LED Agency Launches New Innovation Division, $50M fund

NOLA.com | Rich Collins | 2/6/25 | Original Article

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Louisiana Economic Development used the Super Bowl spotlight this week to announce the launch of a new state-backed venture fund and a research institute focused on artificial intelligence.

Officials at the state agency said Thursday they they have created a new division called Louisiana Innovation – or “LA.IO” for short. The department’s first initiative will be the launch of the Louisiana Growth Fund, a government-run venture capital firm that will invest in local startups using federal dollars. LED is also creating the nonprofit Louisiana Institute for Artificial Intelligence, designed to advance research, commercialization and policy related to new technology in the state.

LED said the new division, which will be run by Chief Innovation Officer Josh Fleig, will move from LED’s Baton Rouge headquarters into a renovated former welcome center near the State Capitol. The new office is expected to open later this year. It will house between 40 and 50 of LED’s roughly 170 employees.

The announcements were made to a crowd of about 400 people inside the glitzy “Louisiana NOW Pavilion,” a temporary tent set up in the parking lot of the Hilton Riverside hotel in New Orleans. The pavilion has been used in the week before the Super Bowl to host visiting corporate leaders, to announce a pilot program to have self-driving cars in New Orleans, and as a site for dozens of media interviews that allowed Gov. Jeff Landry and other leaders to promote the state.

“While the eyes of the world are on the city and state and corporate America is here, we are highlighting opportunities in our state,” LED Secretary Susan Bourgeois told the group of local businesspeople and out-of-town visitors on Thursday.

$50 million for startups

The Louisiana Growth Fund will make use of $50 million in federal dollars already available to the state from the State Small Business Credit Initiative, a U.S. Treasury-backed program authorized by the Biden administration’s American Rescue Plan Act.

If the state maximizes the program’s potential, it could receive a total of $113 million to use for investments, loans and other startup and small business support.

To date, the state has partnered with seven private investment funds to provide one-to-one matching dollars for startups. These include Boot64 Ventures, the Idea Village Momentum Fund, Ochsner Ventures, Tulane Ventures, the New Orleans Startup Fund and Propeller – all located in the New Orleans area – and Baton Rouge-based Innovation Catalyst.

Now, LED will be investing directly in startups, which means the state will have equity in those portfolio companies. The state will begin investing later this year, Fleig said. It will require a minimum of one-to-one private matching capital.

John Roberts, a managing partner at Boot64 who attended Thursday’s LED event, said he supports the new program. His fund, he said, just made its 18th investment using the SSBCI matching funds and has written checks for more than $3 million.

One criticism of the state’s SSBCI program has been that there are too many hurdles to getting the money in the hands of entrepreneurs. Fleig said the state has allocated about $25 million to funding partners so far, but only a portion of that money has made it into the hands of entrepreneurs.

The existing SSBCI program will continue, he said, in addition to the new state-run initiative.

The growth fund investment amounts are expected to be between $1 million and $5 million. The SSBCI program investments are considered “seed” capital, so they are considerably smaller.

New Institute

The fledgling Louisiana Institute for Artificial Intelligence is inspired by projects like the Empire AI Institute, a New York consortium of universities and private companies building a research center for artificial intelligence housed at the University of Buffalo. The initiative is supported by Bloomberg Philanthropies and a $275 million investment from the state.

Fleig said the institute, which is in its infancy, is its own non-profit organization, separate from LED. It has no staff or offices, but Fleig said it was critical that Louisiana press into this area.

“My contact in New York said we’d better hurry because his universities will poach every AI researcher in Louisiana before we have the money to create our own program,” Fleig said. “If we sit on the sidelines we’ll miss this wave. This is about setting up the right structure so we don’t miss the next industrial revolution.”

First on the institute’s to-do list is providing AI tools to 5,000 small businesses to help them grow and compete. Fleig said LA.IO will start sourcing vendors to do this work soon.

“Louisiana’s challenges are its opportunity,” Fleig said. “Whether it’s energy, logistics or healthcare, we can help solve problems.”

‘A brand and a strategy’

Bourgeois said the new Louisiana Innovation division is a “brand but also a strategy,” showing that Landry is prioritizing building innovative companies.

“If Louisiana is going to keep up with the rest of the nation, and our Southern peers, we have to turbocharge innovation,” she said.

She cited Meta’s planned $10 billion investment in a data center in north Louisiana as a game-changing economic development win, but she said “we can’t count on big tech companies to save us. We have to build companies right here at home and steer our own future.”

Fleig said the new division is a “powerfully simple expression of who we are and what we stand for; it’s also where we are and where you can find us,” referring to the web address of a new website promoting the state agency’s new division.

The new division will absorb several existing LED departments, including LED Corporation, which helps manage loan and equity programs; the small business services team; the tech transfer office; and Louisiana Entertainment, which invests in homegrown content creators.

LA.IO’s goal is to build startups on top of the state’s asset industries, including transportation, agriculture, oil and gas, and hospitality.

Fleig said LED will be partnering with startup accelerators, entrepreneurial support organizations, healthcare systems, universities and more to provide “coaching, capital and connections” to entrepreneurs.