Energy, Real Estate & Other Firms Pledge Capital to HX Venture Fund

Houston—Houston Exponential, a group formed last year to boost the city’s innovation ecosystem, announced Thursday that its fund of funds has raised $25 million from nine corporate investors.

That commitment makes up half of the planned $50 million size of the HX Venture Fund, and fund manager Guillermo Borda said he expected to close on the remainder, or more, of the fund by year’s end. The corporate investors include businesses that are based in or have a large presence in the Houston area; they include Insperity, Chevron, Shell, Quanta Services, Westlake Chemical, The Plank Companies, PROS, HEB, and Camden.

“To the outside world, we don’t have a reputation as an innovation hub,” said Marc Watts, chairman of the Greater Houston Partnership, at a press conference Thursday evening. “This effort is changing that perception.”

Houston civic and startup leaders launched the HX Venture Fund last year, modeling it after the Renaissance Venture Fund program which started in Detroit a decade ago. The idea behind a fund-of-funds model is to use those corporate investments to invest in venture capital firms around the country, creating links between Houston, corporate partners, and startups with technologies that would be of interest to those investors. (Chris Rizik, Renaissance’s CEO and fund manager, is on the HX Venture Fund’s investment committee.)

The venture firms that receive capital from the HX Venture Fund are not required to invest in Houston startups but, in Renaissance’s case, “for every $1 Renaissance invests, $16 [in] venture capital came back to Michigan,” said Gina Luna, Houston Exponential’s chairwoman.

The fund of funds is one part of HX, a civic organization founded from efforts among the Mayor’s Innovation and Technology Task Force, the Greater Houston Partnership, and the Houston Technology Council, which was subsumed into the GHP earlier this year. Last year, city leaders decided one key way to boost the city’s anemic startup community is to provide more capital to Houston’s startups.

HX is one facet of several projects aimed at boosting Houston’s innovation scene. In April, Rice University announced it would take the lead in a $100 million effort that would renovate a shuttered Sears store in the city’s midtown area and convert it into an anchor of an innovation district with co-working spaces, classrooms, and offices for corporate innovation arms.

“In a few years, Houston will be a hub for early stage capital,” Luna said.

 

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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