Skip to main content

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

Related News

Economy

Coronavirus, Brexit and a Chinese Trade Deal: Recent Events and the Potential Impact on Houston

2/18/20
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 Senior Vice President of Research Patrick Jankowski about a number of recent global events, from the coronavirus and Brexit to the signing of the U.S. Mexico Canada Agreement, and their potential impact on Houston.   Here are 5 key takeaways from the conversation:  Coronavirus Concerns While there is a great deal of understandable global concern around the coronavirus (now named COVID-19 by the World Health Organization), the vast majority of cases remain centered in China where officials are working to contain it. However, China is a much bigger player in the global economy than it was 17 years ago during the SARS outbreak. Back then, China represented only 4.3% of global economic activity compared with 15.3% today. We also didn’t have the integrated global supply chain that we do now and those are just a couple of the reasons global markets are concerned about this outbreak. The virus’ affect on Houston is likely to be felt in trade, tourism and other areas, but the biggest impact may be the drop in demand for crude oil and related products. U.S.-China Trade Deal As China deals with the coronavirus, trade tensions between the U.S. and the world’s largest country are easing. A newly signed U.S.-China trade deal essentially calls a truce to what had been a mounting trade war and starts removing some tariffs on both sides. Parts of the deal call for the Chinese to open their automobile markets as well as buy more agricultural products and energy products from the U.S. The Chinese have agreed to buy another $200 billion in goods and commodities over the next two years, including $52 billion in energy related products specifically. That is likely to have a positive impact here in Houston. USMCA The biggest impact of the United States-Mexico-Canada Agreement is that it brings some certainty to trade between the countries. A lot of investment was sitting on the sidelines and this helps pave the way for that to move forward, particularly in Mexico which is Houston’s largest trading partner. We are going to see increased trade between the U.S. and Mexico as a result of the deal and that should prove a benefit to Houston. Brexit Part of what led voters in the United Kingdom to want to exit the European Union was that many felt they had lost control of their sovereignty under the EU. When the nation officially left the EU on January 31, they essentially left the political part of the union but they have 11 months to negotiate future trade relationships. Houston has already had visitors from the U.K. wanting to establish closer ties here and in Texas.  We’re likely to see an increased amount of physical trade of goods and commodities back and forth between Houston and the U.K. as well as an increase in investment from firms on both sides now that there are fewer restrictions. The Federal Reserve did not lower interest rates at its January meeting. That suggests the Fed is not concerned about a possible recession, which is good news for Houston since the health of the broader national economy is one of the three big pillars of the local economy, along with the global economy and the energy sector. 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. Find more on these issues in the February edition of Economy at a Glance.   
Read More
Employment

Harnessing Tech Talent For Your Small Business with the Flatiron School

2/13/20
On this video edition of Small Biz Insider, Jeannie Kim, Education Manager at Flatiron School, shares what small businesses should look for in potential tech staff and freelances. Flatiron School is a coding bootcamp with software engineering and data science courses online and on-campus in Houston and other major U.S. cities. Here are the top 3 takeaways from Jeannie Kim:  Small businesses are not taking full advantage of technology. According to Deloitte’s 2018 Connecting Small Businesses in the US report, 80% of small businesses aren’t taking full advantage of digital tools, such as data analytics. Interactive websites are not limited to certain industries or larger companies, and small businesses benefit from investing in new technologies. The report shares that compared to the least digitally advanced businesses, the most advanced earned two times as much revenue per employee.  When looking for tech talent, consider outcomes and relevant experience. In addition to asking what relevant skills and software knowledge the candidate brings to the table, ask about their “programming languages.” What solutions can they deliver, either on the back end or external-facing with a client?  Investing in technology means going beyond a company website.  By learning coding, hiring tech talent or contracting a developer, small businesses can customize the way customers interact with their business on digital platforms and elevate their products and services.  Small Biz Insider is a digital series from the Greater Houston Partnership, where we highlight the innovative business owners, entrepreneurs and leaders of the Greater Houston area making a big impact in the small business community. You can also listen to Lauren Bauml, Campus Director for Flatiron School, discuss tech’s include on the overall workforce in our podcast here. You can find our other Small Biz Insider podcast, videos and other small business resources here.
Read More

Related Events

Digital Technology

Innovation Council

For Houston to continue moving forward as a great global city, we must further the innovation eco-system in order to attract tech and start-up companies. This council examines how the greater Houston region can…

Learn More
Learn More
Executive Partners