Louisiana has raised a record amount of private investment, according to the data-driven, publicly sourced information found in the latest Louisiana Venture and Angel Capital Report released by New Orleans law firm Graffagnini, L.C. The state raised over $123 Million in venture capital in 2014, which places Louisiana among the top locations for raising and attracting capital.
The Louisiana Venture and Angel Capital Report was first released by Graffagnini in 2012 when he began compiling Angel Investor Tax Credit information to determine the number of stage businesses obtaining angel and venture capital financing. The program has incentivized more than $33 Million in angel capital transactions since 2011.
Companies in Orleans Parish continue to receive the most angel investor tax credits, and saw the highest total volume of investments.
The report, released earlier this week during New Orleans Entrepreneur Week (NOEW), shows that Crescent City companies raised $94,926,744 in venture capital in 2014, making it a record year. Since 2011, companies in the area raised a total of $129,612,657.
“Louisiana companies reached a major milestone in 2014, showing signs that the trend in larger financings continues for Louisiana,” said Mark Graffagnini, President and founder of the firm. “This year’s report details even more trends that serve as a basis to gauge the private investment environment in Louisiana, and we have examined several sources not previously examined.”
The tax credit program is scheduled to expire in July 2015. “We can now confirm that angel investors across the state are in the process of organizing into networks, funds and other organizations in order to more efficiently deploy capital,” said Graffagnini. “If the state fails to renew the angel tax credit program in 2015, it will likely put Louisiana companies at a competitive disadvantage to companies in other states with similar programs. Despite some positive trends, there is still a significant gap in angel capital funds for new businesses in the state.”
A summary of key points from the 2015 report is below:
- Louisiana company venture capital or growth companies raised over $123 Million in financing in 2014! This marks a major milestone in the growth company market in Louisiana and shows that Louisiana companies can attract large institutional investors.
- The number of venture capital deals in Louisiana have remained constant for the past two years.
- Despite the growth in large financing deals from large institutional investors, Louisiana lacks a large local institutional risk capital investor market.
- Several groups around the state have organized and more are forming to invest in angel capital deals. These angel groups put a substantial amount of investment in Louisiana businesses.
- Angel capital deals rose in number for the 4th straight year.
- Companies have raised over $33 million in angel capital deals under the Angel Investor Tax Credit program since 2011.
- Data strongly indicates that there is a gap in the amount of angel capital available to Louisiana companies compared to what they are seeking from angel investors.
- The Angel Investor Tax Credit program sunsets in July 2015. It should be renewed for several reasons:
- Loss of the program will send the wrong signal at a critical time in the emergence of the startup capital market.
- Louisiana companies will be at a competitive disadvantage to other states with similar and even stronger programs.
- The low number of local investors and a high gap in available funding would be worsened by loss of the program.