Bank of America Corp. has signed on as the first institutional investor in Overlooked Ventures LP, the inclusive venture capital fund, as part of the financial giant's $350 million nationwide commitment to back underrepresented entrepreneurs.
The investment for an undisclosed amount brings Overlooked to a total of $11.5 million from 32 limited partners after 10 months, out of a two-year goal for $50 million. The fund's portfolio has grown to eight startups around the country, two of which are embarking on a second funding round.
"It’s a huge deal for us because most first-time fund managers don’t have the opportunity to get an institutional LP in the first fund at all," said Janine Sickmeyer, one of two general partners. "We both came into this not having any network or connections in the VC space."
The thumbs-up from Bank of America unlocks a twofold opportunity, Sickmeyer told Columbus Business First.
The first institutional investment in a VC fund can nudge others on the fence. And a handful of larger checks allows Overlooked to take on more smaller investments from family funds and others new to the VC world – maintaining the tricky balance of a $50 million target within a regulatory cap of 99 total LPs.
Sickmeyer, in Upper Arlington, and co-founder Brandon Brooks, based in South Carolina, are betting on a group of female and nonwhite entrepreneurs who are simultaneously underfunded and over-performing. The portfolio's founders so far are Black, Hispanic, Indian, Iranian, Syrian and Ashkenazi Jewish.
"Access to capital is key to participation in economic growth and wealth creation, and Overlooked Ventures is uniquely positioned to provide funding and make introductions for underrepresented fund managers and founders," Kelly D’Ambrosia, the bank's market president, said in a release.
Charlotte-based Bank of America Corp. (NYSE: BAC) last May added $150 million to a $200 million minority-focused investment and grant fund it created, part of $1.25 billion five-year equity pledge in response to the murder of George Floyd in 2020, sister publication Charlotte Business Journal reported.
Overlooked is raising publicly from SEC-accredited investors under a provision of the 2012 Jobs Act that allows the practice within guidelines, which includes the limit to 99 LPs. In most cases startups and VC funds are tight-lipped while rounds remain open.
Sickmeyer and Brooks had heard that first funds don't attract banks and other institutions, but since the fund's entire purpose is to upend conventional wisdom, they stayed ambitious.
"(Institutional investors) want to see more experience; they want to see more results from the first fund before they commit to the second," Sickmeyer said. "From Bank of America, we didn’t have any of those concerns. It’s just been a great experience with them all around."
Brooks, who is Black, appears Wednesday at the U.S. Securities and Exchange Commission virtual Small Business Forum, on a panel of emerging fund managers diversifying VC.
Both prior founders and operators of their own startups, Sickmeyer and Brooks respond to every one of the 50 to 75 pitches submitted weekly, even when it's a no. They explain why it's not a fit, suggest other minority-focused funds and send lists of accelerators, grant funds and other non-dilutive sources of capital.
"I remember sending (a pitch) out into a black hole and never getting a reply from anyone," Sickmeyer said. "We didn’t want it to be that kind of experience.
"We reply to every single person – and that does take time, but we want to be helpful and we want to help as many founders as we can, even if we don’t fund them."
Sickmeyer and Brooks also maintain robust social media presences, sharing the fund's metrics, entrepreneurial tips and even their struggles balancing home life – Sickmeyer has four children under age 6 – and facing bigotry.
"We try to be transparent about everything, and share everything along the way so we encourage more diverse and non-wealthy people to get involved," Sickmeyer said. "That’s the only way we’re going to make change."
