Despite the pandemic creating one of the most challenging business climates in recent history, venture capital investment in Houston grew year over year during 2020, according to a Greater Houston Partnership analysis.
Venture capital investment in Houston reached $752.6 million during 2020, according to a GHP analysis of PitchBook data. That's up 7.8% from $702.2 million in 2019 and nearly 58% from $476.4 million in 2018.
Houston companies managed to see a year-over-year increase in venture capital fundraising in 2020 but through fewer deals overall. There were a total of 117 venture capital deals in Houston in 2020, compared to 175 in 2019 and 154 in 2018, per the GHP's report.
Due to the deep roots of energy and health care in the local economy, companies operating in life sciences and oil and gas technology continue to dominate venture capital deal flow in the Houston region. On average, 17 out of 100 VC deals go to companies in life sciences in Houston, compared to the national average of 10 in 100 deals, according to the report. Companies in oil and gas tech receive 17.6 out of 100 VC deals in Houston on average, compared to the national average of 1 in 100 deals.
Companies specializing in Software-as-a-Service in Houston have seen growth in VC investment in recent years. SaaS firms were the most prevalent targets for VC investments in 2019, up from the fifth-most prevalent target for investments in 2010. Houston has also seen investment growth in companies in clean tech and oncology.
When it comes to VC fundraising, the beginning of 2021 has been kind to companies across the Lone Star State. There has been approximately $1.3 billion in capital committed by venture firms to Texas-based startups through March 11, according to a Wall Street Journal analysis of PitchBook data. That's just shy of the record $1.5 billion raised across Texas in the first quarter of 2020.
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