Startup Houston

This morning I had the pleasure of getting out of bed early to attend the Houston Technology Center’s Education Seminar Series on Raising Capital in Texas Today. Today’s session was entitled, “Current Active Capital Sources in Texas“. The moderator for the event was Scott Crist of Aegis Texas Ventures. Our panel of experts for this seminar were:

• Walt Burnap, President of the Houston Angel Network;
• Tom Farrell, Entrepreneur in Residence at PTV Sciences;
• Blair Garrou, Managing Director for DFJ Mercury;
• Aruna Viswanathan, Principal with Aegis Texas Ventures; and
• Barry Zhang, Investment Associate from Kenda Capital LLC.

Rather than regurgitate the presentations for you, I added a link to them here. The session was well attended, mostly by entrepreneurs looking for capital. Overall, the session provided the following takeaways for me:

1. There are a variety of capital sources for companies looking to raise anywhere from $250K and up that are located right here in Texas. Paul Frison, Vice Chairman of the Houston Technology Center told us that, “the money is out there and looking for good deals.”;
2. The focus tends to be on IT, Life Science and Energy Tech but really the focus is on businesses that can make a good return in a large addressable market;
3. The deals that they look for range from early stage to growth capital;
4. Companies need to be capital efficient (I would define capital efficiency as using as little capital to produce the maximum amount of productivity and growth out of your business. Farrell made a great analogy, “If you need to spend $100 million to generate a return of $120 million then it will be hard for investors to make an investment work.”)
5. Finding the right capital provider needs to be viewed as finding the right business partner. If expectations are not properly set early in the process, there is a greater likelihood of tension creation later down the road.

When the question about the lack of Web 2.0 deals being done in Houston came up (confession: I asked it), Garrou pointed out that it is challenging to build credibility in Houston because it has been tough to, “convince outside venture capital that Houston is a fertile plain for Web 2.0. However, with guys like Marc Nathan of the HTC and Josh Tabin of Startup Houston evangelizing that community, we are beginning to develop that credibility in the market.” Props to Garrou for being visionary in Houston’s capabilities in that burgeoning marketplace.

I personally would like to thank the HTC and the event’s sponsors for making available such a wealth of knowledge and resources to the Houston entrepreneurial community. There are all kinds of great things beginning to happen at the HTC which hopefully will change the landscape of the Houston technology landscape.

FYI, the next in this series is November 30, “Current Active Capital Sources in Texas - Navigating SBIR/STTR Commercialization Grant: The Process, The Agency, and The Award.” No link yet, but I will post once it’s up there.