The Ion: The Place Where Venture Capitalists Will Come To Find Houston's Next Promising Startup
Houston has been a challenging place to get venture capitalist dollars. Investors say they don't know where to go to find the city's next big idea.
Positioned as the solution to improve the innovation talent pipeline, The Ion broke ground last week. The project will serve as a centralized place where investors can learn, meet and support Houston's bubbling technology and entrepreneurial ecosystem.
"We need to do a better job telling our story," said Allison Thacker, president of Rice Management Co., which manages the Rice University endowment that is funding The Ion. "The university's future is tied to the success of Houston."
Capital is flowing to Houston's entrepreneurial community like never before.
Venture capitalists invested $250.8M in the Houston area during the second quarter of 2019, up 115% from the $116.8M reported for the same three-month period last year, according to financial data company PitchBook as reported by the Houston Chronicle.
Houston has raked in $327.3M in venture capital for the first half of this year, up from $169.6M in the first half of 2018. Comparably, Dallas has raised $487.7M while Austin received $1B in funding. Houston leads San Antonio at $33.3M but trails other major metros like Boston at $5.7B, New York at $13.2B and Silicon Valley at $26.9B.
Touting a strong local economy, positive job and population growth, and diversity, the Bayou City has the keys to support and expand its innovation infrastructure, Thacker said.
The Ion, the center point of the Houston Innovation District, a 4-mile stretch from downtown to the Texas Medical Center, will bring the area's entrepreneurial, corporate and academic communities together through collaborative spaces and programs.
Transforming the historic Sears building on Main Street in Midtown, the project will support businesses at all stages of the innovation life cycle and provide resources for those looking to participate in the innovation economy. The 270K SF facility will also include a mix of restaurant and entertainment amenities. The project is expected to be completed in late 2020.
Houston-based Hines is managing the development of The Ion. SHoP Architects, James Carpenter Design Associates, James Corner Field Operations and Gensler will be responsible for the redesign of the building, constructed in 1939.
While funded by Rice University, other founding institutions include the University of Houston, UH-Downtown, the University of St. Thomas, Houston Community College, Texas Southern University, Houston Baptist University, San Jacinto College and the South Texas College of Law.
Station Houston, a local technology incubator, will oversee the public programming such as entrepreneurial workshops, thought-leadership conferences, industry lectures, job training, educations classes and networking opportunities.
"Innovation requires people from all types of backgrounds," Thacker said. "This will be a complete failure if this project doesn't reflect the diversity and the character of the city."
In the past, Houston's major corporations have struggled with how to use innovation and entrepreneurship to solve problems within their industry, Thacker said. However, action will continue to intensify, densify and multiply.
For example, the Texas Medical Center is providing a lane for healthcare-related startup companies. Located at the TMC Innovation Institute, the TMCx accelerator provides a shared workspace, a curriculum tailored to healthcare entrepreneurs and access to industry advisers.
Last month, Meru Health, RoundTrip and Sani Nudge raised over $10M between the three companies, according to Innovation Map. Three more TMCx companies have also raised funds throughout the program but have not formally announced. The program is on its ninth cohort since it launched in 2014.
In addition, at least four accelerator programs have announced plans to launch in Houston this year, per Innovation Map. The new platforms include Microsoft- and Intel-backed Ion Smart Cities Accelerator, Founder Institute, Plug and Play Tech Center and MassChallenge Texas, which will be housed in Midway's GreenStreet in Downtown Houston.
The connectivity of the Innovation District — linking Downtown's global corporations and legal and financial powerhouses with the Texas Medical Center and Rice University — excites innovators and investors, Midway CEO Jonathan Brinsden said.
"We’ve seen it with the rapid rise of MassChallenge Technology Accelerator at GreenStreet, as an important anchor of that corridor. When it comes online, the Ion will build additional critical mass. With all of these advances, Houston is proving once again this city accomplishes remarkable things when we commit.”
More than 150 companies will occupy the 120K SF facility, which features open and private office space and a host of entrepreneurial resources such as Cannon Ventures, an investor network for startups.
“It has been incredible to watch The Cannon’s exceptional growth from inception two years ago to the vibrant community they’ve built today. We can’t wait to see the progress firsthand as The Cannon continues to establish themselves as a leader in building entrepreneurial communities,” said Mark Toon, managing partner of Work America Capital, the Houston-based investment fund that led The Cannon’s initial fundraising round and will also be located at The Cannon.
The partners behind ramping up Houston's innovation ecosystem understand that it is a team assignment.
“We are thrilled to see another exciting innovation hub added to Houston’s growing entrepreneurial ecosystem,” The Cannon founder and CEO Lawson Gow said. “We can’t wait to see the Ion come to life in 2020 and to continue to work with their team further in our shared vision of turning Houston into a global home for entrepreneurship.”
The commercial real estate industry has embraced entrepreneurship and the startup community as a way to expand small businesses, which will increase the demand for office space in Houston.
The Ion is also expected to spur multifamily, retail and flexible office development along the district. Rice Management Co. owns 16 acres across from the Ion and plans to work with the district's large property owners such as METRO and South Main Baptist Church to build a bikeable and walkable community.
“The ION is a unique, creative and brilliant redevelopment that embodies Houston's entrepreneurial spirit,” Avison Young principal and Managing Director Rand Stephens said. “It is a testament to the city of Houston and Rice University to join forces in a private-public partnership with a common vision that helps galvanize the entrepreneurial startup scene in Houston. The old Sears building is the ideal location for this concept. With Rice's financial backing, the support of the city, and the fantastic development team that is in place, this project will elevate Houston's innovation community to a much higher level.”