The New Orleans Startup Fund (The Startup Fund) is a non-profit 501(c)(3) evergreen seed fund established by Greater New Orleans area business and financial leaders to accelerate the growth of early-stage, innovative businesses into venture-ready companies.  The Startup Fund’s mission is to create jobs and economic prosperity for the 10-parish region of Greater New Orleans by providing seed capital and business assistance to early-stage firms that demonstrate significant growth potential.

In recent years, the Greater New Orleans region has become a hotbed of entrepreneurial activity.  In fact, Tax Foundation + KPMG Louisiana recently selected Louisiana as the #2 State in the USA to Start a Company, and according to the Greater New Orleans Community Data Center, New Orleans Leads the USA by 56% in number of startups-per-capita. New Orleans was also ranked as the 6th Best City for Young Entrepreneurs by Under30CEO.com. This growth is supported by several entrepreneurial hubs and by aggressive state tax incentive programs, such as a 25% tax credit for qualified digital media expenditures and a 35% tax credit for qualified angel investments.

The Startup Fund’s mission is to help strengthen the Greater New Orleans region’s entrepreneurial ecosystem by:

  1. Developing a portfolio of companies that will create jobs, wealth, and opportunity;
  2. Building and strengthening the local angel investment network; and
  3. Attracting external venture capital to a region rebranded for innovation.

The result will be a stronger, more diverse economy for the future of New Orleans.

What is the New Orleans Startup Fund?

The New Orleans Startup Fund (“The Startup Fund” or “NOSF”) is a non-profit 501(c)(3) evergreen seed fund established by business and financial leaders in the Greater New Orleans area to accelerate the growth of early-stage, innovative businesses into venture-ready companies.  The Startup Fund’s mission is to create jobs and economic prosperity for the 10-parish Greater New Orleans region by providing seed capital and business assistance to early-stage firms that demonstrate significant growth potential.

The Startup Fund follows the model of successful venture development funds in cities such as Cleveland, Pittsburgh, and New York, but it is specifically focused on the particular needs of the Greater New Orleans business environment.  This model combines seed funding with substantial mentorship and operational assistance, better ensuring the sustained success of individual portfolio companies and of The Startup Fund.

Why was it founded?

While the “new” New Orleans is rich in ideas and energy, it has been lacking in the early-stage capital necessary to fund these ideas and harness this energy.  More specifically, the angel and venture capital markets in New Orleans are young and undersized compared to other markets in the country.  The Startup Fund aims to correct this market deficiency by providing early-stage funding so that promising companies can get started and move towards more traditional financing.

Why should I build my business in New Orleans?

New Orleans has become a vibrant and nurturing environment for startups.  With the presence of entrepreneurial hubs such as Entrepreneur’s Row, the New Orleans BioInnovation Center, The Idea Village, Launch Pad, Icehouse, and Beta, entrepreneurs have a wealth of resources to draw upon as they build their businesses.  The state government is also supportive, offering numerous incentives programs, such as a 25% tax credit for digital media expenditures.  The Startup Fund sees great promise in the companies being developed in New Orleans, which is why it is so committed to investing locally.

Who is running the New Orleans Startup Fund?

The Startup Fund’s Board of Directors is comprised of experienced local business leaders and philanthropists.  The Startup Fund is led by some of the most experienced and successful investors, business people, and economic developers in Louisiana.  The Startup Fund has already secured funding commitments in excess of $5M, from a combination of private and public sources and has a full pipeline of companies, across multiple sectors that are in need of funding support in order to grow.

How is this fund different from a traditional venture fund?

The Startup Fund is different from typical investment funds in two key ways:

  1. While it is crucial that the fund’s investments have good returns, the primary measure of success is not traditional ROI but
    • The creation of a strong portfolio of companies able to attract follow-on financing
    • Development of the capital ecosystem, both local (angel) and external (venture capital)
  2. The fund is “evergreen” – all profits are reinvested back into the program

Are there other funds like The New Orleans Startup Fund?

The Startup Fund’s model is based on venture development funds that have successfully sparked entrepreneurial activity and innovation in other U.S. cities, including JumpStart Inc. in Cleveland; Innovation Works in Pittsburgh; and NYC Investment Fund in New York City.

