When a Houston technology company lands venture capital funding it’s usually an out-of-town firm putting up the money and, more often than not, the company eventually moves out of town.
If it’s a life sciences firm cities like San Diego or Boston reel them in due to the presence of more investors and research dollars. Information technology firms will end up in Northern California, New York, Seattle, even a few hours away in Austin.
The one area where Houston can reverse that trend, however, is in energy technology. While the traditional venture capital hub of Silicon Valley is investing big in “clean tech”, Rice Alliance director Brad Burke talked to us a little about Houston holding its own.
One example of that potential: FMC Technologies’ acquisition of Cerritos, Calif.-based Direct Drive Systems for $120 million.
What’s the big deal about DDS’ equipment? As the company describes it:
“The company’s highly efficient motors and generators can turn up to 12 times faster than conventional motors, and can be directly coupled to machinery without the need for a gearbox. This provides a power to weight improvement by up to a factor of ten.”
That’s pretty useful for equipment sitting 5,000 feet below the ocean’s surface at a huge oil and gas project, or sitting topside of a multibillion dollar semisubmersible production platform 200 miles out to sea.
The Direct Drive/FMC deal is also a milestone for Energy Ventures, a venture capital firm that focuses on the oil and gas business. The Houston office of Energy Ventures led the $12 million B round of funding at the company in January 2008. This is the seventh exit of a EV portfolio company in seven years and the first that was managed out of the Houston office.