Tulane University’s Institute for Innovation will launch a $10 million startup fund for women and minority entrepreneurs, targeting groups that have historically faced barriers to accessing startup capital.
The Tulane Ventures fund—created from $5 million in federal funding matched by $5 million from Tulane—is the university’s latest move to foster innovation in New Orleans.
Funding applications are expected to open early in the new year. Up to $200,000 per applicant will be available in the initial round, invested over five years.
“We want to build a community that revolves around innovation, and we need access for our women and our underrepresented population,” said Kimberly Gramm, David & Marion Traveler President of Innovation and Entrepreneurship at Tulane.
The fund was announced just before the Albert Lepage Center for Entrepreneurship and Innovation in the UK Freeman College of Business at Tulane has released its annual Greater New Orleans Startup Report.
The report’s findings reinforced the need for such a new fund: after an uptick in equity financing from angel investing, convertible debt and venture capital to women and minority-founded businesses, in the New Orleans area and finally on a national scale. general, The 2022 survey showed a decrease in funding.
Federal grant money
In December, Louisiana received $113 million from the American Rescue Plan’s Small Business Credit Initiative, or SSBCI, a federal program aimed at small business startups.
SSBCI was first established in 2010 as a method for The federal government to help states support small businesses that were creditworthy but unable to access capital.
$113 million has been allocated to venture capital and seed money programs. Tulane received a $5 million stake.
Gram said the Tulane Ventures fund aims to be self-sufficient, meaning that proceeds from when the companies are sold will go back into the fund to support more startups if the Treasury and Louisiana Economic Development Guidelines allow.
Although planning is still underway for what the engagement will entail, Gram said the Innovation Institute expects to offer some programs and support to entrepreneurs. Portfolio firms will also receive advice, mentoring, and mentorship from the Institute of Innovation’s resource network.
The ultimate hope, she said, is for entrepreneurs to stay in New Orleans and reinvest their money here.
Funding required
According to the startup report, Members of minority groups who want to start businesses have disproportionate access to capital.
“The 2022 report shows reduced access to equity investment across the board for BIPOC-founded companies (Black, Indigenous and Colored), mirroring national data showing reduced funding for BIPOC entrepreneurs,” said Rob Lalca, BIPOC CEO. The Lapage Center, per report.
For example, BIPOC founders reported 6% less use of venture capital funding compared to last year, while there was an 11% increase for non-minority founders. A similar decline was seen in BIPOC-incorporated firms that reported the use of angel investments and convertible debt.
“Nationally, these numbers are dismal, and yet they make up the majority of the population here in our community,” said Gram.
Startup Report also said that minority-founded companies still lag behind their non-BIPOC-founded counterparts when it comes to traditional bank loans, despite closing the gap slightly since last year.
Tulane is at the entrepreneurship hub in NOLA
With the addition of the Innovation Institute, launching in 2022, Tulane is seeking to position itself as a premier transport for entrepreneurship in the City of New Orleans.
As Tulane’s first fund for entrepreneurs, Gramm said, the Venture Fund is “a huge asset to our community.”
“It’s like having your first child,” she said. Other universities have done this before, but it’s outside the experience command room, usually, at a university. “
Gram said Tulane’s leadership’s support for the fund underscores the university’s prioritization of innovation.
“They’re kind of putting science on the ground to help not just the inner university community, but the broader community’s understanding that science and innovation go hand in hand to make an impact to help people, whether it’s to cure cancer or whether it’s to create wealth opportunities for generations.” When our leaders say They want to support and nurture an environment like this, so that’s a big deal.”