South Loop Ventures, a Houston-based venture capital firm, has successfully closed its $21 million Fund I, with significant backing from anchor investors Rice Management Company and Chevron Technology Ventures. The firm, launched in 2022, focuses on investing in seed and pre-seed companies with an average check size of $400,000. Zach Ellis, founder and managing director of South Loop Ventures, discussed the fund’s successful close with TechCrunch, highlighting the firm’s commitment to supporting diverse founders across the United States.
Focus on Diverse Founders and Houston’s Industrial Strength
South Loop Ventures is particularly interested in backing founders of color and investing in sectors that reflect Houston’s industrial strengths, including healthcare, energy, space, and climate. The fund aims to invest in at least 30 companies, having already made 13 investments. Ellis emphasized the importance of having a fund dedicated to diverse founders in Houston, given the city’s status as one of the nation’s most diverse cities, ranking fifth nationally.
Addressing Anti-DEI Backlash
When questioned about concerns regarding the anti-DEI backlash, Ellis expressed his firm’s strong belief that venture capital should be accessible to everyone. He highlighted that underinvested and diverse teams offer unique opportunities for significant returns. Other participants in the funding round included Texas Capital Bank and The Great Commission Foundation of the Episcopal Diocese of Texas.
Zach Ellis’s Background and Vision
Ellis, who hails from New Orleans and has a background in the Navy, transitioned to the corporate sector after serving seven years on active duty. His career path included working as a healthcare consultant and later joining PepsiCo’s corporate venture team. The idea for South Loop Ventures emerged during the pandemic, prompted by a call from a friend in Houston who was working to raise the city’s profile in tech and innovation. Ellis found the fundraising process challenging, taking 24 months to complete due to market slowdowns. He credited Mercury Fund with helping connect him with other investors in the ecosystem.
Future Plans
Looking ahead, Ellis hopes to attract more tech talent to Houston and support founders in building the next big thing. He believes that the city’s appeal will naturally draw top-tier founders who will not only see business opportunities but also feel welcome. With South Loop’s support, Ellis aims to empower these founders to achieve their goals.
