Entrepreneurism

hile the New Orleans region has recently moved toward the forefront of entrepreneurism in the United States, its place there is not solidified. The city has a long history of being in a leadership position and then resting on its laurels while other cities leap ahead. To cite just two examples, New Orleans used to be the banking center of the South; and the airport used to be the primary gateway to South America.

Neither of these is remotely true today.

Among the vulnerabilities in our current entrepreneurial marketplace are access to capital, entrepreneurial support systems – especially pertaining to scaling up – and overall equitability. In general, the entrepreneurial ecosystem here needs a stronger institutional foundation.

Stepping up to meet this challenge is the new Tulane University Innovation Institute, which is charging right out of the gate with the launch of a $10 million startup fund which expects to begin accepting applications for funding from startups this spring.

“New Orleans is still an emerging entrepreneurial ecosystem,” observed Kimberly Gramm, chief innovation and entrepreneurship officer at Tulane. “The Innovation Institute is designed to convert university research and ideas into marketable products, services and startup ventures.”

Gramm said the institute consists of three basic pillars: commercializing the university’s own IP; supporting faculty and student entrepreneurship education and programs; and helping the broader New Orleans community of innovators realize their entrepreneurial goals.

To kickstart the third, outward-facing component, Tulane is establishing a Community Pillar program that will, in Gramm’s words, “connect, fuel and recharge community opportunities. This initiative will emphasize community engagement and will have the mandate to support current community programs that are successfully creating and tracking community startups, and/or provide a new opportunity to build community startups.”

Most impactful will be the $10 million startup fund, which will be accompanied by a variety of entrepreneurial support programs and services.

The focus will primarily be on ventures owned by women and people of color, given the tremendous lack of resources available to these types of businesses in the current investment world. Gramm cited recent research from the Greater New Orleans Startup Report — commissioned by Tulane’s Albert LePage Center for Entrepreneurship and Innovation — which found that women receive 2.3% of startup investment, and another 2022 study showing that only 1.87% of assets under management was dedicated to DEI (diversity, equity and inclusion) investments.

In terms of sectors, companies that are technology-focused and/or technology enabled will be given priority, with a particular emphasis on startups in the fields of healthcare, AI and energy.

“Most of these ventures will be in their early stages,” noted Gramm, “and we want to get them the fundamentals they will need to succeed. This will include things like how to use QuickBooks, how to prepare financials and go-to-market strategies, and how to write competitive federal funding applications.”

One key component will be an expert mentor network, which Tulane will assemble by drawing on its own vast network of successful alumni.

“Mentors will have a wide variety of expertise and technical backgrounds,” Gramm elaborated. “They will help guide participants through the challenges they will have to overcome.”

Another existing Tulane resource that will support this work is the University’s Innovation Labs, which according to Gramm will explore “proof of concept funding for prototypes. We can translate technologies, tests the markets, see if customers really exist for these concepts.”

Program participants will also learn about business fundamentals such as marketing, public relations, social media, and general connectivity with the marketplace and with customers. In addition, they will come out of the program with access to additional local support and a broader network of contacts that can assist with links to manufacturers, shipping and other resources.

“The institute’s goal is to build startups that will be ready for funding,” explained Gramm. “We want to help a startup grow, increase its traction and valuation, and get it ready for larger Series A and B funding rounds.”

Integral to achieving this is the funding Tulane will provide for the program. Five million dollars of the initial amount comes from the U.S. Treasury’s State Small Business Credit Initiative (SSBCI), a program initially established in 2010 and expanded in the 2021 American Rescue Act. Tulane itself will put up the additional $5 million.

For local entrepreneurs seeking to tap into the program and funding, there is a formal application process that will open this spring. Gramm offered some guidelines for those considering applying.

“What we’re looking for is, ‘What problem are you solving?’ Is your technology solving this problem, and how? What is the market for your concept? What are your competitors doing or not doing? Describe your unique value proposition — it’s important to say how this differentiates you in the marketplace.”

On the business side, Gramm wants to know, “What are your plans for how to reach your customers? What are your future revenue growth plans, your plans for engaging customers? How will you make money — in plain, simple language, what is your business model? What is your road map for milestones?”

Gramm categorized the investments as “seed funding, which enables an early-stage company to finance some of its first steps, such as market research and product development, and enables a company to take its vision from idea to reality. Essentially it is equity-based funding, which requires inves- tors to invest money into the business at the very early stages. In return for the investment, the investor is given an equity stake in the company.”