How is the New Orleans Startup Fund funded?

Sources of capital are both public and private, and include charitable contributions from civic-minded business and professional leaders, foundations, and government grants—both state and federal.

How large are the New Orleans Startup Fund’s investments?

The Startup Fund generally invests between $25,000 and $100,000 in startups that have already demonstrated proof-of-concept and have existing revenue streams.

What types of companies are eligible to apply for funding?

Target investments are those with significant growth potential and located in Greater New Orleans.  The Startup Fund is particularly interested in startups that have strong business plans, have clear visions to grow to at least $20 million in revenues in five years, and are capable of attracting subsequent rounds of institutional investment capital.  For more specific information please refer to the investment guidelines.

Is the fund limited to certain sectors?

No, all high-growth companies are welcome to apply.

What is a high-growth company?

High-growth companies have the potential to reach $20 million in annual revenues in five years with upside growth beyond that amount.

What area qualifies as the Greater New Orleans region?

The Startup Fund requires that its portfolio companies establish their headquarters in the 10-parish region of Greater New Orleans.  Qualifying parishes are those located in southeastern Louisiana including Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, St. Tammany, Tangipahoa, and Washington.

What kind of business assistance does the New Orleans Startup Fund provide?

During initial review of the business application, the Startup Fund examines the business plan, financial model, use of proceeds, addressable markets, go-to market strategy, and team members.  If the Startup Fund identifies certain deficiencies in the plan, Staff and Board Members work with the entrepreneur and make introductions to a network of professionals who can provide assistance and guidance in filling the gaps of the offering.  Oftentimes, this involves placing a hold on the application while the entrepreneur works to address any issues, making the application as strong as possible.

Following the completion of the due diligence process, the Startup Fund will introduce the entrepreneur to its network of angel investors and early-stage venture capital firms to help fill out the round of investment.  At this point, the entrepreneur will have a working term sheet, a firm commitment for funding from the Startup Fund, and a due diligence seal of approval.  It is the Startup Fund’s hope that its participation will provide some assurance to other investors on the merits of the company’s offering.

Once the round is completed, a Board Member will volunteer to mentor the entrepreneur through the early months post-investment.  This commitment can range from acting as a coach or mentor, to providing professional introductions in the market to grow sales and help build an organization’s brand, to offering feedback on strategy and direction.

How does a company apply?

All applications to The Startup Fund should be submitted through the Startup Fund’s web-based application form.  The initial application collects basic information about the entrepreneurs, technologies involved, intended products or services, life-stage of company, intended market, current financing, current and future financial need, and other relevant data.  More comprehensive information may be required over the course of the review process.

What is the review process?

Applicants are evaluated on a continuous basis using a multistage process:

  1. Online application;
  2. If meeting initial qualifications, an in-person interview;
  3. If selected, presentation to the Startup Fund’s Investment Committee;
  4. Investment Committee will either decline or refer to Staff for due diligence, including audits, background and intellectual property checks, and external expert assessment;
  5. Diligence findings are presented internally to the Investment Committee which may make an investment recommendation to the Board of Directors;
  6. Board of Directors ultimately decides whether or not to invest.

If a company gets turned down, can it reapply?

Applicants will have the ability to amend their applications and resubmit for reconsideration after six months (or earlier, if specifically allowed by the Startup Fund’s management) if the application changes significantly.

How do I invest in the New Orleans Startup Fund?

To make a donation to the Startup Fund, please email donate@neworleansstartupfund.org.  The Board and Staff of the Startup Fund thank you for your support.

Please direct any further inquiries to ask@neworleansstartupfund.org.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benjamin Allen, Dolphin Debit Access, LLC.

Catalyst Foundation

Crescent Bank and Trust

Frank & Coya Levy

George H. Wilson, Jr.

Hugh Uhalt

Hunter & Leslie Pierson

Jay and Sally Lapeyre

Mary Freeman Wisdom Foundation

Michael S. Gollner, Managing Partner and Founder of private equity firm Operating Capital Partners, LLP and its venture capital affiliate, Operating Venture Capital, LLC.

Rick S. Rees

RosaMary Foundation