Q&A with Houston Technology Center CEO Walter Ulrich

 

The Houston Technology Center will ring in the New Year with $25,000 for each new client.

Earlier this month, the tech incubator and accelerator announced a partnership with Texans owner Bob McNair and The McNair Group, which, over the next three years, will invest $1 million annually to help emerging technology companies. Each company will receive $25,000 upon becoming a client at the HTC.

This seed investment starts a new era for the nonprofit, and it's the first time clients are guaranteed funding.

President and CEO Walter Ulrich talked with the Chronicle about the initiative, called the McNair Houston Ignition Fund. Edited excerpts follow:

Q: Why partner with The McNair Group?

A: The Houston Technology Center's mission is to help emerging technology companies be successful. One of the most important aspects of success is being able to get funding. And especially for an early-stage company, a little bit of money goes a long way. So what a terrific opportunity for the Houston Technology Center to ask if The McNair Group would be willing to make that kind of social investment to help those early companies get that catalytic, initial investment that gets them off to a great start.

Q: What are the requirements for a company to receive the $25,000?

A: The company must be a client of the Houston Technology Center. So the requirements to be a client is that the company has a breakthrough or disruptive technology, that the company has the potential of driving a lot of revenue and creating a lot of jobs, and that the founder of the company is coachable.

Q: Is there an equity requirement? If so, why?

A: There is an equity requirement. It's 2.5 percent in the form of a warrant (which gives The McNair Group the right to buy stock in the future). The reason for the equity investment is so that over time it returns some of the money that's invested. So in future years, The McNair Group doesn't have to write checks from their own bank account. In other words, this is an opportunity to create a sustainable investment opportunity that will last for a very, very long time, and the success of one company pays it forward and replenishes the fund to provide the success of the next company.

Q: What kind of advantage do you think the investment will give your clients?

A: It'll save six months to a year in many cases to when they actually achieve their financial rewards. It means for Houston, they're going to be able to create jobs faster and quicker. It means for Houston, that Houston will be competing more effectively against the other cities in the world that have startup ecosystems.

Q: What are your long-term goals for the HTC?

A: One of the things the Houston Technology Center is doing very successfully is expanding geographically. We serve the 10-county region from Beaumont to Katy and Galveston to College Station. We have a fully staffed office south of town in the Johnson Space Center area. We're going to (have) our first person up in The Woodlands. So I think one of the things you're going to see is we're going to expand geographically so we're closer to clients and closer to clients' customers. But again the mission of all of this is to ensure that Houston leverages its intellectual property. We have billions of dollars of research coming from the Texas Medical Center, for example, and really only a trickle of that is being commercialized in Houston. So one of our missions is to make sure that much more of the economic return is in Houston.

Q: Where do you see the HTC in five years? In 10 years?

A: Currently, Houston Technology Center clients have created nearly 5,000 jobs and enjoyed over $1.6 billion of financial transactions. In five years, I expect it to be over 10,000 jobs and over $3 billion of financial transactions. And in 10 years, I expect it to be at least 25,000 jobs and $6 billion of financial transactions. All money coming into our community.

Q: What do you mean by financial transactions?

A: Either an investment by a venture capital or private equity firm. Or by a positive liquidity event, either an IPO or a purchase by a strategic investor.

Q: How does one apply to become an HTC client?

A: Thank goodness for the Internet. Companies go to HoustonTech.org and the information about applying is right there. They need to identify a little bit about their business plan, a little bit about their product and a little bit about what they hope to accomplish.