The new Ion promises a striking new look for the old Sears building — and a more tech-friendly future for Houston.
Mayor Sylvester Turner, MassChallenge founder and CEO John Harthorne and more announced the new startup grant today.
There’s no question about it — Houston is serious about jumpstarting its startup community. The Bayou City’s new innovation district is receiving a major boost thanks to two new developments.
Boston-based business accelerator MassChallenge committing to opening in Houston. And the Innovation Hub in the iconic old Sears building in Midtown now has a new name (The Ion) and construction date (its build will begin in May).
The two projects will be linked by an Innovation Corridor — the four-mile stretch on Main Street between the two locales.
MassChallenge is moving into GreenStreet, the mixed-use development in Downtown that spans an impressive four city blocks.
“Houston is in its early stages of developing a movement where culture and industry collide along a four-mile stretch of Main Street called the Innovation Corridor,” Mayor Sylvester Turner tells the crowd gathered at 1201 Main for the announcement. “The corridor offers a converging point for all authentic characteristics necessary to foster a startup community.
“The corridor is linked by light rail — it just passed,” Turner laughs as the train sounds out on the street. “I said that, and they did it. I love this city.”
“We’re here to announce a significant partnership in advancing our strategic plan to make Houston an innovative city at a world-class level. That’s what it’s all about — for us to compete not just with other cities in the state, or in the country, but quite frankly on a global level.”
Rice University owns the 1939 Sears building and the land around it. The 27,000-square-foot structure will undergo a dramatic transformation as Houston looks to a more high-tech future.
“The Ion will become Houston’s nucleus for innovation, fostering a community and culture where entrepreneurs and corporations come together to solve some of the world’s greatest problems,” Rice president David Leebron says in a statement.
At the same time, MassChallenge aims to revolutionize Houston’s burgeoning startup ecosystem by supporting entrepreneurs with a zero-equity, no-strings-attached model.
MassChallenge will operate its program in Houston with a grant from the Downtown Redevelopment Authority that will not exceed $2.5 million and will be paid over a five-year period.
In partnership with the City of Houston and Houston Central, MassChallenge is launching its six-week long startup bootcamp-style program this summer. Twenty-five lucky startups will be selected to add value to The Bayou City.
Eligible startups must have raised a max of $500,000 in equity-based funding and generated less than $1 million in revenue over the past year. Applications open in April. Roughly 8 to 10 percent of applicants are accepted.
“I believe that MassChallenge will quickly become a cornerstone in accelerating our startup community and a pivotal component in moving the needle on our tech anchors’ recruitment efforts,” Turner says.
MassChallenge operates in four different countries and has hundreds of corporate partners globally. Since the first program in 2010, 1,900 MassChallenge alumni have raised more than $4 billion in funding, generated more than $2.3 billion in revenue and created more than 121,000 jobs worldwide.
Successful startups cover myriad categories, from biotech firm Ginkgo Bioworks and mobile cash platform UnoDosTres to medical device company Access for Life.
The program is free for the selected startups, and the nonprofit does not take equity.
“We set out with a mission to restore creativity to the soul of the American economy, to harness the creative capacity of our society and combine that with economic power and investors,” John Harthorne, MassChallenge founder, and CEO, tells PaperCity.
“Our entire process is accelerating startups. We compress what might take 18 months of normal growth into three months. We help them to meet more people, help them to get deals done faster, hire people faster, all done by creating urgency and structure through a competition format.”
A Texas Two-Step
This is MassChallenge’s second Lone Star State effort. As of 2017, MassChallenge has launched 84 startups in Austin, and more than half of them came out of Texas’ five major cities, with seven from Houston itself.
Some stats: as a whole, the Austin startups have raised more than $3 million in funding, generated more than $20 million in revenue and created 524 jobs.
“We are fully committed to making Texas the very best place in the world for innovation. This is a hotbed of innovation. We’re excited to bring innovators from Boston and from all around the world to Houston to help with the effort,” Harthorne says.
That includes mentoring, in-person training, community building, virtual classes from the Austin space, and more.
Harthorne was drawn to Houston not just because of Austin’s success, but because of the city’s collaborative ethos.
“I’ve been really impressed by how receptive Houston is,” he says. “One of the many elements I look for in locations for us to launch is people that have a collaborative mindset, not a turf-war mindset.
“There’s a lot of that around the country and around the world — the idea to protect and hoard their own innovation and ideas. This is a city where I’ve found enlightened leadership at the public level and private companies.”
Houston complements Boston’s startup power with an overlap in industry expertise in areas such as medicine and aerospace, but not perfect overlap, allowing for both cities to grow and benefit from one another, Harthorne believes.
“It’s not competitive. It’s ‘coop-etitive’ if you will,” he says. “It’s very collaborative and both cities will gain. Both cities are going to win by expanding their connections. Together, we’ll compete against the rest of the world.”
While past startups have proven profitable, that’s a bonus, not the major thrust of MassChallenge’s programs.
“Anybody can enter from anywhere in the world, with any startup in any industry. It could be a nonprofit, it could be aerospace, it could be tech, software, anything. The criteria for judging is looking for startups with the highest potential for significant impact on humanity,” Harthorne says.
“So it’s not about investability or profitability, but do you have the possibility to make a powerful impact on the world?”
At the end of the six weeks, some of the startups are selected as winners and given prize money. Last year, MassChallenge gave more than $3 million total, globally. About $1.6 million went to Boston startups.
“The individual prizes for startups is usually $300 to $500 grand,” Harthorne says.
The prize money — which ranges from program to program, based on what the partner pool can provide — is not mean to be a make-or-break sum.
“It’s not a game-changing amount of money. What’s much more important for them is the legitimacy of winning the prize,” Harthorne says.
“It’s very exclusive. We only accept 8 to 10 percent of the applicant pool, and not all of them win. You’re talking about the top one or two percent that are already heavily vetted. They’ll immediately get phone calls from investors the very next day after the awards ceremony. Offers will flow quickly. That will accelerate their growth.”
Houston, it’s time to get started.