I’ve started up two companies in Houston, one in Austin, and one in Lausanne, Switzerland, which later started up a US subsidiary in San Francisco. Relative to CA, NY, or MA, I give the startup environment top marks for a few reasons:

1. The cost of living is LOW (yet the quality of life is very high)
2. Abundance of top technical and creative talent
3. Abundance of young, entrepreneurial energy interested in such opportunities
4. Business-favorable employment law making it really easy to hire/fire and otherwise be agile

The entrepreneurial ecosystem is definitely not as mature in TX as it is in, say, the bay area, which I find to be a double-edged sword. On the one hand there are fewer resources just sitting around waiting to be used by entrepreneurs. On the other, it is easier to differentiate your startup to investors, business partners, and employees.

Now, Houston vs. Austin. I definitely think of Austin as more of a “startup city” but Houston’s startup scene is expanding rapidly–thanks in no small part to the efforts of the HTC, the Rice Alliance for Technology, and others. Houston is particularly appropriate for B2B startups, which is why we chose to locate our most recent venture here instead of Austin.

BTW, there is a common myth that Austin is less humid than Houston. As you will see from meteorological data (http://www.met.utah.edu/jhorel/html/wx/climate/rh.html) and as I can personally attest from having lived in both cities, it is not. Houston does, however, have more floods and hurricanes.

I don’t think you can go wrong starting up a company in either Houston or Austin and one basically gives you access to the other.

The short answer is Houston is an incredibly supportive place to launch a tech startup.

The long answer is:

1) taxes are tolerable and largely irrelevant for a startup (see other answers above)

2) Talent is abundant and doesn’t have the attitude and management problem of jumping to the next deal like you have in a hot startup town like the Bay Area, Boston, Seattle, Portland or Austin. No one retires to Houston – everyone comes here to work for a couple of years and ends up staying for twenty.

3) Office Space is dirt cheap for a sub-lease, and there are some incredible alternatives – specifically the largest coworking space in the US, carolinecollective.cc and two new coworking sites that I’m personally helping start, http://www.katydock.com and a brand new site up north in The Woodlands. As Mikey mentioned above (thanks for the hat tip), the Houston Technology Center houstontech.org has a very strong base of dozens of tech startups in the middle of one of the hottest neighborhoods for young, creative class people called Mid Town. It is five blocks from one of the most social media/tech startup/student friendly coffee/bars in the country, @CoffeeGroundz (coffeegroundz.net and business.twitter.com/twitter101/case_coffeegroundz) where you can regularly find several startups huddled around the tables.

4) Once again, full disclosure – I am personally very active in the startup scene having recently (the last day of the year, so four days ago as I’m writing this) left the Houston Technology Center as the Director of Entrepreneur Development – a non-profit business incubator that basically helps startups through all of the funding, management and customer issues that face early stage tech startups. In addition to organizations that have already been mentioned like HTC and Rice Alliance – home to the largest MBA business plan competition in the world, we’ve created a vibrant community full of professional and fun events such as OpenCoffee Club, Startup Houston Happy Hour, RefreshHouston, NetSquared, TiE Houston, and a significant and diverse User Group scene especially a very large iPhone Developer meetup, plus quite a few BarCamp-style events – 20+ in the last two years. sites.google.com/site/houstontechgroups/

You will find that all of the obvious negatives of Houston – the heat, humidity, and long commutes are quickly outweighed by the fact that the spirit of this city is so friendly, helpful and intrinsically entrepreneurial that its a wonder more people don’t talk about it as a startup hub. I love Austin and go there regularly for startup-related work and SXSWi (where I’m speaking this year about building tech communities, via y-combinator style seed-funding/mentorship programs) and it’s only 150 miles or 2 1/2 hours by car.

Houston has a lot to offer entrepreneurs who are willing to take the risk of coming to a place that’s not one of the tech mecca’s – just take a look at http://www.startuphouston and I’m happy to talk to you directly if you have more questions:

Marc Nathan marc1919 -at- gmail -dot- com 713-401-9394 Google Voice