Congrats to the newly-launched The New Orleans Startup Fund, a new $3.9 million fund to invest in high-growth businesses in New Orleans.
Nicole Gelinas in City Journal, Big Easy Rising,
“On his blog earlier this year, business consultant Taylor Davidson listed 58 such companies, from Audiosocket, which licenses music rights to entertainment companies, to TurboSquid, which deals in 3D modeling. “There’s a lot going on in New Orleans,” Davidson says.”
There is. And someday soon, I’ll update that list of 58 startups and organizations in New Orleans. Much has happened since I wrote that list with Chris Schultz; lots of new companies, many new people, new efforts, organizations, ideas, and energy for change.
And now, a new venture capital fund to invest in and support New Orleans entrepreneurs.
Amid the news about New Orleans’ economic evolution and entrepreneurial spirit, many of the organizations and leaders in the venture ecosystem in New Orleans have been working on creating local funds to invest in startups. Why? Put simply, it’s difficult to find the right kind of msart, connected risk capital to invest in high-growth businesses in New Orleans.
Some companies, like The Receivables Exchange, have been able to raise capital from investors outside of New Orleans, but it can be difficult to find interested investors from outside one’s community, especially early-stage capital.
One bulwark in the early-stage entrepreneurial community, Idea Village, partnered with First Light Ventures on Village Capital, an initiative to connect entrepreneurs to capital, and Goldman Sachs recently committed $20 million in small business loans to New Orleans, but a vibrant, growing entrepreneurial system needs a deeper, more varied network of investors.
First talked about in February, The New Orleans Startup Fund was recently launched to “accelerate the growth of early-stage, pre-revenue companies looking for proof-of-concept capital”, investing $25,000 to $250,000 to fund companies that have the potential to reach $20 million in sales within five years, and attract further investment from private investors within 3 years.
It’s a public / private hybrid; according to Jaquetta White in The Times-Picayune on NOLA.com, New Orleans business leaders launch venture capital fund:
Of the nearly $4 million the Startup Fund has received, $1.5 million have come from private donations and 2 million from the state through the Louisiana Office of Community Development. Another $400,000 is expected to be provided by the federal government, though that amount has not yet been committed.
The goal is for the fund to grow to have a $7 million investment capacity, which Jacobs said she expects to come largely from private investors who will not receive a monetary return on their investment or a share in the companies in which they invest. Instead, the private investments are more like tax-deductible donations.
The public/private hybrid is a model we’ve seen in other cities, notably JumpStart in Cleveland and Innovation Works in Pittsburgh, and similar to the impact those institutions have had in their cities, The New Orleans Startup Fund has the potential to have a significant impact on the entrepreneurial ecoystem in New Orleans. While New Orleans still needs more private investors willing to fund high-growth businesses using the Internet, and a deeper base of people able to build these businesses, this Fund is a major step and building block.
Still to be seen are how the fund will source deals, find entrepreneurs, developers, managers and marketers, and what industries and trends the fund will invest in, but I’m looking forward, regardless.
My hope? A success story, a big exit, and the resulting community full of people with the experience and capital to build their next company in New Orleans. Public, non-returns-based capital may be necessary to seed an entrepreneurial community, but it can’t build a thriving system without private investors. The New Orleans Startup Fund will be one part of that. And for that, from all who love New Orleans, thank you.
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