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Dawn Starns

While Louisiana and the South still lag be-hind other parts of the country when it comes to raising venture capital, public and private efforts to encourage these types of investments have begun to make their presence felt.

The Louisiana Angel Network, designed to provide early-stage funding for viable start-up companies, opened at the beginning of the year. None of its members have made any investments through the network yet, but that's not bad news, executive director Dawn Starns said.

"There has never been any type of network formalized that does this, ever, in the state," Starns said. "It's important to note that because we finally have one, people are interested in it ... and we've started the conversation about venture capital."

Angel-round funding typically ranges from $50,000 to around $2 million. Entrepreneurs can use that money to do everything from finishing their product development to entering the marketplace.

L.A.N. offers the state's only Web-based forum for entrepreneurs and angel investors. Entrepreneurs post their businesses' executive summaries on the secure site, and investors can browse the submissions to see if it matches their investment interest profile

Eight businesses have approached the angel network so far, Starns said. Of those, four met the network's investment criteria; none were healthcare firms.

"But we're open to any opportunity," Starns said.

One has to remember that angel investors aren't looking to put their money into mom-and-pop businesses, she said. Investors are interested in firms with high-growth potential; opportunities that offer high-risk and high-return.

The network has already made it over the first big hurdle: attracting investors and starting the venture-capital conversation, Starns said. The network hopes it will get a big boost from a proposed law that will help venture capitalists offset their risk with tax credits.

Once the law is passed, Louisiana Angel Network plans to increase its marketing efforts to both entrepreneurs and prospective venture capitalists.

Gov. Kathleen Blanco has said spurring venture capital is one of her goals this legislative session.

Louisiana could use the help.

According to PricewaterhouseCoopers' 2004 Money Tree Survey, venture capitalists invested in only three Louisiana deals worth about $3.2 million.

Nationwide, venture capitalists poured $20.9 billion into 2,876 projects.

The angel network is one of a handful of groups working to change that anemic performance by creating more funding opportunities for Louisiana firms. The state also has three new venture funds, Louisiana Fund 1 LP, Louisiana Ventures LP and Louisiana Technology Fund.

Most recently, New Orleans-based economic development groups, nonprofit The Idea Village and public-private partnership Greater New Orleans Inc. formed The Capital Village. The Capital Village was designed to increase the pool of lead venture capital by drawing out-of-state firms to partner with local venture capital companies. These partnerships will develop the infrastructure and support for qualified businesses.

On a regional level, Southern Growth Policies Board, a regional public policy think tank based in Research Triangle, N.C., has created a regional task force on venture capital. VentureSouth will create a network of venture capitalists, entrepreneurs and policy makers to help boost the flow of venture capital to the region, said Scott Doron, director of Southern Technology Council.

Doron said Louisiana isn't the only state losing the fight for venture capital.

For decades, the South has drawn around 9 percent of the national total of venture capital, Doron said. That was fine when the South's share of the national economy was at the same level, but these days the region makes up 20 percent of the nation's economy.

"That would give the South an extra $10 billion going into new ventures," Doron said. "That's a lot of money."

VentureSouth is a business-led initiative that will develop concrete strategies to help states attract venture capital, to jump start the industry, and create jobs, Doron said.

Without venture capital, the South will not be able to create the Microsofts, the Cisco Systems, the new companies and industries that will serve as the growth engines for the future, Doron said.

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