South Loop Ventures closes $21M fund in Houston to build up local tech ecosystem

Summary

South Loop Ventures, a Houston-based venture firm, announced a $21 million Fund I, with Rice Management Company and Chevron Technology Ventures serving as anchor investors. The firm, which launched in 2022, focuses on seed and pre-seed companies, with $400,000 as the average check size. It also primarily hopes to focus on backing founders of color. Zach Ellis, the firm’s founder and managing director, spoke to TechCrunch about his final close. He said the fund is general and will invest in founders nationwide, though it does have a preference for sectors that “reflect the industrial strength of Houston,” such as healthcare, energy, space, and climate. Texas Capital Bank and The Great Commission Foundation of the Episcopal Diocese of Texas also participated in the round. So far, South Loop has made 13 investments and hopes to invest in a total of at least 30. “We thought it was important to have a fund focused on diverse founders here in Houston, given Houston’s diversity,” he said. Houston is one of the nation’s most diverse cities, ranking at number five. Asked if he was worried about the anti-DEI backlash, as his fund targets founders of color, Ellis offered a simple response. “We strongly believe that venture capital should be accessible to everyone and that underinvested and diverse teams offer a unique opportunity for significant returns,” he said. Despite his growing love for Houston, Ellis actually hails from New Orleans and started his career in the military. “I’ve always been a very mission-driven person, so after serving seven years active duty in the Navy, I transitioned to the corporate sector.” That led him to work as a health care consultant, which later exposed him to a corporate innovation group. That group then taught him about how to use technology in a way that helps people with the mundane aspects of everyday life. “I was like, ‘I can’t believe we get paid to do this,’” he recalled. “And my colleague said, ‘You should see what the VCs do.” He net...