Venture funds have historically been counted on many types of limited partners – or LPs – for their own investment capital. One of these groups is institutional investors – think pension funds, university endowments, hospital systems and the like. There is another corporation. A third bucket centers on rich individuals and often their Family office.
It is a fairly small universe, in other words, but two new initiatives, both announced this week and both being very different, are looking to change the equation – and may launch similar efforts soon.
Arlan Hamilton was the first to bring his news. Is the founder of hamilton Backstage capitalA venture firm that focuses on investing in startups founded by color, women, and members of the LGBTQ community. In short, diversity is at the very core of backstage. But Hamilton, who is black himself, is not interested in financing diverse founders alone; He is also interested in enabling more people from diverse backgrounds with a social background – to invest in venture capital as an asset class.
Later that week, on the private investment platform Republic, it opened a new fund, in which anyone – including unaccounted investors – could return under the Securities and Exchange Commission rule, called Reg CF, or Regulation Crowdfunding.
Hamilton hit the upper limit of Reg CF, which allows an organization to raise $ 1,070,000 over a 12-month period – what seemed like hours from 2,790 investors who were invited to invest as little as $ 100 had gone. But more can come. Reason why: that rule Change in november Under former SEC Chair Jay Clatten, and will start allowing organizations to raise crowds of up to $ 5 million next month.
This process can be slowed by incoming SEC heads. President Biden has appointed Gary Gensler, a former regulator and former partner of Goldman, who should now receive Senate confirmation. There is also a new administration Is reviewing Several measures lasted late in the Trump administration. If all this system goes, however, it is easier to invite more inane investors to another fund, and a larger, venture fund soon.
Knock of opportunity
A second initiative this week, Hamilton has similar objectives – putting more diverse investors in the ranks of LPs – although it has a different approach and is targeting only accredited investors, which basically means those individuals who per Year earning $ 200,000 and / or a net. Priced at $ 1 million or more.
Launched by Attracted capital – operated by a Palo Alto- and San Francisco-based early-stage veteran VC Theresia Gaua – firm Found out yesterday It is currently raising a traditional development-stage fund with a twist. In addition to giving its current LP a crack to invest in a new fund, it is also opening up the vehicle to more women, people of color, and undervalued individuals, who must first invest in a later stage The vehicle would not have got a chance.
Prominent here is Acrew’s emphasis on growth-stage investment. While more women and people of color are falling into the category of seed-stage investment, it takes longer to make money with early stage funding. Meanwhile, growth-stage funds are more exclusive because the companies they return are generally closer to “exit”. This attracts them greatly to institutions – including mutual funds and hedge funds – and leaves little, if any, room for the type of person who is now expected to bring the crew under the fold.
Like backstage, the variety is in Acrew’s DNA, which Gove teamed up with partners Lauren Kolodny, Vishal Lugani, Asad Khaliq and Mark Krenac. Back fund, Aspect Ventures.
It is a little surprising that this firm – which says that 88% of its total team is female and 63% comes from the undergraded background – has made the world’s more diverse angel investors, board members and C-levels publicly. First, focus on stretching. Late stage deals.
Like backstage, which gets new capital to invest through its new effort, AQWay’s new effort – which focuses largely on fintech and cyber security, and has a stake in Very valuable The Challenger Bank Chaim, among many others – is both inclusive and strategic.
As Kolodny puts it, a growing number of startups are focused on increasing diversity in board rooms, and have a diverse LP base of individuals who can tie it to interesting board roles, working well for everyone involved Which is likely from Aqua. Companies own their new LP
In fact, it is an approach that the crew’s mates hope will not tear the firm apart in the long run, Kolodny says. “Our expectation is that five years from now, an independent firm that is helping to connect various independent board members and diverse executives will not be a unique strategy.”
Hope is “he says” [this effort] People get to adopt a new standard around what is expected from venture companies. “
Picture above: Members of Acker Capital which are part of its first development fund, which it has dubbed as its Diversity Capital Fund.