factors in what she's experienced through the program at an international level.

Lewis is focused on what she calls the "power theme" at Mercury, which includes fintech, blockchain, web3, and more. She says these industries have been hit in particular within market uncertainty.

"Ultimately the companies that are now getting investment and see capital flow through them within Web3 are the ones that have been building a sustainable business from the beginning," she says. "And thinking about what are the real use cases that blockchain unlocks and how it adds economic value."

When it comes to VC activity, Lewis says 2023 has been plagued with "FOMO investing" — the fear of missing out on a buzzy new technology — and "hype projects." Investors were throwing money into Web3 technology that hadn't yet been vetted in a real way.

Mercury didn't do that, Lewis says. "We've been very disciplined about where we put dollars within Web3. We've done mostly infrastructure Web3, and the only thing we'll continue to do is infrastructure." She cites Topl, a Houston-founded blockchain network company, as an example.

On the podcast, she shares more about the tumultuous ride blockchain has had in 2022, and why she's still bullish on Web3 despite the bad actors within cryptocurrency. She also shares some of the things Mercury has been up to with its Houston-based portfolio and what's next for them.

Listen to the episode below, or wherever you get your podcasts — just search "Houston Innovators Podcast."


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Med tech firm expands footprint, Houston innovator assumes new role, and more local innovation news

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Houston's innovation ecosystem has had some big news this month, from new job titles for Houston innovators to expanding office space.

In this roundup of Houston startup and innovation news, a Houston organization expands its footprint in the TMC, Rice University opens applications for a cleantech accelerator, and more.

Organization expands footprint in Houston

Proxima CRO has announced its expansion within TMCi. Photo via Twitter

Proxima Clinical Research, a contract research organization headquartered in Houston, announced that it is expanding its office space in the Texas Medical Center Innovation Factory.

"Texas Medical Center is synonymous with innovation, and the TMC Innovation space has proven an ideal location for our CRO. It's an important part of our origin story and a big part of our success," says Kevin Coker, CEO and co-founder of Proxima CRO, in a news release.

The expansion will include around 7,500-square feet of additional office space.

"The resources found across TMC's campuses allow for companies such as Proxima Clinical Research to achieve clinical and business milestones that will continue to shape the future of life sciences both regionally and globally. We are excited for Proxima to expand their footprint at TMC Innovation Factory as they further services for their MedTech customers," says Tom Luby, director of TMC Innovation, in the release.

$20M grant fuels hardtech program's expansion

Activate is planting its roots in Houston with a plan to have its first set of fellows next year. Photo via Activate.org

A hardtech-focused nonprofit officially announced its Houston expansion this week. Activate, which InnovationMap reported was setting up its fifth program here last month, received a $20M commitment by the National Science Foundation to fuel its entrance into the Bayou City.

“Houston’s diversity offers great promise in expanding access for the next generation of science entrepreneurs and as a center of innovation for advanced energy," says NSF SBIR/STTR program director Ben Schrag in a news release.

The organization was founded in Berkeley, California, in 2015 to bridge the gap between the federal and public sectors to deploy capital and resources into the innovators creating transformative products. The nonprofit expanded its programs to Boston and New York before launching a virtual fellowship program — Activate Anywhere, which is for scientists 50 or more miles outside one of the three hubs.

“We are delighted to be opening our newest Activate community in Houston,” says Activate Anywhere managing director Hannah Murnen, speaking at the annual Advanced Research Projects Agency-Energy Innovation Summit. “Houston is a city where innovation thrives, with an abundance of talent, capital, and infrastructure—the perfect setting for the Activate Fellowship.”

Activate is still looking its Houston’s first managing director is actively underway and will select fellows for Activate Houston in 2024.

TMC names new entrepreneur in residence

Zaffer Syed has assumed a new role at TMC. Photo via TMC.org

Houston health tech innovator has announced that he has joined the Texas Medical Center's Innovation Factory as entrepreneur in residence for medtech. Zaffer Syed assumed the new role this month, according to his LinkedIn, and he's been an adviser for the organization since 2017.

Syed has held a few leadership roles at Saranas Inc., a medical device company founded in Houston to detect internal bleeding following medical procedures. He now serves as adviser for the company.

"As CEO of Saranas, he led the recapitalization of the company that led to the FDA De Novo classification and commercial launch of a novel real-time internal bleed monitoring system for endovascular procedures," reads the TMC website. "Zaffer oversaw clinical development, regulatory affairs and strategic marketing at OrthoAccel Technologies, a private dental device startup focused on accelerating tooth movement in patients undergoing orthodontic treatment.

