Last month, Living Cities, in partnership with the Kauffman Foundation, launched the Catalyst Fund III, an $100 million fund to address capital fund management and underinvestment in entrepreneurs of color.
The fund seeks to increase investment in BIPOC communities by:
- Providing emerging fund managers of color access to seed capital and technical support.
- Reducing the time it typically takes for fund managers of color to raise initial capital.
- Enabling the emerging fund managers of color to establish a track record, gain credibility, and be positioned for future rounds of funding.
“Our approach applies proven strategies working with capital managers focused on BIPOC (Black, Indigenous, and people of color) needs, and we have the investing know-how and operation support to effectively deploy capital to generate strong returns for investors while achieving substantial impact with BIPOC communities,” says Demetric Duckett, managing director at Living Cities.
The research underscores that the need for this fund is quite clear. For example, while at least 77% of venture capital is invested in white men, only 1% of venture-backed founders are Black. However, data has shown that, for most asset classes, firms managed by people of color exhibit returns that are not significantly different than those of white-managed firms.
For our economy to reach its full potential, we must address the racial wealth gap with equitable, innovative solutions to capital access. “Entrepreneurship is fundamentally different for those who have access to capital,” says Philip Gaskin, vice president of entrepreneurship at the Kauffman Foundation “To increase capital access for Black and brown entrepreneurs, we need to ensure that capital decision-makers are knowledgeable about the history and root causes of the country’s racial wealth gaps. We must explore new ways of investing in fund managers of color.”
Gaskin recently spoke about the future of capital access during a fireside chat a KINETIC-CON, an annual conference sponsored by the Kauffman Foundation that aims to help entrepreneurs and funders create a more efficient entrepreneurial ecosystem that benefits entrepreneurs of color.
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation based in Kansas City, Missouri, that seeks to build inclusive prosperity through a prepared workforce and entrepreneur-focused economic development. The foundation uses its $3 billion in assets to change conditions, address root causes and break down systemic barriers.