Best Buy Co. Inc. will invest up to $10 million with Brown Venture Group, the Twin Cities venture capital firm that exclusively funds Black, Latino and Native American-owned technology startups.
Best Buy is making the investment to "break down the systemic barriers often faced by Black, Indigenous and people of color entrepreneurs — including access to funding," the retailer said in a press release. Best Buy's starting investment (the size of which Best Buy did not immediately disclose to the Business Journal) will grow to the full $10 million as Brown Venture Group closes on committed capital from other investors, Brown Venture Group co-Founder and Managing Partner Paul Campbell said.
The investment contributes handsomely to Brown Venture Group's goal of building a $50 million inaugural fund, one of the largest venture funds in the U.S. with a diversity mandate.
"When we first started looking at raising funds, Best Buy was definitely top of mind, particularly because of their focus on technology and our focus on technology," Campbell said. "Any venture capital firm would love to have a partner like Best Buy come to the table."
Campbell and Brown Venture Group co-Founder and Managing Partner Chris Brooks added that having a local company like Best Buy partner with them reaffirmed their decision to stay in Twin Cities, and that the sizable investment would speed up their investment plans.
Brown Venture Group has reached around 75% of the committed capital it needs to reach its $50 million inaugural-fund goal, Campbell said.
"Best Buy with their investment is making a statement that they want to join us in our way of deploying capital into entrepreneurs and companies of color," Brooks said. "We are hopeful that Best Buy's bold commitment to be the first large LP [limited partner] in, will cause other potential LPs that are in the Twin Cities to think about joining them."
Brown Venture Group's mission exists in stark contrast with the state of the venture capital industry today. From 2015 to mid 2020, Black and Latino founders only received 2.4% of venture capital, according to Crunchbase data.
“We’re committed to taking meaningful action to address the challenges faced by BIPOC entrepreneurs,” Best Buy CEO Corie Barry said in the release. “Through partnerships like this, we believe we can begin to do this by helping to build a stronger, more vibrant community of diverse innovators in the tech industry, some of whom we hope will become partners of Best Buy in the future.”
For Brown Venture Group, Best Buy's investment is not only a sign of a moral shift in the business community, but also that investors are beginning to wise up about the economic cost of ignoring entrepreneurs of color.
"The amount of talent that has been ignored, the amount of innovation that has been ignored, the amount of revenue that we've lost out on as a nation and as the Twin Cities community — it's just really logical" that the investments are coming in, Brooks said. "We were relying on the logic to sink in at some point and for folks to wake up and say 'we've been missing out.'"
Best Buy's investment in Brown Venture Group is part of the company's recent commitment to spend $1.2 billion with businesses owned by people of color by 2025 — with a special focus placed on firms in tech, the company said.
In addition, Best Buy and Brown Venture Group are partnering to develop a young-entrepreneurs program at Best Buy Teen Tech Centers to provide education, mentorship, networking and funding access.
"We know that talent doesn't start when people graduate high school or go to college," Campbell said. "You can have much younger talent start out and get access to experience and experience is a huge thing."
Though Brown Venture Group is still building its inaugural fund, it's already been making some investment commitments, including its investment partnership as lead investor in a $3 million seed round for Naples Fla.-based transportation-solutions company Ecolution KWH, the Business Journal previously reported.
