Houston Startup Hopes to Create Tech Cluster, Rebuild Neighborhood

When Gaurav Khandelwal opened the doors to Start Houston last year, its neighbors included a carpet outlet warehouse, food-distribution companies, and an industrial tool supplier.

The gritty environs of warehouses and out-of-service railroad tracks in the optimistically named “EaDo” neighborhood—presumably hipper than “East of Downtown”—are not the sort you usually associate with a hotbed of entrepreneurial activity.

But Khandelwal sees promise among the hulking buildings. Last month, he purchased another one on Delano Street, a gutted art deco structure that he says will be the headquarters of his mobile IT startup, ChaiOne, by next spring.

“I want to put Houston on the map for technology startups,” Khandelwal says. “I want to drive some energy into the community.”

ChaiOne will spend about $3 million buying and refurbishing the building, an effort that Khandelwal and city officials believe will be not only the keystone for Houston’s newest startup ecosystem, but a jump-start to the development of a long-neglected city neighborhood.

“This is right in line with what we need to see happening in the district,” says Anton Sinkewich, executive director of the East Downtown Management District, which supervises redevelopment in this part of Houston.

ChaiOne would be the first professional services company to be located in EaDo. And the startup’s purchase of this particular building is a grace note that ties the present with Houston’s entrepreneurial past: The edifice was built in 1934 to be the first headquarters of the Schlumberger Well Surveying Corporation, which has become a global, multibillion-dollar energy services company.

“This was an opportunity not to just tear down and build something new, but to restore a piece of Houston’s history as an oil and gas mecca,” Khandelwal says.

AbandonedBack before it was called “EaDo,” this area was Texas’ largest Chinatown, a nucleus of Asian immigrants who began coming to the city following the repeal of the Chinese Exclusion Act in 1943. But when US 59 separated EaDo from downtown Houston, along with a general development climate that favored suburban expansion, the Chinese moved out to the southwest part of the city.

In 1999, the Texas Legislature established special taxing districts to boost economic development in neglected neighborhoods. In the years sincthe trappings of a community have begun to sprout: small clusters of townhomes and loft apartments, an art gallery, and the beginning of a new bike trail. The stadium for Major League Soccer’s Houston Dynamos opened here last year, and a crop of eateries and bars have followed to cater to fans and residents.

“I love to work out of here,” Khandelwal says. “Where else can we find the space for ChaiOne’s future growth?”

Each month, Start’s demo days attract a standing-room-only crowd of eager techies pumping kegs from local St. Arnold’s brewery as startups from across the state speed through their pitches. Start is a catalyst to help fledgling entrepreneurs take flight, Khandelal says. Why shouldn’t this ethos trickle out to the neighborhood?

“This is how we keep talent in Houston,” he says. “This could create a critical mass.”

But, since this is Houston, ChaiOne’s beachhead is just one in a sprawling metropolis that’s home to more than 5 million people.

Across Interstate 45, in what’s known as Midtown, another cluster has formed, starting with the Houston Technology Center, which put down stakes just as redevelopment efforts began in 2000. Surge Accelerator, which runs a program for energy IT companies, has spent $2 million to refurbish a building that next month will become its new headquarters and a co-working space for cleantech startups.

A life sciences ecosystem has formed around the Texas Medical Center and Rice University, with groups such as Platform Houston, a co-working space, and Brightwork CoResearch, which is building a Biosafety Level-2 lab for scientists-entrepreneurs to pursue research.

Blair Garrou, managing director at the Mercury Fund, was a newcomer to the city in 1999 when he joined the newly formed HTC. He applauds tech entrepreneurs like Khandelwal and Surge founder Kirk Coburn, who he says are making decisions that are good not just for their companies and the tech-sphere, but also for the Houston economy at large.

“They realize that making individual decisions differently could have a lasting impact down the road,” says Garrou, who is also an Xconomist. “There needs to be more people thinking like that.”

Still, he wishes there wasn’t such a fragmentation of their efforts. “When VCs come to Austin, they just go to the Capital Factory,” which houses two seed accelerators, has a co-working space and has become the hub of entrepreneurial activity there.

“When they come to Houston, they don’t know where to go,” Garrou added. “It’s going to be challenging for Houston to find a true venture center.”

Still, Khandelwal says he believes EaDo represents the best place for ChaiOne to thrive and to bring a Silicon Valley-like community to Houston.

“We found a fantastic-looking space, one that we thought captured the spirit of what we wanted to do,” he says. “We want to attract the talent that’s going to Silicon Valley, Austin, and New York to come work for us. We are building that fabric.”

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3 responses to “Houston Startup Hopes to Create Tech Cluster, Rebuild Neighborhood”

  1. Rae says:

    While
    I’m happy to see new development in EaDo, this article is a bit
    misleading. Sure, parts of the area contain ugly buildings and some
    areas aren’t at their highest and best use, but it’s not a wasteland!
    There are half-million dollar town homes just down the Street from
    Start! And surrounding this new facility location there are dozens of $250,000 brand new town homes. During the day, the area is hopping with industry. As a
    resident, I love how quiet the area is at night and on weekends; it
    really feels like a neighborhood and there are always people walking
    their dogs, running and riding bikes. This new business will help
    contribute to the betterment of the area, and it’s appreciated, but they
    aren’t “saving” us like the article implies. There are many other
    companies and home builders who are contributing quite significantly as
    well.

    • Hi Rae. Thanks for reading. I don’t think this article conveys that we think the area is a wasteland. I mention the townhomes and bars and restaurants that are there now, that are currently helping to change things. Certainly, this is an area in transition. While there is nothing wrong with the industrial type businesses that are located there, there is opportunity for the area to adopt higher and better uses for the land, something that would bring in more tax revenue to the area and contribute to a virtuous cycle of growth. ChaiOne’s efforts there symbolize that, and that is the purpose of the story.

    • grvaughan says:

      As a native Houstonian who’s been out in Sugar Land for decades, I’m having a hard time keeping up with the many positive changes happening downtown. I understand where the article’s coming from, it certainly speaks to the (mis?)perception many of us still have about east downtown, at least since the decline of the original Chinatown.

      There’s a good deal of skepticism in many oldtimers’ minds since earlier efforts to revitalize the area fell flat. Failure of the GRBCC to stimulate growth and the Mercado debacle are two examples.

      But things are different now, and I commend Gaurav Khandelwal for having the vision to try to build an entrepreneurial ecosystem. There’s not many places in sprawling Houston where you have relatively cheap space plus close access to universities, major businesses and so on, but maybe he’s found the spot.

      If we can just get the tree started, I’m sure in Houston’s dynamic economy, it will take off from there.