Tulane Launches $10 Million Fund for Women, BIPOC Startups | business news
The Tulane University Institute for Innovation will launch a $10 million seed fund for women and minority entrepreneurs, targeting groups that have historically faced barriers to accessing capital to start businesses.
The Tulane Ventures fund, built from $5 million in federal funding that was matched with $5 million from Tulane, is the university’s latest move to fuel 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 seed round, invested over five years.
“We want to build a community that is focused on innovation, and we need our women and our underrepresented populations to have access,” said Kimberly Gramm, director of innovation and entrepreneurship at David and Marion Mussafer at Tulane.
The fund was announced just before the Albert Lepage Center for Entrepreneurship and Innovation in Tulane’s AB Freeman School of Business released its annual Report on Startups of the Greater New Orleans Area.
The report’s findings reinforced the need for such a new fund: after a slight increase in angel capital, convertible debt, and venture capital funding for women and minority-founded businesses, both in the New Orleans area and at scale National last year the 2022 survey reported a decrease in funding.
federal grant money
In December, Louisiana received $113 million from the American Rescue Plan State Small Business Credit Initiative, or SSBCI, a federal program designed to start small businesses.
SSBCI was first established in 2010 as a way to federal government to help states support small businesses that were creditworthy but could not access capital.
The $113 million was allocated to venture capital and seed capital programs. Tulane received a stake of $5 million.
The Tulane Ventures fund, Gramm said, is meant to be self-sustaining, meaning that the returns from when the companies are sold will go back into the fund to support more startups if guidelines from the Louisiana Department of Treasury and Economic Development permit. .
Though planning for what participation will entail is still being planned, Gramm said the Innovation Institute hopes to provide some programs and support for entrepreneurs. Portfolio companies will also receive consulting, mentoring and guidance from the Innovation Institute’s network of resources.
The best hope, he said, is that businessmen stay in New Orleans and reinvest their money here.
According to the Startup Report, members of minority groups who want to start businesses have unequal access to capital.
“The 2022 report shows a decline in access to equity investment across the board for BIPOC-founded companies (Black, Indigenous, and people of color), reflecting national data showing a decline in funding for BIPOC-founded companies.” BIPOC entrepreneurs,” Rob Lalka, executive director of the Lapage Center, wrote in the report.
For example, 6% fewer companies with BIPOC founders reported using venture capital funds than last year, while there was an 11% increase for those with non-minority founders. A similar decline was seen in BIPOC-founded companies that reported the use of angel investment and convertible debt.
“Nationally, those numbers are dismal, and yet they are the majority of the population here in our community,” Gramm said.
The Startup Report also said that minority-founded businesses still lag behind their non-BIPOC-founded counterparts when it comes to traditional bank lending, though the gap has narrowed slightly since last year.
Tulane at the hub of NOLA entrepreneurship
With the addition of the Innovation Institute, launched in 2022, Tulane seeks to position itself as a key transmitter of entrepreneurship in the city of New Orleans.
As Tulane’s first fund for entrepreneurs, the Venture Fund is a “huge win for our community,” Gramm said.
“It’s like having your first baby,” she said. “Other universities have done it before, but it’s outside the scope of experience typically at a university.”
Gramm said Tulane leadership’s support of the fund underscores the university’s prioritization of innovation.
“Somehow they put a flag on the ground to help not only the internal university community, but the community in general, understanding that science and innovation go hand in hand to have an impact to help people, be it to cure cancer or to help people. to create generational wealth opportunities,” she said. “When our leaders say they want to support and nurture an environment like that, it’s a big deal.”