Start-Up Guide (Issue Brief)

From edegan.com
Jump to navigation Jump to search

Abstract

Every entrepreneurship ecosystem consists of a delicate balance between innovative thinkers, ambitious business owners, market forces and entrepreneurship institutions. The entrepreneurship institutions, ranging from accelerators and incubators to hubs and co-working spaces, provide key services to aspiring entrepreneurs. After founding a start-up, entrepreneurs require every possible edge they can get in order to maximize their idea's potential. Houston, the largest city in a state with little venture capital, stands in a position to change the narrative of Texan entrepreneurship. Through an analysis of the major entrepreneurship institutions located in Houston, the McNair Center has complied a guide for start-up entrepreneurs, academics, and policy makers to help navigate and better understand the options, successes and failures of the Houston entrepreneurship ecosystem. For this qualitative and quantitative analysis, each institution must provide a "program" for entrepreneurs and their start-ups to enroll in and go through. The qualitative analysis consists of few key parts, namely what the institution considers itself, the services provided by the institution and the entrepreneurship experience level of the institution's directors. The quantitative analysis investigates how many start-ups that participated in an institution's program received venture capital, were acquired, or exited in an initial public offering (IPO). Other considerations such as repeat dealings with venture capital firms, founding date of institution, non-profit status, and quality of venture capital firms dealt with were noted in the data.

Institutions

In order for an entity to be considered an institution for this project, it needed to be located in Houston, provide some kind of "program" for enrollment by start-ups and entrepreneurs, and had to have an easily accessible and published list of all companies which have participated in this "program." All data was collected from institution websites, thus the type of institution, services provided, skill level of directors, and list of cohort companies which have been through a "program" are all self-reported. Data was then aggregated across the board.

Houston Accelerators

An accelerator is a “fixed-term, cohort-based program including mentorship and educational components, that culminates in a public pitch event, often referred to as ‘demo-day’” (Cohen and Hochberg, 2014). The mission of an accelerator, often a non-profit entity, is to provide early stage start-ups with resources, mentorship, and networking needed to gain access to venture capital funding. On average, cohorts stay with an accelerator for 3 months cumulating with a pitch to several venture capital investors. (Fehder and Hochberg, 2014)

HHV's NextHIT

Houston Health Venture's NextHIT accelerator program is a Houston-based, for-profit institution founded in 2014. It advertises a wide array of services, including funding, access to experts, educational programs, mentorship, and office space at the University of Houston. Of the NextHIT program's five directors, two have direct entrepreneurship experience as either an established entrepreneur or serial venture capitalist, and one director has peripheral experience as a repeat investor or member of an advisory board. Of the seven startups which have enrolled in the NextHIT program, none have received venture capital funding. No companies which have participated in HHV's NextHIT program have been acquired or exited in an IPO.


SURGE

SURGE Venture's accelerator program was a Houston-based, for-profit institution founded in 2011. It is no longer operating and closed down in 2016. It advertised a wide array of services, including funding, access to experts, educational programs and mentorship. SURGE's director has direct entrepreneurship experience as an established entrepreneur. Of the 32 startups which had enrolled in the SURGE program, four had received venture capital funding. One company which had participated the SURGE program was acquired and none exited in an IPO.


TMCx

TMCx is a Houston-based, for-profit accelerating institution founded in 2014. It advertises a wide array of services, including funding, access to experts, educational programs, office space, mentorship and networking opportunities. TMCx has three directors, one of whom has direct entrepreneurship experience as an established entrepreneur. Of the 53 startups which have enrolled in the TMCx program, five have received venture capital funding. No company which has participated in the TMCx program has been acquired or exited in an IPO.


Houston University Accelerators

University accelerators, like standard accelerators combine mentorship and education in a fixed-term cohort program. Rather than being run by a purely entrepreneurship-focused entity, university accelerators are powered and run through universities. Generally the advising is provided by entrepreneurship and business academics. While entrance costs and expectations are comparatively low, enrollment is generally restricted to those affiliated with the University. The cohort size, time of program and total funding of university accelerators tend to be smaller than than their non-academic counterparts.

OwlSpark

OwlSpark is a Houston-based, non-profit university accelerator founded in 2013. It advertises a wide array of services, including funding, access to experts, office space and mentorship. OwlSpark has five directors, none of whom have direct entrepreneurship experience as an established entrepreneur. Of the 33 startups which have enrolled in the OwlSpark program, none have received venture capital funding. No company which has participated in the OwlSpark program has been acquired or exited in an IPO.


RED Labs

RED Labs is a Houston-based, non-profit university accelerator founded in 2013. It advertises a wide array of services, including funding, access to experts, office space and mentorship. RED Labs has one director who has indirect entrepreneurship experience in the sector. Of the 18 startups which have enrolled in the RED Labs program, none have received venture capital funding. No company which has participated in the RED Labs program has been acquired or exited in an IPO.


