According to a recent report by experts supporting the growth of Houston’s innovation ecosystem, local Houston startups raised over $1 billion in venture funding in the first six months of 2021. This amount exceeds total year-end results from previous years. When I started my company and began advising startup technology ventures as an entrepreneur, startup development organizations (SDOs) as we know them today did not exist. Today, there are over 30 SDOs locally.
From advancing the energy transition to developing cutting-edge technologies for the health care sector, Houston is home to some of the nation’s most notable hubs, labs, incubators, accelerators, and venture studios. Moreover, the city’s entrepreneurs and intrapreneurs – both equally important – are rising to the occasion and building an enviable consortium of tech-focused enterprises.
Historically, the state benefited from the halo effect caused by its proximity to tech-focused businesses, including Texas Instruments, Compaq, and Dell. Having launched my career while working for IBM’s Federal Systems Division to support the Space Shuttle and Space Station programs at NASA, I have had a front row seat to Houston’s contribution to some of the world’s most impressive engineering feats.
Disruption 2.0 in the Lone Star State
Since my early years, we’ve seen an explosion of startups at various stages and many investor networks, co-working spaces, and corporate resources designed to support them. As an active angel investor and advisor in scores of tech startup ventures, I founded Softeq – a Houston-based full-stack consulting and development company – in the late ’90s to focus on product development for emerging technologies. Over time, I grew my company while observing a new wave of innovation wash over the city with the support of industries central to Houston’s economy.
Made famous by its deep roots in the oil and gas industry, the pronounced energy capital of the world paved the way for sprawling medical centers, renowned educational institutions, and, most importantly, an abundance of technically trained talent.
Ample resources for startups
Throughout the years, I have worked with some of the industry’s brightest minds to help them create connected devices and bring science fiction to life. As the rush to Texas continues with the support of California-based businesses like Hewlett Packard Enterprise, Tesla, Charles Schwab, and others, we are attracting the right talent and significant financial resources at an exciting rate.
As observed by the local investment community, including Roberto Moctezuma – a local entrepreneur, advisor, and angel investor – and Blair Garrou— a co-founder and managing director of Mercury Fund, tech investments are flowing into Houston. With technology rewriting the roadmap for the city, it’s helpful to become familiar with the five types of SDOs available to early-stage startups:
- A hub brings the startup ecosystem together. Office space, shared common areas, startups, advisors, capital, and mentors all under one roof. Membership costs vary, and no equity is required. Example hubs in Houston include Plug and Play and The Ion.
- An innovation lab assists entrepreneurs and intrapreneurs with ideation and innovation. Working with the world’s preeminent innovators in an immersive co-creation boot camp, they drive breakthrough growth. This is the focus of the Softeq Innovation Lab, which launched in late 2020. Since its inception, the lab has provided an environment where intrapreneurs and preeminent innovators from Houston and beyond can collaborate, create the technologies of tomorrow, and expedite the commercialization of ideas for Houston’s unique mix of enterprise companies.
- An incubator helps entrepreneurs refine their business ideas and build their company by offering resources, networking, and advisors for six months to five years. This avenue typically doesn't provide funding or require giving up equity but offers office space and mentorship. For example, a Houston incubator focused on climate tech is Greentown Labs.
- An accelerator speeds up growth and early success, focusing on training and mentorship. Usually, there is a fixed period of guidance, resources, and financial support (from $10K to $100K+) in exchange for equity (from 4% to 10%). Houston Accelerators include Founder Institute, MassChallenge, and TMCx.
- A venture studio creates a replicable model for the earliest stages of business formation, which de-risks the investment for both founder and investor. The studio operates as a technical co-founder and receives equity for their time and capital investment. Earlier this year, my team launched the Softeq Venture Studio.
If you’re considering starting a tech company, I strongly recommend you research and apply to join a program from one or more startup development organizations. Some entrepreneurs go through more than one program to sharpen their pitch, explore product-market fit, broaden their connections, and build tech products. So find the one that’s right for you and go for it.
Christopher A. Howard is CEO of Softeq, a global digital consultancy focused on developing technical software, embedded systems, and hardware. He founded the company in 1997 based on his passion for solving complex problems and now engineers new products for tech giants and startups alike. Connect with Howard at https://www.linkedin.com/in/techris/.
