The institution is hoping a deal worth up to $25m will create a startup hub.
Houston University is aiming to transform its Energy Research Park into the next Silicon Valley that will create jobs for the local economy and attract venture capital. The deal, announced on May 15, 2014, will be worth up to $25m, with $15m being provided by three private investors – David Franklin, executive vice-president at Consumer Media Network, Huan Le, general counsel for software company DiCentral and co-founder of cloud-based medical records service Medifr, and James Tao, managing partner at Presidio Venture Capital – who will form the Texas Collegiate Regional Centre.
The Centre will also raise and invest another $3m to $10m in Houston University-created technologies, and help the university identify research that can be easily commercialised. In turn, the university will provide space for outside startups also backed by the Centre. An investment board, made up of appointees from both the Centre and the university will select projects that will receive individual investments of $250,000 to $1m. Under the agreement, Houston may only invest in its own technologies.
The plan to create a new Silicon Valley has been a long time coming, with Houston University purchasing the land for its research park in August 2009, with the ambition of eventually turning it into a startup hub. The plan follows the model of Silicon Valley, which itself is feeding off of Stanford University. Houston’s efforts follow other institutions in the state of Texas, as a growing number of them have been launching incubators.
The partnership between Houston and the Centre should attract more venture capital to Texas, which has been struggling to secure outside investors. Indeed, a mere 5% of US venture capital investments occur in Texas, despite the state accounting for almost double that, 9%, of US economic activity.
Renu Khator, Houston University system chancellor and president, said: “Developing a more entrepreneurial culture promotes the university’s overall academic and research mission to create new knowledge for the good of society. Ideally, the revenues from this arrangement will be used to support additional research that leads to even more innovation.”
