Forge North, an initiative of Greater MSP that's focused on boosting the state's startups, announced Wednesday the establishment of the MSP Equity Fund.
The $50 million venture-capital fund of funds will invest in at least 10 venture capital firms around the country. Those firms will then commit to invest all of that back into Minnesota-based startups with minority and women founders.
The effort is being led by St. Paul-based Greater MSP and Madison, Wis.-based gener8tor. It's launching with a $10 million investment from Golden Valley-based Allianz Life Insurance Co. of North America and seven-figure investments from Minneapolis-based Allina Health System and Minneapolis-based Xcel Energy Services Inc.
During a press conference Wednesday morning, Al Cornish, general partner of the MSP Equity Fund, said venture capital funding is at an all time high, but it's clear the equity isn't being evenly distributed.
Only 1.2% of U.S. venture funding went to Black entrepreneurs, according to data from Pitchbook.
"This will generate investment and interest in Minnesota, while increasing the investable capital available to Minnesota based startups," Cornish said. "This fund is a game changer for the entire Minnesota ecosystem, but specifically for Black, brown and women led startups in Minnesota."
No specific venture capital firms have been identified yet, but Cornish said the organization is in discussion with local and national firms. "What we're looking for is funds that have a very strong cultural fit with the goals and mission of the MSP Equity Fund, and also strong leadership and a strong track record of returns, and really investing in Black, brown and women led startups," Cornish said.
More institutions are expected to join as investors prior to the fund closing later in the year.
The MSP Equity Fund comes a couple weeks after Tundra Ventures launched its $10 million fund that committed to investing in early-stage, underrepresented founders from diverse backgrounds.
And just this week, a group of nonprofits serving minority businesses in the Twin Cities launched a fund that aims to increase access to capital for underbanked businesses affected by the Covid-19 pandemic or civil unrest and riots.
