The nation’s financial crisis continues to negatively impact a number of Louisiana companies. While credit markets are thawing in some sectors, the availability of risk/venture capital to fund start-up businesses in the state is minimal. As the CEO of a New Orleans-based technology company, I am regularly speaking with entrepreneurs in the state who are having difficulty finding funding for their businesses.
Louisiana is not unique in having limited funding to apply towards start-up businesses, particularly businesses in the areas of technology and life sciences. In fact, the National Venture Capital Association reports that venture investing in early-stage businesses is down 71% over the last 12 months. This has created a funding “gap” that is preventing the growth of small businesses, and subsequently hurting job creation.
However, Louisiana is unique in its lack of venture capital compared to other states. Louisiana ranks in the bottom ten percent of states when measured by venture capital investment. Traditionally, the state has supplemented venture capital investment in an effort to keep promising new small businesses in the state. My company was a beneficiary of state venture capital tax credits and the existence of the state program is a major reason my company has stayed in Louisiana, even when other investors were urging us to move out of the state. However, state venture capital assistance has all but ended and a tight budget year threatens to stall several legislative initiatives aimed at improving access to capital for entrepreneurs and small businesses.
Companies founded with venture capital include FedEx, Google, Microsoft, eBay, Genentech, Intel and Apple. If the State is not able to maintain a basic venture capital infrastructure, we may just find the next Apple or Fedex leave our state in order to find its start-up funding elsewhere.
— Matt Wisdom is CEO of New Orleans-based Turbo Squid.
