Tulane University is launching a new institute focused on innovation and supporting entrepreneurship as part of its growing downtown campus, the latest move by New Orleans institutions and investors aimed at putting more resources towards the local startup sector.
The Innovation Institute, supported by an undisclosed amount of philanthropy and private funding that school officials said was in the millions of dollars, is expected to open later this year. It will include seed funding and other support for entrepreneurs who are trying to turn their research into products and companies.
The goal, according to Tulane President Michael Fitts and other officials, is to eventually seed at least $100 million of startup investment derived from research at the university and from entrepreneurs in the region more broadly.
“Research has expanded logarithmically over the last few years and is expected to expand even further,” said Fitts in an interview to discuss the institute, noting that biomedical, environmental, and energy research dollars in particular have seen large increases. “The idea for us is to pick out early stage investment that might make a real difference and to shepherd them along to the point where a venture capital firm might come in and fund them as a business.”
The $1 billion sale of New Orleans market-research firm Lucid in October, which followed the $500 million sale of construction-software firm LevelSet a month earlier, has brought renewed interest to the city’s tech sector.
City boosters are hopeful that the proceeds of those deals will be re-invested into other local firms, and that support from Tulane and other investment funds like Saints owner Gayle Benson’s Benson Capital Partnerswill provide the needed funding and support to create more businesses.
Fitts said that one of Tulane’s main aims is to forestl a brain drain of promising students and faculty who take their ideas to places like Silicon Valley instead of starting businesses in New Orleans.
Tulane University President Michael Fitts pictured on September 2, 2020 at a groundbreaking ceremony for the conversion of the old Warwick Hotel into housing and other space for university students and faculty.
A successful innovation center “is amazingly important in attracting top faculty,” Fitts said. He added that Tulane has studied similar institutes it wishes to emulate, such as the Penn Center for Innovation, which was started by the University of Pennsylvania in 2016, and the Ohio University Innovation Center, which has been around since 1983.
The initial funding for the institute will come from wealthy alumni, with the lead investment from the Priddy Family Foundation, which will fund the Robert L. Priddy Innovation Lab within the institute. Priddy, who graduated from Tulane in 1969 with a degree in economics, founded ValuJet and AirTran, which was sold to Southwest Airlines for $1.4 billion in 2011.
The Priddy Innovation Lab, which will be a discrete part of the institute, will provide proof-of-concept and early-stage gap funding for aspiring entrepreneurs and promising technologies, as well as mentorship, training and administrative support, according to a Tulane spokesperson . The aim is to provide “millions of dollars in grants and direct investment.”
The size of the Priddy donation wasn’t disclosed. Fitts said they were still in the process of raising funds for the project, which will be ongoing as the institute begins to invest.
Another major donor is David Mussafer, who is a member of the Tulane board, and his wife, Marion, who has established an endowment to support various aspects of the institute, including paying for staff. David Mussafer is chairman and managing partner of Advent International Corp., a private equity firm which manages $88 billion of assets.
Institute’s first head selected
Fitts said they have already selected the institute’s first executive director. That job will be known as “the David and Marion Mussafer Chief Innovation and Entrepreneurship Officer.” The name of the person was not disclosed.
Also backing the project is David Barksdale, a university board member add principal at Alluvian Capital, a private investment firm, and his wife Stephanie, a social innovation and social entrepreneurship instructor at Tulane’s Phyllis M. Taylor Center for Social Innovation and Design Thinking.
Carol Bernick, chair of the Board of Tulane and CEO of Polished Nickel Capital Management, a privately held investment company, is investing. So too is Walter Isaacson, the writer and historian who is an emeritus member of Tulane’s board and a professor of American history there, together with his wife, Cathy, who is vice chair of The Idea Village, a startup accelerator.
Jeffrey Silverman, co-founder and managing partner of Laconia Capital Group, a New York-based venture capital firm, and his wife, Amy, also are investors.
The former Charity Hospital on Tulane Avenue is set for a $300 million rehabilitation, with Tulane University as its anchor tenant. When completed, the university will site its Tulane Innovation Institute there, a new unit funded by alumni that it expects will attract $100 million of investment to seed startup companies in the region.
The institute will be based initially on Thirteen15, the building on Duncan Plaza that was formerly the Warwick Hotel and which was converted into residences and retail and office space last year and leased entirely to Tulane. Later, it will move to the old Charity Hospital building, where Tulane is anchor tenant and taking 350,000 square feet of space when the $350 million renovation of that building is competed.
Creating the innovation district
As well as providing a way for Tulane to attract and retain staff and students, Fitts said that creating the institute is also a recognition of the university’s central role in developing the broader innovation district in the city. Such entrepreneurial institutes have been key to the success of innovation districts like The Cortex in St. Louiswhich has attracted hundreds of companies and accounted for about 6,000 jobs in the past decade.
One of the aims of the new institute will be to partner with other entrepreneur-boosting organizations in the city, including The Idea Village and the New Orleans BioInnovation Center. Tulane was one of the institutions that danced out the latter three years ago when it nearly ran out of funding. Tulane’s chief operating officer, Patrick Norton, is currently its chairman.
Investors in the project said they expect the institute to have a wide impact.
“In the Innovation Institute, I see a promising idea with the power to capitalize on Tulane’s existing strengths and grow into something huge for the city and the Gulf Coast,” said Robert Priddy in a prepared statement announcing the institute. “I’m captivated by this project’s possibilities and the opportunity to play a role in developing new concepts that can produce jobs, improve the local economy and change the world for the better.”
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