Northwestern Mutual, the $32 billion life insurance and financial management company based in Milwaukee, is dedicating $20 million to investing in startup companies founded by Black entrepreneurs in Milwaukee and across the nation.
The company announced Wednesday the investments will be made through its venture capital arm, Northwestern Mutual Future Ventures. In addition to the allocated dollars, the company is also partnering with nationally ranked and Wisconsin-based startup accelerator and venture fund gener8tor to launch an accelerator designed specifically for Black entrepreneurs.
"At Northwestern Mutual we're dedicated to supporting and promoting diversity, not just within our company, but within our communities and the businesses we partner with nationwide," said John Grogan, chief product and innovation officer at Northwestern Mutual. "Allocating $20 million is only the beginning. We will continue to invest in and provide opportunities for Black founders and are committed to providing access to capital and resources to help them grow their business."
Future Ventures will invest in Black-owned startups focused on financial services technology, digital health, data analytics and user experience.
When it comes to venture capital, Black founders receive less than 1% of those dollars in the U.S. For perspective, in 2019, the venture investors deployed $136.5 billion into U.S.-based companies, according to PitchBook, a Seattle-based firm that tracks investment deals.
According to Business Journals research, small businesses in majority-Black neighborhoods throughout the U.S. are disadvantaged on several levels. In aggregate, some $66.4 billion dollars in small business loans, defined as $100,000 or less, were originated in majority-white Census tracts in 2018. In majority-Black tracts, that number was $3.6 billion. Per capita, that broke down to $304.59 for every resident in majority-white neighborhoods versus $157.89 in majority-Black areas.
"Innovative thinking is required to drive breakthrough solutions to close the racial equity gap, and by supporting Black founders through Northwestern Mutual Future Ventures and the new accelerator program in partnership with gener8tor, we can make a difference to close this funding gap," said Abim Kolawole, vice president of digital innovation at Northwestern Mutual.
The Northwestern Mutual Black Founder Accelerator will run 12 weeks and have two cohorts, with five companies in each cohort, each year. The first cohort will start in early 2021, the company stated.
Through Future Ventures, Northwestern Mutual has invested in more than a dozen companies focused on financial service technology, customer experience, digital health and data analytics. Deals from Future Ventures range from $500,000 to $5 million and will typically begin in Series A or B funding rounds.
In May 2019, Northwestern Mutual announced a similar initiative, allocating $20 million of its corporate venture capital dollars to investing in startups founded by women.