Funding will be available in a range from $10,000 to $200,000, depending on the justification applicants provide for their funding needs and how they plan to use the investment dollars. The funding should become available by late spring.

Gramm hopes that going through the application process, and addressing these and other key entrepreneurial questions, will help business owners further clarify their own objectives and capacities.

“Not everybody is meant to be a founder, or can scale a business,” she pointed out. “Different-sized businesses have different problems, and people with ideas are not necessarily the people that can scale them. Everybody has their sweet spot of expertise, and some people may be best at ideas and innovation. It may be their baby, but they have to get comfortable with the handoff.”

Those who are accepted into the program will generally be early-stage startups, though a business that has been around for a few years but not yet raised Series A funding could be considered. The amount of time someone will remain in the program will depend on the type of startup and the type of technology it is working with, though the objective is to have the businesses ready for their next round of investment within a few years.

When participants do reach that stage, Tulane will assist with access to its networks and to outside investors locally and statewide. Along the way, the university hopes to realize some return on its investments in these businesses.

“In a perfect world, this becomes an evergreen fund,” said Gramm. “The investment returns can be used to continue supporting innovation.”

Gramm feels that Tulane is the ideal location for the Innovation Institute and this type of entrepreneurial programming.

“Tulane tends to be pro-innovation: I see innovation as our third university pillar, along with research and education,” she said. “We have a lot of infrastructure here to help us understand a lot more about the technologies being proposed.”

Indeed, existing university institutions such as the A.B. Freeman School of Business and the Albert LePage Center for Entrepreneurship and Innovation, along with contests such as the Novel Tech Challenge and the Business Model Competition, have already carved out a large role for Tulane in the entrepreneurial ecosystem. Gramm sees her initiative as complementary to, and expanding of, these ongoing efforts.

“We will not duplicate,” she stated. “We will leverage existing programs and fill in the gaps. We will engage and enhance and be additive, to create an innovation pipeline with the intent of managing our portfolio. The programs will be more integrated to ensure follow-through and success.”

The startup fund, however, is something new.

“This is our first venture fund, and it is still in the early stages,” explained Gramm. “We are in the process of forming the general partner and LLC entities, as well as developing a job description for the fund manager.”

While the specific source of the internal funds has not yet been determined, Gramm is certain of Tulane’s commitment to lining the monies up, and anticipates no real problems meeting that late spring timetable.

Gramm herself is new to Tulane, although she has been in the higher education world for 15 years. Prior to that, she worked at UPS, where she learned how to navigate and be effective in institutional environments — experience that has translated well into the university world.

“Institutions change over long periods of time, while innovation and entrepreneurs are juxtaposed to that,” she observed. “I became conscious about how to create environments that support the American dream in these settings and have focused my passion on how to create entrepreneurial environments.”

Her success in creating university-based incubators led her to Tulane and her newest challenge, which of course also comes in the context of the challenges of the Greater New Orleans region.

Gramm is ready to take these on as well.

“We have to nurture environments that people want to be in, innovators and investors,” she said, pointing out that every investment made in one place or in one company is an investment not made somewhere else. “We have to make it safe to fail, as well as to succeed. We have to nurture the spirit of innovation.

“Within this idea of being sustainable and competitive, we have to remember that we are competing in a global marketplace,” she continued. “What does that mean for us? In a university, we transfer knowledge to our students, but most of our students leave New Orleans. If startups and their founders are going to stay here, we have to have the things here that are going to nurture them, so they can build it here and stay here.”

The solution, Gramm believes, is found in the focus of the Innovation Institute, on lifting up the women, Black, Indigenous, and people of color in the entrepreneurial world that are so often ignored and under-resourced.

“We believe that ideas can come from anywhere,” she said, “and we have to provide opportunities for access to anyone with a good idea. We have to back our own local people.”

In her view, this is entirely doable. “We are in the right place at the right time with the right leadership. Many of our community and university leaders have made entrepreneurship a priority, and we are seeing more alignment with mobilizing resources. I know we have a lot of work to do, but every city has its challenges. I’m excited about the building blocks and momentum we have, and I feel we have a really great future ahead of us.

“We are the champions for the entrepreneurial ecosystem, providing the appropriate infrastructure, policy and investment capital,” she concluded. “We are going to institutionalize innovation and entrepreneurship.” T