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Houston companies raised $433.5 million in Venture Capital (VC) funding in Q1/21, up 95.5 percent from the same period last year, according to a Partnership analysis of PitchBook data. The four-quarter total ending in Q1/21 was $1.035 billion, an all-time high. 

Several large deals contributed to the increase in funding even as overall deal counts dropped compared to before the pandemic. Houston companies closed 33 VC deals in Q1/21, down from 44 deals in Q1/20.  The financial software firm HighRadius raised the largest deal of the quarter – a $300 million series C funding. That massive deal was a record for Houston. It valued HighRadius at over $3 billion, one of the most lucrative valuations ever for a software firm in Houston. 

Other notable Q1 deals included $42 million to the biotech firm NuProbe; $20 million to Fair Fintech; and $10 million to the biotech company Coya Therapeutics.  

Funding volumes were up across all stages, though deal counts remain stubbornly low for early stage companies. Venture capitalists have favored later stage firms during the pandemic, as early stage deals have proved harder to source. Startups are receiving larger investments, but are closing fewer deals than before the pandemic. In the four quarters ending in Q1/21, Angel and Seed rounds in Houston totaled 74 deals, down 21.1 percent from 95 deals during the same period last year.    
 

On an industry basis, VC investors continue to favored information technology and health care companies. The four-quarter total for VC investment in information technology was $402.0 million (with HighRadius accounting for three-quarters of the total), while health care investment totaled $340.7 million, business products and services accounted for $156.8 million, energy accounted for $41.0 million, and consumer products and services accounted for $29.9 million. 

Prepared by Greater Houston Partnership Research

Josh Pherigo
Research Director, Data Analytics
713-844-3617
jpherigo@houston.org