"Prior to working in startup ventures, Zaffer spent the first 13 years of his career in various operational roles at St. Jude Medical and Boston Scientific to support the development and commercialization of Class III implantable devices for cardiovascular and neuromodulation applications."

TMC is currently looking for an entrepreneur in residence for its TMCi Accelerator for Cancer Therapeutics program.

Applications open for clean energy startup program

Calling all clean energy startups. Photo courtesy of The Ion

The Clean Energy Accelerator, an energy transition accelerator housed at the Ion and run by the Rice Alliance for Technology and Entrepreneurship, has opened applications for Class 3. The deadline to apply is April 14.

The accelerator, which helps early-stage ventures reach technical and commercial milestones through hybrid programming and mentorship, will host its Class 3 cohort from July 25 to Sept. 22.

“Accelerating the transition to a net-zero future is a key goal at Rice University. Through accelerating the commercial potential of our own research as well as supporting the further adoption of global technologies right here in Houston, the Rice Alliance Clean Energy Accelerator is proof of that commitment,” says Paul Cherukuri, vice president of innovation at Rice, in a news release. “The Rice Alliance has all the critical components early-stage energy ventures need for success: a corporate innovation network, energy investor network, access to mentors and a well-developed curriculum. This accelerator program is a unique opportunity for energy startups to successfully launch and build their ventures and get access to the Houston energy ecosystem.”

According to Rice, the 29 alumni companies from Class 1 and 2 have gone on to secure grants, partnerships, and investments, including more than $75 million in funding. Companies can apply here, learn more about the accelerator here or attend the virtual information session April 3 by registering here.

Houston-based real estate giant rolls out sustainability-focused business unit

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Houston-based real estate investor, developer, and manager Hines is stepping up its commitment to sustainability.

The company just formed a business unit, EXP by Hines, that is aimed at addressing “the disruptive changes in the built environment.”

EXP by Hines comprises two parts: Global ESG and the Global Venture Lab. Doug Holte, who was a senior partner at Hines from 1987 to 2009, has been hired as CEO of EXP.

“EXP by Hines is an engine of growth using the most innovative ideas in capital, culture, and environmental stewardship to connect every stakeholder in the built environment and create healthy, activated communities,” Holte says in a news release. “EXP is looking beyond the boundaries of real estate to solve complex problems while creating long-term value.”

Peter Epping, who joined Hines in 2001, is the company’s global head of ESG (environmental, social, and governance). A 2022 survey by professional services firm Deloitte found that ESG continues to gain ground in the corporate world. Business executives questioned for the survey believe ESG strategies will:

  • Strengthen stakeholder trust
  • Elevate brand reputation
  • Boost employee retention
  • Improve ROI
  • Reduce risk

Kathryn Scheckel, who joined Hines in 2019, leads the company’s new Global Venture Lab, which is tasked with identifying and accelerating ventures, partnerships and investments. The lab includes a startup incubator and a VC arm.

According to the news release, priorities of the Global Venture Lab include innovations in the use of physical space, development of ESG solutions, and creation of “revolutionary built-world technologies.”

The efforts being spearheaded by Holte, Epping, and Scheckel are geared in part toward Hines achieving net zero carbon by 2040 in its nearly 231 million-square-foot global portfolio without buying carbon credits.

5 most popular innovation stories in Houston this week

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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 high-tech space suits revealed, tips from a unicorn startup founder, and more.


Houston space tech company secures third NASA mission, reveals new spacesuits

Axiom Space has announced plans for its third commercial space launch and revealed details of its high-tech spacesuit. Photo courtesy of NASA

A Houston-based space tech company has revealed details on two of its commercial partnerships with NASA.

NASA and Axiom Space have again signed a mission order for a private astronaut mission to the International Space Station. The mission will commence sometime in November or on and will be from the agency’s NASA’s Kennedy Space Center in Florida. Axiom Mission 3 is the third mission of its kind and, according to a statement from NASA, is expected to be a 14-day trip.

The ISS's Multilateral Crew Operations Panel will approve four proposed crew members and two back up crew submitted by Axiom for the Ax-3 mission. The crew will be expected to train for their flight with NASA, international partners, and SpaceX beginning this spring, according to NASA.

