Capital Access for Startups in New Orleans
- May 11th, 2010 /
This post has been coming together for a while, and I’m excited that I am finally getting a chance to share the coming capital options for startups in NOLA. My feeling for a while has been that the seed capital gap and lack of VC in general in Louisiana has been one of the biggest challenges facing startups. The Receivables Exchange had to go raise its capital outside of Louisiana.
As far as local angel funding, here’s what I wrote to Ben Rosen after his visit to New Orleans last week during Launch Fest:
The next step is to develop a strong, active, angel community to fund these companies, and keep them in New Orleans, rather than needing to go to Austin, NY, Boulder or the Valley for capital & talent.
A big part of our mission at Launch Pad is getting the investment community familiar and comfortable with these types of investments, which may be non-traditional for the region where wealth has traditionally been generated through oil and gas and the port.
It appears that we are on the verge of a tidal shift in the availability of capital for startups locally (fingers crossed). Here are some of the things that are happening now and on the horizon.
- Idea Village – open – an eight year old non-profit that provides grant funding & educational curriculum. The 2010 class has just completed, and the application process for 2011 will be open towards the end of this summer.
- Leap Frog Ventures – projected launch Q3 2010 – a non-profit evergreen fund that Leslie Jacobs, Rick Rees, and Ben Allen are putting together in conjunction with GNO Inc. The fund is based on the JumpStart program in Cleveland OH. Projected to raise $5-8 million from public and private sources and make seed investments of $250,000 – $500,000.
- GNO, Inc Opportunity Fund – projected launch Q3 2010 – this is a fund that will package CDFI funds from local banks into an evergreen investment fund that will make low interest convertible debt loans to local startups. I am unsure of projected raise, the average size of loans is likely to be around $250,000.
- South Coast Angels – open, currently accepting pitches – this is a local angel fund managed by Clayton White and Choose Taurman. This is a member managed angel fund, so it is different than an angel network like the events we do at Launch Pad. My understanding is that they have $2-3 million committed and they are currently seeking investment opportunities of $250,000 to $500,000. They are using AngelSoft software to manage the application process and you can find out about it here.
- National VC Activity – starting – one of the best opportunities I see is to build strong ties to the national VC community, particularly NY, Boston & Austin. The Kraft Group investment in NakedPizza led to Steve Schlafman’s participation in Launch Fest. In addition, David Safaii of Windspeed Ventures came to Launch Fest and is getting connected with the local community. Nurturing and strengthening these ties is critical.
- Barrett Vernon Montgomery LLC – open - Disclosure: Investor in Launch Pad. Currently managing two funds. Funds under management: $30 million. General size of investments are seed investments of $100,000 to $300,000 with follow on capital of up to $3 million.
- Long Branch Ventures – open – Michelle Oaks has been an active angel investor in the New Orleans community over the last two years. Long Branch invests in early stage companies with an investment criteria that includes the company be based in Orleans Parish.
- Trumpet Ventures – open – Spun off from Trumpet Group in 2009, Trumpet Ventures invests financially and also by providing services in exchange for equity.
- Launch Pad Angel Network – open – We host quarterly angel pitch events at Launch Pad at the IP. We hosted the last one during Launch Fest where we had ten 5 minute pitches by entrepreneurs. 70% of the startups were invited to contact an investor following the pitches. Range of capital has been early stage prototype to seed capital.
- Voodoo Ventures – open – Voodoo recently made an investment in Jackson Square Group. I am open to other strategic investment opportunities.
I am particularly excited about the new funding sources coming online listed above. While I still believe that we’d benefit greatly from a seed accelerator program, and Launch Pad has some things underway to launch one, I think the capital is going to be flowing locally in the next 6 months to a year looking for deals. If you have a startup idea, now is the time to get your business plan, or better yet, prototype together.
If I’ve made any mistakes above, feel free to contact me. If you are a source of capital, and would like to be listed, please add a comment, and I’ll add you to the list. Here’s to solving the seed capital gap in New Orleans!
- categories: All, Entrepreneurship, Launch Pad, Voodoo Ventures /
May 11, 2010 at 9:31 pm
Good work, Chris. Any thoughts on getting some sort of IP legal help for trademark, copyrights, and patents, at a non-retail price, for start-ups? I think that’s a big hurdle most start-ups don’t understand, need to, in order to protect their ideas. I know, I’ve got a couple of ideas, but not sure how to put them to practice without some sort of IP protection.
May 11, 2010 at 9:45 pm
Great post Chris. Exciting to see the momentum and to finally see things getting off the ground.
Hopefully the Angel Investor Rebates gain some steam this session. http://bit.ly/cNb9ak
May 12, 2010 at 11:06 am
James, great question. I have two answers for you:
1) don’t worry about it, you have have so much more to gain by sharing your idea talking to everyone and anyone about it than you have to lose by someone stealing it. The vast majority of the time people fail b/c they never told anyone about their idea, and it never got traction vs. someone stealing it
2) that being said, I do understand your concern. I’d encourage you to find a micro-economy where an attorney is willing to help you. There are several in Launch Pad who are very generous with their time. I agree, fees on IP for a startup can be spectacular, but the truth is, all of what you are describing can be done reasonable. I’ve filled trademarks and provisional patents myself (not that I recommend forgoing an attorney, but you can)
Good luck!