South Loop Ventures, a Houston-based venture company, has announced a $21 million Fund I. Rice Management Company and Chevron Technology Ventures served as anchor investors.
Launched in 2022, the company focuses on seeds and pre-seed companies, with an average check size of $400,000. I also want to focus primarily on supporting the founders of Color.
Zac Ellis, the company's founder and managing director, spoke to TechCrunch about his final ending.
He said the fund is common and will invest in founders across the country, but prefers sectors that “reflect Houston's industrial capabilities” such as healthcare, energy, space and climate.
The Texas Capital Bank and the Great Committee Foundation for the Episcopal Church of Texas also participated in the round. So far, the South Loop has made 13 investments and is hoping to invest at least 30.
“Given the diversity of Houston, I thought it was important to have a fund that focuses on the diverse founders here in Houston,” he said. Houston is one of the most diverse cities in the country and ranks fifth. As his fund targets founders of color, Ellis offered a simple response when asked if he was worried about anti-DEI backlash.
“We strongly believe that everyone should have access to venture capital and that underinvestment and diverse teams provide unique opportunities for important returns,” he said.
Despite growing love for Houston, Ellis actually originally from New Orleans and began her military career. “I've always been a very mission-driven person, so after seven years of active duty in the Navy, I moved into the corporate sector.”
As a result, he worked as a healthcare consultant and was later exposed to the Corporate Innovation Group. The group taught him how to use technology in ways that help people with the mundane aspects of everyday life.
“I said, 'I can't believe we'll get paid to do this,'” he recalled. “And my colleague said, 'We should see what the VC does.'
He networked until he landed on PepsiCo's corporate venture team, where he combined investments in technology scouting, corporate partnerships and food and agriculture-related funds. From there he went to Ohio, where he helped manage a pool of money to invest in Midwest-focused VC funds and startups spun from the university.
“It was around that time that the pandemic happened and the murder of George Floyd happened. I was able to look back at my career and the impact I had and the fact that I was often the only black or brown face in the room I was in,” Ellis said. “I wanted to do something about it.”
By chance, he received a call from a friend in Houston. He told him the city is working to raise its technical and innovation profile. His friends in particular said many stakeholders had a desire to support founders who support the Color Fund. That, and he had already told many of them that Ellis was the perfect person to lead it.
So Ellis descended to Houston and came up with the idea for a South Loop Venture.
He described the fundraising process as “difficult.”
“We continued to be more challenging when the market began to slow down,” he said. “It took me 24 months to finally complete while the initial momentum was strong.”
He met most of the fund's current investors through a network of stakeholders, adding that the Mercury Fund in particular will help connect him with other investors in the ecosystem. Second, Ellis hopes to lure more technical talent into the city. It, and of course, pours some money into founders looking to build the next big thing.
“People are naturally drawn to living here. I think this will help attract top-class founders who feel welcome and comfortable, not only see business opportunities,” he said. “With the support of the South Loop, we aim to ensure they are empowered.”