Houston Voices

Houston-founded startups — are you in the right city for growth?

Choosing the right city in which to launch your startup can make or break your company. Miguel Tovar/University of Houston

Choosing the best city for your startup can mean the difference between success and closing up shop prematurely. It's important to think outside your home city for a startup launch because your home city may not have the ecosystem set up for your particular startup.

If you give in to your emotions; staying in your hometown because it's, well, your hometown, you risk preventing your company from launching in a city more conducive to its growth.

Here are three keys to making sure you choose the right city for your startup.

A city's ecosystem

Few things are more valuable to a new company than a web of like-minded companies, investors, social groups and connections. You want a city that uses its resources to grow and maintain its startups. Whether it be accelerators or pitching events or entrepreneur conferences, the city you choose needs to be active in the startup community. Establishing your startup in a city with a weak ecosystem will halt the growth of your company because it'll be that much harder to boost your company without a city's support.

A city's social network

A city with a robust social circle of like-minded entrepreneurs is a city that is doing something right for startups. First of all, if the city is rich in like-minded entrepreneurs, then that means they are living there. So there has to be a reason for that: the city is startup-friendly. Second, a city with a strong social sphere of startups means you have more opportunities to make connections and network. You can meet with other business owners to discuss issues important to your companies and even learn new things from each other. What's more is you have a chance to work with other companies to help each other grow. The city of New Orleans has Krewe de Nieux, for example. This social group is a resource for over forty technology startups in the city.

A chance to give back

Opportunities to give back. The best city for your startup will have plenty of opportunities to give back. For example, giving high school students real-life work experience to expand their knowledge and prepare them for a career in the field. A city with a plethora of opportunities like charities, youth groups, internships and career and business organizations allows startups to barter: we will give you experience and you can help us get work done. You help each other grow. In doing so, you blossom the city's startup community as a whole.

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This article originally appeared on the University of Houston's The Big Idea.

Rene Cantu is the writer and editor at UH Division of Research.

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Building Houston

 
 

Plug and Play, an international accelerator and investment group with a presence in Houston, joined a panel to discuss startup investment, networking, and more during the pandemic. Photo by Zview/Getty Images

It's no secret that the spread of COVID-19 has greatly affected startup ecosystems by shutting down coworking and accelerator spaces and providing economic uncertainty in the venture capital world. However, organizations focused on investment and acceleration are still working to virtually guide startups virtually.

Plug and Play Tech Center, an accelerator and investment group based in Silicon Valley that recently launched its Houston presence, is still offering support and even investments to startups as the pandemic continues on. One way they've recently done so is through Houston Exponential on a virtual panel to answer questions from Houston entrepreneurs.

On the panel, Neda Amidi, partner and global head of health at Plug and Play Tech Center, Milad Malek, associate at Plug and Play Ventures, and Payal Patel, director at Plug and Play Houston, discussed concerns and questions about the organization's dedication to Houston, advice amid the pandemic, and more. If you missed it or don't have time to stream the whole conversation, here are some impactful moments of the chat.

“Timing and opportunity set up the Plug and Play Houston office. The mayor and other business leaders in Houston had seen what happens in our Silicon Valley office and with all the things that are going on in the burgeoning startup community in Houston, we saw the opportunity.”

— Patel says on how Houston snagged its very own Plug and Play location. "Given the high concentration of large companies here — as well as the growing number of investment opportunities — we moved quite quickly to open the office here," she adds.

“There’s a number of great entrepreneurs here in this city. I think a missing ingredient has been the number of early stage investments — especially in that Seed or series A stage. So, we hope to make an impact in that. Our CEO has publicly stated that he’d like to make five investments in Houston a year.”

— Patel shares about Plug and Play's investment strategy in Houston. She adds that five investments in Houston a year is the bare minimum, and they actually are striving for more.

“[Investing virtually is] kind of the same process, but we definitely try to make sure we have cameras on and distractions are away, really giving that entrepreneur that same experience as we can in a face-to-face meeting."

— Amidi says on how Plug and Play's investment team approaches investment meetings and pitches during this time. She explains that during the beginning of the pandemic, most of their investments were with companies that had existing relationships with or follow on deals. Now they have made investments in companies they've never met in person. She says Plug and Play has relied on its network to give feedback on these potential deals.

“During COVID, we’ve recommended to a lot of our portfolio companies to raise more than what they needed at the time to be able to power through what’s happening now and what will happen on the economy side as well."

— Amidi says about investment advice they've given to Plug and Play startups.

“A lot of hardware companies get too intense in terms of thinking about one avenue of fundraising. Spend a lot more time thinking about fundraising strategy.”

Malek says on fundraising for hardware startups specifically. He adds that there are other options for generating cash flow, like grants. "Don't forget the business side of things" he adds. "I know early on, a lot of founders are focused on the technology and prototyping, but it's important as well to think about a compelling narrative for potential investors — even if you're pre-revenue."

"For SaaS, it’s important to have a unique differentiation. There are a lot of copy cats in this realm. It’s ok to be doing something that has competitors — every startup has competitors."

— Malek says about software-as-a-service startups pitching to investors. "It's a red flag when we're talking to a startup — especially one with a SaaS product — that says we don't have competitors," he adds, saying it's usually not true.

“A lot of investors out there prefer teams with multiple founders and not just one founder. It never hurts, at least in an investor’s eyes, to have two or three founders.”

— Malek explains, responding to a question about how to begin the process of bringing another co-founder on board. Investors, he says, value a team with diverse backgrounds and expertise.

“Take your time — it’s kind of like picking a spouse or partner. You want to make sure you’re compatible.”

Amidi adds, saying it's an exceptionally difficult process nowadays. She recommends reaching out to your network for leads on a potential co-founder or even looking into sites like AngelList or LinkedIn.

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