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Bayou Business Download: The State of Houston's Startup and Funding Scene

Published Feb 05, 2020 by A.J. Mistretta


Josh Pherigo (right) chats with host A.J. Mistretta

Bayou Business Download is a podcast from the Greater Houston Partnership that dives into the data and analytics influencing the region’s economy and the core business sectors that drive Houston’s growth. 

On this edition of Bayou Business Download, we chat with Partnership Director of Data Analytics Josh Pherigo about the state of Houston’s startup and funding scene going into 2020. What happened in the VC landscape in 2019 and what does that suggest about the year ahead?  

Here are 5 key takeaways from Pherigo: 

  • Houston is home to the first tech unicorn of the new decade. In the funding realm, a unicorn is a privately held, startup technology company valued at $1 billion or more. Houston has not had such a company, until now. HighRadius, an AI-powered fintech software company, raised a $125 million round of funding in January, propelling the Houston-based business' valuation over $1 billion. While Houston has seen several tech firms reach $1 billion valuation in the past—think Compaq or BMC Software for example—none have done it outside of IPOs or mergers. 
     
  • Houston had its best venture capital year ever in 2019. A total of $543 million in VC funding was raised by Houston startups during the 12-month period, so there’s perhaps never been a better time to raise startup funding in the region than right now, Pherigo said. 
     
  • 2019 was also a year of milestones for the local startup and innovation ecosystem. There were a series of major announcements around new accelerators and incubators, from gener8tor and MassChallenge to the Cannon. Rice University broke ground on The Ion in Midtown. Altogether, these projects have helped deliver the infrastructure and support tech startups need to succeed. Now, the stage is set to see what the waves of classes coming out of these programs can do in the next year and beyond. 
     
  • Established tech companies in places like Silicon Valley are looking for expansion opportunities. We see a growing number of businesses in growth mode looking to expand with new offices elsewhere around the country, which presents an opportunity for Houston. But the region needs to be aware that competition for these second or third offices is intense among peer cities. We need to focus on what makes us stand out. 
     
  • With 2019 venture capital funding in hand, 2020 should be a growth year for several Houston startups. Pherigo said he’s excited to see those companies that received funding start using it to build out their offices, ramp up hiring and prove what they can do.

Listen to this and future episodes of the Bayou Business Download podcast here. Get updates on key economic indicators and other data and analysis from the Partnership Research team here

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