Innovation Catalyst looks to launch for-profit investment fund

Innovation Catalyst, which runs a Baton Rouge-based nonprofit seed capital fund for new companies, hopes to launch a for-profit fund next year. 

The new fund would look to invest in companies that are past the fledgling stage, with the goal of keeping them in Louisiana rather than watching them leave for states with more available venture capital. 

“We’ve got the seed stage, we’ve got the angel capital, we’ve got a bunch of programs [for entrepreneurs],” Innovation Catalyst CEO Bill Ellison says. “The logical next step would be to start a for-profit fund.”

Innovation Catalyst through its nonprofit fund typically invests in very early-stage companies that often don’t have revenue yet. The Red Stick Angel Network subsidiary seeks more mature companies that nonetheless still may be missing some of the ingredients for success, Ellison says. 

But for-profit venture capital funds want to invest in more mature companies with most, if not all, of the boxes checked, he says. Companies that can’t find that here will look for it elsewhere, and out-of-state funds might want the company to move. 

The federal American Rescue Plan provides $10 billion for the U.S. Treasury’s State Small Business Credit Initiative. State applications are due Feb. 11. 

While venture capital funds are eligible for the money, they would have to raise $1 for every $1 in public money. Ellison doesn’t know yet how much money Innovation Catalyst might be able to get, and he declined to say what the minimum allocation for a successful fund would be. 

Innovation Catalyst has invested more than $3.3 million in more than two dozen companies, most notably Waitr. Red Stick Angel Network has invested a little more than $2.5 million in five companies, Ellison says, three based in Baton Rouge: Omnidek, Pass it Down and Mastery Prep.