Solving the Shortage

Village Capital aims to bring more investment capital to New Orleans.

Here’s today’s fun fact: according to the Village Capital investment firm, “78 percent of venture capital in the U.S. goes to just three states.” Louisiana — you will not be shocked to hear — is not one of them.

As a result, “we are missing out on a lot of opportunities,” points out Jared Marquette, manager of VilCap Communities, a new enterprise aimed at addressing this imbalance. “There are a lot of solutions to global problems that are not getting off the ground.”

“Entrepreneurs across the U.S. can solve society’s greatest problems, building their communities in the process,” adds Ross Baird, executive director of Village Capital, “yet most entrepreneurs don’t have a shot at the resources they need to grow.”

Investment capital presently concentrates in three cities: Boston and New York — large markets with substantial financial resources — and San Francisco, also a wealthy city with the added advantage of proximity to Silicon Valley.

To break through this financial barrier, Village Capital has designated 16 cities throughout the United States as VilCap Communities — and hopefully you will not be shocked to hear that New Orleans is one of them.

VilCap’s approach is to partner with individuals and organizations in each of these communities (Propeller and the New Orleans Start-Up Fund are the New Orleans partners), then find, train and invest in startup companies in each city. Each community commits to providing a minimum of $50,000 in local capital.

Peer review is another key component of methodology, with VilCap bringing together successful entrepreneurs to analyze, mentor and even invest in the startups identified through the program. As Baird pointed out in a presentation during Entrepreneur Week, this leads to much greater willingness to invest in truly innovative ideas and also to break through the additional barriers of gender and ethnicity. As this column has noted before, new business owners are still overwhelmingly white and male.

Marquette also sees the disinvestment in women- and minority-owned businesses as a major impediment to building a better world. “If we are going to solve big world problems, like food distribution or global health, we need to look to a larger group than white men in big cities.”

In service of this objective, VilCap looked beyond the most common types of startup businesses, such as tech and service, in selecting the participating cities. The press release announcing the VilCap launch cited industries such as “health, education, water and energy, food and agriculture,” among other fields of opportunity.

According to Marquette, the post-Katrina rise of entrepreneurism landed New Orleans a spot among the VilCap Communities. “New Orleans was rebuilt by entrepreneurs, which makes it a good place to develop and get support for early ideas,” he observes, adding that factors like the large number of charter schools also contribute to the local entrepreneurial ecosystem.
Marquette also notes that the new program seeks to increase local entrepreneurs’ knowledge of national and even global investment and entrepreneurial systems as a way to build capacity within the city and region. “We want to create self-awareness of New Orleans as its own entrepreneurial system,” he says.

While building a local investment architecture and supporting individual startups  — especially women- and minority-owned businesses — is the methodology, Village Capital clearly has the big picture in mind. “We can’t complain about not solving world problems,” he adds, “if we don’t put people in a position to solve them.”
 

Keith Twitchell  spent 16 years running his own business before becoming president of the Committee for a Better New Orleans. He has observed, supported and participated in entrepreneurial ventures at the street, neighborhood, nonprofit, micro- and macro-business levels.