Houston Incubators

Incubators “shelter vulnerable nascent businesses, allowing them to be stronger to become independent” (National Business Incubation Association). Incubators serve as a temporary space for start-ups to develop in their early stages. Unlike accelerators, there is no formal curriculum, cohorts, or duration of stay. Residents of incubators pay fees for both rent and services, and are not offered the breadth of resources found in an accelerator. (Fehder and Hochberg, 2014)

Redhouse Associates

Redhouse Associates is a Houston-based, for-profit incubator institution founded in 2011. It advertises a wide array of services, including funding, office space and mentorship. Redhouse Associates has five directors, three of whom have direct entrepreneurship experience as an established entrepreneurs, and one who has indirect entrepreneurship experience in the sector. Of the 4 startups which have enrolled in the Redhouse program, two have received venture capital funding. No company which has participated in the Redhouse program has been acquired or exited in an IPO.

HTC

The Houston Technology Center is a Houston-based, non-profit incubator institution founded in 1999. It advertises a wide array of services, including education, directors for companies, start-up services and mentorship. HTC has four directors, two of whom have indirect entrepreneurship experience in the sector. Of the 144 startups which have enrolled in the HTC program, 17 have received venture capital funding. Six companies which have participated in the HTC program have been acquired and one has exited in an IPO.

Other Houston Institutions

Other types of institutions within the Houston area were also analyzed. Co-Founder institutions work to match eligible entrepreneurs with experienced business people and experts in relevant fields. There is an understanding that these more experienced individuals will co-found start-ups with the entrepreneurs, potentially providing funding and guidance as well. Hubs, also known as tech hubs or startup hubs, are entities that serve as an intersection between incubators, accelerators, and co-working spaces to foster an entrepreneurial ecosystem and environment. Hubs serve as leaders in their local entrepreneurial communities, enabling entrepreneurs through a wide variety of programming, events, and benefits. Co-working spaces represent institutions that provide collaborative and shared space for entrepreneurs and fledgling start-ups. Co-working spaces oftentimes offer other services beyond just the physical space such as mentorship, networking and educational programs.

Fannin Innovation Studio (Co-Founder)

The Fannin Innovation Studio is a Houston-based, for-profit co-founding institution founded in 2005. It advertises a wide array of services, including access to experts, directors for companies, start-up services and co-founding. Fannin Innovation Studio has three directors, two of whom have indirect entrepreneurship experience in the sector. Of the nine startups which have enrolled in the Fannin program, one has received venture capital funding. No companies which have participated in the Fannin program have been acquired or exited in an IPO.

Station Houston (Hub)

Station Houston is a Houston-based, for-profit hub institution founded in 2016. It advertises a wide array of services, including access to mentors, experts, networking, office space, and start-up services. Station Houston has three directors, all three of whom have direct entrepreneurship experience as established entrepreneurs. Of the 54 startups which have enrolled in the very new Station Houston program, two have already received venture capital funding. One company which participated in the Station Houston program have been acquired and none have exited in an IPO.


- Station member companies have raised just under $20 M in funding since March 2016 - Station now boasts over 75 members - Station member Arundo Analytics recently clothes on a $4.9 million funding round - Station closed its seed round of funding - there are other companies currently going through diligence to exit, but I can't provide any details regarding any of those deals - TMCx posted that Johnson and Johnson is making a larger investment in the digital health space in the city - the Texas Workforce Commision has recently made changes to their requirements for coding academies which has resulted in most platforms halting their recreational platforms. I can expand on this as needed - you may want to take a look at what's going on with HP enterprise as I believe they recently had a restructuring if you want to comment on one of the larger enterprise companies here in town - Alert Logic filed their S1 earlier this year towards going public in 2017 - Meshify acquisition in the news - Houston launched company Virtuix raised over $7 million in crowd funding recently, however the team relocated to Austin earlier this year - Kemal Farid, founder of Merrick systems which was one of the Larger software exits in the O&G industry some years ago closed on his first fund which is a Houston/Silicon Valley investment vehicle - $160 M fund - You can search Joe Martin articles for recent funding activities

START Houston (Co-Working Space)

START Houston is a Houston-based, for-profit co-working space institution founded in 2012. It advertises a wide array of services, including access to office space, networking, and mentorship. START Houston has three directors, one of whom has direct entrepreneurship experience as established entrepreneur. Of the 27 startups which have enrolled in the START Houston program, one has received venture capital funding. No companies which participated in the START Houston program have been acquired and none have exited in an IPO.

Benchmarking Institutions (Non-Houston)

Institutions outside of the Houston area of significant reputation and success were also analyzed as comparative benchmarks for Houston's progress. While Houston's institutions cannot be expected to perform at the exact same standards as these pinnacles of the industry, TechStars, NVC, and YCombinator represent the potential for Houston's institutions and as a target for growth.

