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Risk Capital and Entrepreneurship in New Orleans: The New Orleans Startup Fund

A few weeks after the Idea Village’s annual New Orleans Entrepreneurship Week, and numerous Forbes articles espousing the rise of the Silicon Bayou, it is evident that entrepreneurship in post-Katrina New Orleans is on the rise. Although the growth of young companies in New Orleans makes it an exciting time to be involved with the city’s entrepreneurial ecosystem, it is critical that the pool of local risk capital needed to fuel these ventures continues to grow. In this series of articles, we at EMH turn our attention to some of the most important actors in the local investment scene, and profile the role that each one is playing to provide the capital and expertise needed to grow and scale local companies.

New Orleans Startup Fund

For the first post in our series, we focus on one of our first clients: the New Orleans Startup Fund (NOSF). NOSF is a non-profit 501 (c)(3) seed fund focused on helping young businesses get the strategic and financial support they need to become high-growth, successful ventures in the Greater New Orleans area.

As a non-profit, NOSF is a bit different than a traditional venture fund.  For starters, NOSF is considered an “evergreen” seed fund, which means that all profits of the investors are reinvested into NOSF, which encourages the growth, success, and self-sufficiency of the program for the future.  In addition, NOSF is non-traditional in the sense that the principal measure of success is the ability of the funded company to draw interest from other companies to provide additional financing.  NOSF seeks to invest in high-growth ventures (defined as having the ability to scale to $20 million in revenue by year 5) and has found success initiating rounds of capital but ultimately investing only approximately 10% of the total round (generally between $50,000 and $100,000), with the rest of the round of capital coming from other local or national investors. In this way, NOSF is able to achieve their mission while preserving the capital currently within the fund.

As mentioned above, EMH worked with the Startup Fund in its infancy to help develop the fund and craft its operational infrastructure. For more on our work with the Startup Fund, click here.

Interested in learning more about the New Orleans Startup Fund? Click here, and stay tuned for more posts from EMH on important players in the New Orleans investment community.