South Loop Ventures Secures $21M Fund to Boost Houston’s Tech Scene

Houston-based venture capital firm South Loop Ventures has announced the successful closing of its $21 million Fund I. This significant milestone aims to bolster the local tech ecosystem, with anchor investments from Rice Management Company and Chevron Technology Ventures.

Launched in 2022, South Loop Ventures focuses on providing seed and pre-seed funding to promising startups. The firm’s average check size is $400,000, and it has a particular interest in supporting founders of color, addressing a critical gap in venture capital accessibility.

Zach Ellis, the founder and managing director of South Loop Ventures, discussed the fund’s objectives with TechCrunch. He emphasized that while the fund is general and will invest in founders nationwide, there is a preference for sectors that align with Houston’s industrial strengths. These include healthcare, energy, space, and climate-related technologies.

In addition to the anchor investors, Texas Capital Bank and The Great Commission Foundation of the Episcopal Diocese of Texas also participated in the funding round. To date, South Loop Ventures has made 13 investments and plans to support at least 30 companies in total.

“We thought it was important to have a fund focused on diverse founders here in Houston, given Houston’s diversity,” Ellis stated. Houston ranks among the nation’s most diverse cities, and South Loop Ventures is committed to ensuring venture capital is accessible to all, regardless of background.

Addressing concerns about potential anti-DEI backlash, Ellis affirmed, “We strongly believe that venture capital should be accessible to everyone and that underinvested and diverse teams offer a unique opportunity for significant returns.”

Ellis, a New Orleans native and Navy veteran, transitioned to the corporate sector, where he gained experience in healthcare consulting and corporate innovation. This path eventually led him to venture capital, including a role at PepsiCo’s corporate venture team and later at Ohio State, managing investments in Midwest-focused VC funds and university startups.

The events of the pandemic and the George Floyd murder prompted Ellis to reflect on his career and the lack of diversity in the VC landscape. A conversation with a friend in Houston revealed an opportunity to contribute to the city’s growing tech scene by supporting founders of color, leading to the creation of South Loop Ventures.

Ellis acknowledged the challenges of fundraising, particularly given the market slowdown. “We began just as the market started to slow down, and it continued to become more challenging,” he explained. “While we had strong initial momentum, it ultimately took us 24 months to complete.”

Looking ahead, South Loop Ventures aims to attract more tech talent to Houston and provide crucial funding to innovative founders. Ellis believes that Houston’s welcoming environment and business opportunities will draw top-tier founders, and with South Loop’s support, they will feel empowered to build impactful companies.