South Loop Ventures Launches $21M Fund to Back Diverse Founders in Houston and Beyond

South Loop Ventures, a Houston-based venture capital firm, has successfully closed its first fund at $21 million. Launched in 2022 by founder and managing director Zach Ellis, the firm aims to invest primarily in seed and pre-seed stage startups, with an average investment size of $400,000. The fund’s anchor investors include Rice Management Company and Chevron Technology Ventures, alongside Texas Capital Bank and The Great Commission Foundation of the Episcopal Diocese of Texas.

South Loop Ventures distinguishes itself by focusing on backing founders of color, reflecting Houston’s diverse population, which ranks fifth among U.S. cities for diversity. While the fund is open to investing nationwide, it has a preference for sectors that mirror Houston’s industrial strengths, such as healthcare, energy, space exploration, and climate technology. So far, the firm has made 13 investments and plans to reach at least 30.

Zach Ellis’s journey to founding South Loop Ventures is rooted in a mission-driven career path. After seven years of active duty in the Navy, Ellis transitioned to the corporate sector, working as a healthcare consultant and later joining corporate innovation groups. His exposure to technology’s potential to improve everyday life inspired him to explore venture capital, leading to roles at PepsiCo and Ohio State University managing investments in startups and VC funds.

The social and cultural events of 2020, including the pandemic and the murder of George Floyd, prompted Ellis to reflect on his impact and the lack of diversity in venture capital. Recognizing Houston’s growing appetite for tech innovation and support for diverse founders, Ellis was encouraged by local stakeholders to establish a fund focused on underrepresented entrepreneurs. Despite a challenging 24-month fundraising process amid a slowing market, the fund secured strong support through networks like Mercury Fund.

Looking ahead, South Loop Ventures aims to attract more tech talent to Houston and continue investing in founders building transformative companies. Ellis emphasizes the importance of creating an inclusive environment where founders not only see business opportunities but also feel welcomed and empowered. This approach aligns with Houston’s diverse demographic and its ambitions to become a leading tech hub.

South Loop Ventures’ focus on diverse founders and key industrial sectors highlights a broader trend in venture capital: the recognition that inclusivity drives innovation and financial returns. By investing in underrepresented entrepreneurs, the firm not only addresses equity gaps but also taps into unique market opportunities that traditional funds might overlook. This strategy positions South Loop Ventures as a catalyst for economic growth and technological advancement in Houston and beyond.