The Innovation Institute at Tulane University is going to launch a $10 million startup fund for women and minority entrepreneurs. The fund is intended to be self-sustaining, which means that profits from the sale of enterprises will be reinvested in the fund.
Tulane University’s Innovation Institute is going to launch a $10 million startup fund for women and minority entrepreneurs, addressing traditionally underserved populations in getting funding to start firms. The Tulane Ventures fund, which was created with $5 million in government financing and matched with $5 million from Tulane, is the university’s newest effort to boost innovation in New Orleans. Funding applications are likely to start early in the new year.
The seed round will provide up to $200,000 per application over a five-year period.
Kimberly Gramm, Tulane’s David and Marion Mussafer Chief Innovation and Entrepreneurship Officer, said, “We want to develop an innovation community, and we need women and disadvantaged communities to have access.”
The fund was launched just before the annual Greater New Orleans Startup Report was issued by Tulane’s A. B. Freeman School of Business’s Albert Lepage Center for Entrepreneurship and Innovation. The report’s results reaffirmed the necessity for such a new fund:
Following a little gain in equity financing from angel investment, convertible debt, and venture capital for women and minority-owned businesses in the New Orleans region and nationally last year, the 2022 study indicated a funding decrease. Louisiana got $113 million in December from the American Rescue Plan’s State Small Business Credit Initiative, or SSBCI, a government programme designed to help small businesses get started.
The Small Business Credit Initiative (SSBCI) was founded in 2010 as a mechanism for the federal government to assist states in assisting small firms that were creditworthy but unable to obtain funding.
The $113 million was set aside for venture capital and seed funding initiatives. Tulane was awarded a $5 million share.
Gramm explained that the Tulane Ventures fund is intended to be self-sustaining, which means that profits from company sales would be reinvested in the fund to promote future businesses if Treasury Department and Louisiana Economic Development criteria allow.
Portfolio firms will also benefit from the Innovation Institute’s network of services for consulting, mentorship, and coaching. The ultimate goal, she says, is for businesses to stay in New Orleans and reinvest their profits.
“The 2022 study reveals a drop in access to equity investment across the board for BIPOC (Black, indigenous, and people of color)-founded enterprises,” Rob Lalka, executive director of the Lapage Center, noted in the research.
For example, 6% fewer firms with BIPOC founders reported using venture capital investment than the previous year, whereas non-minority founders reported an 11% rise.
A comparable drop was observed in BIPOC-founded businesses that reported using angel funding and convertible debt. “Those percentages are horrible nationally, but they are the majority of the people here in our neighbourhood,” Gramm remarked.
According to the Startup Report, minority-founded firms continue to trail behind their non-BIPOC-founded rivals when it comes to standard bank financing, albeit the margin has narrowed significantly since last year.
Tulane hopes to establish itself as a main conveyer of entrepreneurship in the city of New Orleans with the advent of the Innovation Institute, which will be inaugurated in 2022.
The Venture Fund, Tulane’s first fund for entrepreneurs, is a “huge success for our community,” according to Gramm.
She explained, “It’s like having your first child.”
Gramm said Tulane leadership’s support for the fund demonstrates the university’s commitment to innovation.