TechStars (Accelerator)

Techstars is a Boulder, Colorado-based, for-profit accelerator institution founded in 2006. It advertises a wide array of services, including access to office space, funding, mentorship, experts, start-up services and office space. Techstars has five directors, four of whom have direct entrepreneurship experience as established entrepreneurs. Of the 874 startups which have enrolled in the Techstars program, 225 have received venture capital funding. 45 companies which hacve participated in the Techstars program have been acquired and nine have exited in an IPO.

NVC (University Accelerator)

The New Venture Challenge is a Chicago, Illinois-based, non-profit university accelerator institution founded in 1996. It advertises two services, mentorship and education. NVC has four directors, three of whom have indirect entrepreneurship experience in the sector. Of the 293 startups which have enrolled in the NVC program, 15 have received venture capital funding. 13 companies which participated in the Station Houston program have been acquired and two have exited in an IPO.

YCombinator (Incubator)

YCombinator is a Silicon Valley-based, for-profit incubator institution founded in 2005. It advertises a wide array of services, including access to mentors, funding, office space, and start-up services. YCombinator has eight directors, seven of whom have direct entrepreneurship experience as established entrepreneurs and an eight who has indirect experience in the sector. Of the 849 startups which have enrolled in the YCombinator program, 204 have received venture capital funding. 66 companies which participated in the YCombinator program have been acquired and seven have exited in an IPO.


Quantitative

Percent of Portfolio to Receive Venture Capital

SDC Session: 

 Session Details
---------------
Request   Hits    Request Description
  0        -     DATABASE: Portfolio Companies (VIPC)
  1     38059    Moneytree Deals: Select All Moneytree Deals
  2              Custom Report: VCall (Columnar) - Save As:
                 C:\SDC\4.0.3.1\Platinum\USR\VCall.txt

 Billing Ref # : 1964678
 Capture File  : riceuniv.1964678
 Session Name  :

Variables Pulled: 

Company Name
Date Company Received Last Investment
Date Company Received First Investment
Company Founding Date
Total Known Amt Invested in Company ($000)
Company City
Company Nation

Percent of Portfolio to IPO

Session Details: 

Session Details
---------------
Request   Hits    Request Description
   0        -     DATABASES: All Public & Private Common Stock, exc. UK & PO (C, CEC,
                  CNC, EC, ICX, JPC, LAC, OC, R144C, UKC, ANCX, ASPC)
   1    212146    Dates: Issue Date: 1/1/1985 to 10/28/2016 (Custom) (Calendar)
   2     57663    IPO: Select All IPOs
   3     44185    Issuer/Borrower Public Status : V
   4              Custom Report: IPOrefined (Columnar) - Save As:
                  E:\McNair\Projects\Houston\Acc Rank (IB)\Portfolios_updated\SDC
                  Data\IPOrefined.txt
�
  Billing Ref # : 1973273
  Capture File  : riceuniv.1973273
  Session Name  :

Variables Pulled 

Issuer   
Industry   
Principal Amountmil   
Issue Date  
Filing Date  
State   
Nation   
Principal Amt sum of all Mktsmil  
Proceeds Amt in this Mktmil  
Proceeds Amt sum of all Mktsmil  
Marketplace   
CUSIP   
Ticker Symbol  
Primary Exchange Where Issuer s Stock Trades
IPO FlagY N   
Pc Change Stock Price 1 Day After Offer
Date Founded
Street Address Line 1
Street Address Line 2

Percent of Portfolio to be Acquired

Session Details: 

Session Details
---------------
Request   Hits    Request Description
   0        -     DATABASES: Domestic Mergers, 1979-Present (MA, OMA)
   1        -     Date Announced: 1/1/1985 to 10/11/2016 (Custom) (Calendar)
   2    300607    Target Nation : US
   3    258144    Acquiror Nation : US
   4    210845    Acquiror Public Status : V, P
   5    101382    Target Public Status : V
   6     87962    Deal Status : C
   7     77311    Percent of Shares Owned after Transaction: 100 to 100
   8              Custom Report: RelevantAcquis (Columnar) - Save As:
                  E:\McNair\Projects\Houston\Acc Rank
                  (IB)\Portfolios_updated\RelevantAcquis.txt
�
  Billing Ref # : 1970397
  Capture File  : riceuniv.1970397
  Session Name  : RelevantAcquis.ssh

Variables Pulled: 

Target Name
Acquiror Name
Enterprise Value at Announcement mil
Enterprise Value Based on Effective Date mil
Equity Value at Announcement mil
Date Announced
Date Effective
Acquiror Industry Sector
Target Industry Sector
Status
Acquiror City
Target City

References

Retrieved from "http://www.edegan.com/mediawiki/index.php?title=Start-Up_Guide_(Issue_Brief)&oldid=12584"