The Idea Village Momentum Fund Backs Founders

NEW ORLEANS – The Idea Village has quietly launched a game-changing capital engine: the Momentum Fund — a capital vehicle with a novel structure built specifically to support promising startups after they complete VILLAGEx, The Idea Village’s marquee accelerator program. The Idea Village is a NOLA-based accelerator assisting Gulf Coast startups to scale their ventures. Closing the Gulf

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Closing the Gulf Coast Funding Gap

Underscoring its growing influence in the state’s entrepreneurial landscape, the Momentum Fund was honored with the Louisiana Economic Development (LED) Corporation’s Fund of the Year at the Spotlight Louisiana Awards, part of the annual LED Awards program. The award serves as proof that The Idea Village’s programs, including the Momentum Fund, are helping to fill a startup gap in startup Gulf Coast funding.

“The Gulf Coast has a gap for startup funding period, full stop,” said Megan Balch, Managing Director of The Idea Village. “Capital investors and founders are the eternal chicken and egg problem – both need the other and since the Gulf Coast is not as known for having a bustling startup scene like New York, the West Coast, or even Austin, both local investors (chickens) and local founders (eggs) often go in search of investment opportunities in bigger, better markets (like a reliable chicken coop). Momentum Fund is dedicated to investing in founders located in Louisiana, and by adding one more chicken to the local coop, we hope more founders will thrive, more eggs will hatch, and more chickens will come and stay.”

Unlike traditional venture capital models, the fund operates as a for-profit investment fund under a nonprofit umbrella. “Our structure allows for us to keep our accelerator services and founder support free of charge for participants,” Balch said. “By separating the two we can help companies thrive regardless of if they take our investment dollars, and it allows us to invest on founder-friendly, market terms.”

Founders don’t apply to the fund directly — they can apply to VILLAGEx year-round, and select companies who complete the program and show exceptional promise are then offered market-rate investment through IDEApitch and the Momentum Fund. “Traditionally, for-profit accelerators invest up front for a standard equity fee,” Balch explained. “Companies that go through our accelerator are not guaranteed funding at the end, nor are they required to take funding from us at the end. When we do invest, our founders have all had to go out into the market, and find deals from other investors, which we then match. To date we have invested at least $100,000 into each of our portfolio companies and have not yet received as much as 6% of a company's equity.”

A Founder-Friendly Investment Model

One of the ways the Momentum Fund distinguishes itself is through its founder-friendly terms. “We do not negotiate company valuation with founders,” Balch said. “Our fund requires founders to go out into the market and find outside independent investment to lead the round, meaning they negotiate the value of the company. Once they have agreed on a value we follow along on those terms, unlike traditional funded accelerators which give money up front for a standing equity fee.”

Launched in 2023 with $6.7 million in committed capital from 24 individual investors and family offices, the fund has already backed eight companies across diverse sectors, including local standouts OS Benefits and Hello Gravel. VILLAGEx itself is industry-agnostic, but the focus is on companies with strong growth potential. “We do look for companies that have high-growth potential, who are/can rapidly scale, and who are looking to take on at least $1 million in investment in the next 24 months,” Balch said.

The Idea Village also sees the Momentum Fund as a tool to keep companies in Louisiana. “We hope the fund encourages companies to stay in or build extensions in Louisiana, and that it also encourages other investors to come and invest in companies here as well, knowing that companies here have supportive regional resources, like our fund and others, here,” said Balch.

Building a Sustainable Startup Ecosystem

At its core, the Momentum Fund is also contributing to The Idea Village’s impact of building a self-sustaining Gulf Coast startup ecosystem that recycles talent, reinvests in local founders, and keeps innovation rooted in New Orleans and the region.

“As a non-profit, The Idea Village requires annual fundraising and grant management,” Balch said. “The fund is set up so that the profits the manager would typically receive go back into The Idea Village's endowment that will support the organization long-term. When one of our companies has a successful exit, part of that win will be recycled back into the ecosystem to help the next founder get going.”

The model may also serve as a guide for other regions. “Accelerators can be a polarizing topic, largely because founders have felt that the terms and conditions of funded for-profit accelerators can be predatory towards founders, and that accelerators without funding don't actually give the resources all founders (at least believe) they need the most,” Balch explained. “Our fund operates separately from The Idea Village, with traditional LPs and an independent board. Founders often live by the ‘give-first’ mentality and by setting up the accelerator first, then fund model, we are able to both give first and invest better at the end. And we ultimately believe the startup ecosystem will be better and more successful if we are setting up more of these win-win scenarios.”