Station Houston, a startup organization that helped set Houston’s revamped entrepreneurial agenda but has more recently taken a backseat to other organizations, is merging with Austin startup hub Capital Factory.
In taking control of Station Houston, Capital Factory has taken another step in its effort to create a “Texas Startup Manifesto,” where the 11-year-old organization is seeking to unite the state’s major cities and market them as one startup region to better compete with the East and West Coasts.
“The Austin vision, the Houston vision, the Dallas vision, those are 10-year, 20-year visions,” said Joshua Baer, founder and CEO of Capital Factory, a for-profit organization. “The Texas vision is right here, right now. Texas can take on any other city, any other state, any other country in the world. That is the opportunity we have right now.”
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The terms of the deal were not disclosed. Station Houston, located at 1301 Fannin, will keep its name with a small adjustment: Station Houston, powered by Capital Factory. This will be Capital Factory’s second Houston location, it opened in the Cannon startup hub last year. Baer said it would like more Houston locations, perhaps including one in the Texas Medical Center.
A catalyst for its Station Houston merger is the Ion, Rice University’s $100 million project to renovate the former Midtown Sears into a startup hub that’s intended to anchor a broader Midtown innovation district. Gaby Rowe, previously CEO of Station Houston, is executive director of the nonprofit that will oversee operations at the Ion. Station Houston’s deeper affiliation with Ion coincided with Rowe’s move, and she retained oversight of it as its executive director.
“We are partnering together to make sure that our members and our entrepreneurs continue to have the best possible shot at accelerating and growing their companies,” Rowe said of the merger with Capital Factory.
Station Houston was founded as a for-profit in 2016 and seemingly became the poster child of Houston innovation, with many considering it a more modern approach to entrepreneurship, offering coworking space, startup events and entrepreneurial mentoring. Its business model included charging membership fees to startups and matchmaking fees to corporations seeking new technologies. And its emergence coincided with the closing of the Houston Technology Center, which had embodied Houston’s previous innovation push.
Station Houston currently has just under 200 startups actively participating in its programming or receiving mentoring sessions.
In 2019, Capital Factory programs had roughly 200,000 participants in person and online, and it invested in 70 companies. The organization was initially privately funded by Baer and other angel investors and CEOs. Today, it’s supported by membership dues and corporate sponsorships.
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Station Houston became a nonprofit roughly one year ago to attract more funding from grants and foundations. In October, it pared back to become a business incubator under the Ion umbrella, giving up its broader role of trying to develop a local innovation ecosystem.
Continued support
That’s partly why Tuesday’s merger announcement wasn’t surprising to Marc Nathan, vice president of client strategy for Austin-based law firm Egan Nelson, where he helps startups with legal services and fundraising strategies. He doesn’t believe Station Houston had been actively fundraising or looking for operational funds.
“Instead of Station Houston just winding down its operations, which is clearly what has been happening, this gives the Station clients and sponsors a platform to continue growing in Houston,” said Nathan, a mentor for both Station Houston and Capital Factory.
Nathan ultimately thinks it’s a good union between two like-minded organizations, and he expects it will help market Texas as a region so the individual cities quit dividing capital and customers.
“It’s a great move,” Nathan said. “It strengthens the community. It strengthens the connections between Houston and Austin.”
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Andrew Bruce, CEO of Houston-based Data Gumbo, a company that uses blockchain technology to automate business transactions, also praised the merger.
“Ultimately for Houston, I think it’s good to have a strong, recognized formula that works for startups,” he said.
Bruce was a Station Houston member when it first opened, and he liked the entrepreneurial buzz. But over time, he said, the organization lost its way, focusing on building the ecosystem and its personal brand more than assisting startups.
He canceled his membership and relocated Data Gumbo to the Cannon startup hub in west Houston. He gave Station Houston another chance after Rowe was named chief executive in August 2018 but, still running his company from the Cannon, didn’t feel plugged into the community and canceled again.
He thinks Capital Factory’s proven program will be useful to Houston startups. Rowe said the two organizations had long worked together and their merger is the best entrepreneur-focused transition for Station Houston during this “exciting time for the city.”
Current members of Station Houston will be able to access mentors, educational programming, investors and coworking space at Capital Factory’s Austin and Dallas locations. Station Houston members located downtown will stay downtown until the Ion opens in early 2021. They will then move into the Ion, where Capital Factory will become a founding tenant.
“As soon as we heard about the Ion,” Baer said, “we knew that we needed to find a way to be part of the Ion.”
andrea.leinfelder@chron.com
Twitter.com/a_leinfelder
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January 29, 2020 at 06:00AM
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Capital Factory acquires Station Houston as part of statewide innovation strategy - Houston Chronicle
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