“Axiom Space’s selection to lead the next private astronaut mission to the International Space Station enables us to continue expanding access to nations, academia, commercial entities, and emerging industries to research, test, and demonstrate new technologies in microgravity,” says Michael Suffredini, CEO and president of Axiom Space, in the release. “As NASA’s focus shifts back to the Moon and on to Mars, we are committed to transforming low-Earth orbit into a global space marketplace, where access to space moves beyond the partners of the space station to nations, institutions and individuals with new ideas fueling a thriving human economy beyond Earth.” Read more.

7 lessons from a Houston-based unicorn startup founder

Gaurab Chakrabarti, the CEO and co-founder of Solugen, shared his entrepreneurial journey on the SXSW stage this year. Photo courtesy of the Greater Houston Partnership

At a fireside chat at SXSW, a Houston founder pulled back the curtain on his entrepreneurial journey that's taken him from an idea of how to make the chemicals industry more sustainable to a company valued at over $2 billion.

Gaurab Chakrabarti, the CEO and co-founder of Solugen, joined the Greater Houston Partnership's Houston House at SXSW on Monday, March 13, for a discussion entitled, "Building a Tech Unicorn." In the conversation with Payal Patel, principal of Softeq Ventures, he share the trials and tribulations from the early days of founding Solugen. The company, which has raised over $600 million since its founding in 2016, has an innovative and carbon negative process of creating plant-derived substitutes for petroleum-based products. Read more.

Following Silicon Valley Bank collapse, banking diversification is key for Houston founders

Last weekend was a tumultuous one for founders and funders in Houston and beyond. Here's what lessons were learned. Photo via Getty Images

Last week, Houston founder Emily Cisek was in between meetings with customers and potential investors in Austin while she was in town for SXSW. She was aware of the uncertainty with Silicon Valley Bank, but the significance of what was happening didn't hit her until she got into an Uber on Friday only to find that her payment was declined.

“Being positive in nature as I am, and with the close relationship that I have with SVB and how they’ve truly been a partner, I just thought, ‘OK, they’re going to figure it out. I trust in them,'” Cisek says.

Like many startup founders, Cisek, the CEO of The Postage, a Houston-based tech platform that enables digital legacy planning tools, is a Silicon Valley Bank customer. Within a few hours, she rallied her board and team to figure out what they needed to do, including making plans for payroll. She juggled all this while attending her meetings and SXSW events — which, coincidentally, were mostly related to the banking and fintech industries. Read more.

California-founded biotech startup relocates to join Houston's emerging bioeconomy

San Diego-based rBIO moved to Houston to take advantage of the growing ecosystem of biomanufacturing and synthetic biology. Photo via Getty Images

Cameron Owen had an idea for a synthetic biology application, and he pitched it to a handful of postdoctoral programs. When he received the feedback that he didn't have enough research experience, he decided to launch a startup based in San Diego around his idea. He figured that he'd either get the experience he needed to re-apply, or he'd create a viable company.

After three years of research and development, Owen's path seems to have taken him down the latter of those two options, and he moved his viable company, rBIO, to Houston — a twist he didn't see coming.

“Houston was not on my radar until about a year and a half ago,” Owen says, explaining that he thought of Houston as a leading health care hub, but the coasts still had an edge when it came to what he was doing. “San Diego and the Boston area are the two big biotech and life science hubs.” Read more.

Investor advocates now is the time to position Houston as a leading biomanufacturing hub

Veronica Wu, founder of First Bight Ventures, joins the Houston Innovators Podcast to outline Houston's opportunities in synthetic biology and biomanufacturing. Photo courtesy

Houston has all the ingredients to be a successful synthetic biology hub, says Veronica Wu. She believes so strongly in this that she relocated to Houston from Silicon Valley just over a year ago to start a venture capital firm dedicated to the field. Since then, she's doubled down on her passion for Houston leading in biotech — especially when it comes to one uniquely Houston opportunity: biomanufacturing.

While Houston's health care innovation scene is actively deploying synthetic biology applications, Wu points to Houston-based Solugen, a plant-based chemical producer, as an example of what Houston has to offer at-scale industrial biomanufacturing. Houston has the workforce and the physical space available for more of these types of biomanufacturing plants, which have a huge potential to move the needle on reducing carbon emissions.

"This is really fundamental technology that's going to change the paradigm and whole dialogue of how we are making a significant impact in reducing a carbon footprint and improving sustainability," says Wu, founder and managing partner of First Bight Ventures, on the Houston Innovators Podcast. Read more.

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