South Loop Ventures, a Houston-based enterprise agency, introduced a $21 million Fund I, with Rice Administration Firm and Chevron Expertise Ventures serving as anchor traders.
The agency, which launched in 2022, focuses on seed and pre-seed firms, with $400,000 as the typical verify dimension. It additionally primarily hopes to concentrate on backing founders of shade.
Zach Ellis, the agency’s founder and managing director, spoke to TechCrunch about his ultimate shut.
He stated the fund is basic and can put money into founders nationwide, although it does have a choice for sectors that “replicate the economic power of Houston,” comparable to healthcare, vitality, house, and local weather.
Texas Capital Financial institution and The Nice Fee Basis of the Episcopal Diocese of Texas additionally participated within the spherical. To this point, South Loop has made 13 investments and hopes to put money into a complete of at the least 30.
“We thought it was essential to have a fund targeted on various founders right here in Houston, given Houston’s variety,” he stated. Houston is likely one of the nation’s most diverse cities, rating at quantity 5. Requested if he was apprehensive concerning the anti-DEI backlash, as his fund targets founders of shade, Ellis provided a easy response.
“We strongly imagine that enterprise capital needs to be accessible to everybody and that underinvested and various groups supply a singular alternative for vital returns,” he stated.
Regardless of his rising love for Houston, Ellis truly hails from New Orleans and began his profession within the army. “I’ve at all times been a really mission-driven particular person, so after serving seven years energetic responsibility within the Navy, I transitioned to the company sector.”
That led him to work as a well being care marketing consultant, which later uncovered him to a company innovation group. That group then taught him about the way to use know-how in a manner that helps individuals with the mundane points of on a regular basis life.
“I used to be like, ‘I can’t imagine we receives a commission to do that,’” he recalled. “And my colleague stated, ‘You need to see what the VCs do.”
He networked till he landed on the company enterprise workforce at PepsiCo, the place he carried out a mixture of know-how scouting, company partnerships, and investing in meals and agriculture-related funds. From there, he went to Ohio State, the place he helped handle a pool of cash to later put money into Midwest-focused VC funds and startups spun from the college.
“It was round that point that the pandemic occurred, the George Floyd homicide occurred, and I used to be capable of replicate on my profession and the affect I used to be having and the truth that I used to be usually the one Black or brown face in any room that I used to be in,” Ellis stated. “I needed to do one thing about it.”
Serendipitously, he obtained a name from a pal in Houston, who advised him that town was working to boost its profile in tech and innovation. His pal, specifically, stated many stakeholders had an urge for food to help a fund backing founders of shade. That, and he had already advised lots of them that Ellis can be the right particular person to steer one.
So, Ellis got here all the way down to Houston and birthed the thought for South Loop Ventures.
He described the fundraising course of as “troublesome.”
“We started simply because the market began to decelerate, and it continued to change into more difficult,” he stated. “Whereas we had sturdy preliminary momentum, it finally took us 24 months to finish.”
He met many of the fund’s present traders by way of a community of stakeholders, including that Mercury Fund specifically helped join him with different traders within the ecosystem. Subsequent, Ellis is hoping to lure in some extra tech expertise to town. That, and, in fact, pour some cash into founders seeking to construct the following large factor.
“Persons are naturally drawn to reside right here, which I imagine will assist entice top-tier founders who will see not solely the enterprise alternatives but additionally really feel welcome and cozy,” he stated. “With South Loop’s help, we purpose to make sure additionally they really feel empowered.”