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Houston’s Established Industries Have Made Digital Entrepreneurship Seem Superfluous, Says Report

City and business leaders are making a concerted effort to try to fix Houston’s startup problem.

(TNS) — By and large, Texas' cities stay in their lanes. Houston is the energy capital, with a hefty dose of health care. Dallas does finance. Austin does technology and startups. For a long time, that was fine.

In recent years, however, Houston has started to feel the absence of that startup energy. Venture capital funding, which has backed companies such as Apple, Amazon and Facebook that have now surpassed the largest oil companies in size, has sunk in Houston over the past decade.

And now, city and business leaders are making a concerted effort to try to fix it.

On Wednesday, the city and the Greater Houston Partnership — the city's chamber of commerce —were presented with the results of a study by the consulting firm Accenture on the strengths and weaknesses of Houston's startup scene.

One of the weaknesses is a consequence of perhaps Houston's greatest strength: Established powerful industries, like medicine and oil and gas, that have made digital entrepreneurship seem superfluous. Against companies that employ thousands, startups that employ a handful of people — if that — didn't hold a lot of interest for business leaders and economic development officials.

"We've been focused on our members," said John Nordby, the Greater Houston Partnership's vice president for innovation. "If the Partnership had come down and said 'Here's what we're going to do to create an innovation economy,' I don't think it would've been taken very seriously."

Accenture's report, only part of which has been released, contains a long list of potential governmental and private interventions to help solve the problem. By now, we know a lot about how to do this: As city after city has tried to brand itself the "next Silicon Valley," whole books have been written about how to foster startup ecosystems.

Other cities have done things like create funds that co-invest with outside investors, offer tax breaks to lure hot companies, and offer free data storage to lower costs for young companies.

"We're not the first city that tried to create more innovation," says Brian Richards, managing director for innovation at Accenture.

Richards won't say what tools would work best. But he will say that whatever the city does, it needs to free up more investment capital, attract local offices of big tech companies like Google and Facebook, and build a dense hub where startup founders can have access to resources like mentors and potential hires.

Houston has already taken some steps towards fulfilling that last need with the founding of Station Houston, which provides startups with office space and hosts events. CEO John Reale has also played an active role in conversations with the city and the business community about what they can do to support local tech.

In order to study what new efforts might work best in Houston, next week a team including Reale, City Council member Amanda Edwards, Houston's Chief Development Officer Andy Icken, and Houston Technology Center president Lori Vetters are heading to Chicago and Cincinnati to meet with tech leaders.

They expect to present a set of recommendations to the Mayor and City Council in May.

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