The Case for Texas

February 2020 Research Report

We use data to illustrate the economic truth we see in the world around us, in hopes that this information will enlighten, expand, and spur action.  

Today, we make The Case for Texas.  

The Texas economy is strong and growing – the second largest in the United States, tenth largest in the world, with people (and talent) flooding in.  51 Fortune 500 companies, $170 billion in capital managed by university endowments, and a low cost of doing business (no taxes!) … amongst other achievements.

Oil and gas accounts for a whopping 30% of the Texas economy.  Massive wealth has been generated, from big corporate to Texas billionaires to Texas institutions.  The commodity price crash in 2014 shook the industry, on the heels of the unconventional energy revolution.  Prices remain low and the industry in distress.  Now, energy storage has the near-term potential to disrupt oil and gas permanently. 

Disruption in the face of rapidly advancing technology is occurring throughout legacy industry.  Widespread connectivity coupled with advances in automation are causing change at an unprecedented pace.  This is impacting our capital markets, economy, and society more broadly.  The time is ripe to increase efforts to fuel new innovation.  This will require coordinated effort and capital commitment from the state, Texas institutions, universities, and venture investors.

Venture capital has emerged as a key driver of entrepreneurship and technological innovation.  Venture capital in the United States today remains heavily geographically concentrated, with over 85% managed across only 3 states (California, New York and Massachusetts).  The level of venture capital localization far exceeds that of entrepreneurship. Patterns of investment reflect strong local bias.  Texas lags, with $4.2 billion in venture capital assets under management (1% of the national total).  

We are risk takers, wildcatters, and entrepreneurs at heart.  We have huge economic strength, a strong base in legacy industry, a growing talent base, and an abundance of capital at our disposal.  We must diversify to build a better future.  What starts here does in fact change the world.