Black Founders Matter I Fund Closes $3M Committed Capital, Establishes Black as an Investment Vertical
PORTLAND, Ore.–(BUSINESS WIRE)–Black Founders Matter, a fund that identifies Black-led businesses as an investment vertical, announced today that it has reached $3 million in committed capital for a planned $10 million fund I dollars.
Separately, Black Founders Matter (BFM) announced an exceptional initial tranche of 10 seed portfolio investments from Fund I: participation in seed funding rounds for New York-headquartered Hued, which closed in August a start-up round of $1.6 million; participation in the starting rounds for the female-led Glow Up Games of New York-based BIPOC and Los Angeles-based Allyson Felix Saysh in the second half of 2021.
BFM, originally formed by former startup founder Marceau Michel, is on a mission to disrupt the historical pattern-recognition bias in the venture capital world. This bias has led to the exclusion of underrepresented companies, especially companies founded by black people, and the overwhelming majority of the most successful startup leaders for decades have therefore been white men.
“Black is the new vertical,” said Michel, founder of BFM. “Our fund focuses on creating accessible venture capital for black entrepreneurs and diverse innovative problem solvers. Similarly, we also want to be a resource for other emerging funds, giving them access to top-tier deal flow. Accessible venture capital represents the new wave of venture capital practices. »
Closing the Historic Funding Gap for Black Entrepreneurs
Michel and Managing Director Himalaya Rao-Potlapally launched the fund in 2020 and began to gain traction with individual and institutional investors.
The BIPOC and queer duo, raise funds for BFM in the spirit of a local community campaign. They leverage their combined relationships within the Black, Indigenous, and People of Color (BIPOC) community to share exclusive opportunities with LPs aligned with BFM’s financial justice, diversity, and inclusion mission.
Black founders find it extremely difficult to raise capital. A record $147 billion in venture capital funding flowed into U.S. startups in the first six months of 2021, Crunchbase News reported in July. Only 1.2% of that amount went to black founders. Black people made up 13.4% of the US population in 2020, according to the US Census Bureau. Black female founders had secured just 0.34% of all venture capital investments in 2021 through July 16, Crunchbase News reported. But the venture capital dollars paid to those founders so far, $494 million, had already topped the $484 million total in 2020.
“BFM looks for innovation outliers in their respective spaces and industries,” said chief executive Himalaya Rao-Potlapally. “We are taking an intentionally new approach to generating venture capital and financial returns. By shifting the focus away from pairing archaic models, we are able to prioritize innovation and focus on the differences that make our businesses successful. Black Founders Matter presents new investment strategies that can be both financially lucrative and holistically inclusive of diverse indispensable perspectives.
BFM investment thesis and initial portfolio investments
BFM’s investment thesis is independent of the industry. The company is prioritizing early stage start-ups, at the stage of the biggest funding gap, with checks north of $100,000. They often syndicate with their network funds and participate in the first round of institutional investment funding for a startup. BFM has earmarked half of its first fund to participate in follow-on investments. A central tenet of BFM’s strategy is to ensure that all of its investments have a path to subsequent funding and liquidation. Black Founders Matter partners with leading industry-specific Series A-C companies to create a clear funding and network trajectory for its portfolio companies. In doing so, BFM ensures its businesses have the resources to scale and be acquired.
The company’s mission-driven approach has already yielded big gains.
BFM co-invested with sports legend Serena Williams in New York-headquartered Hued, which closed a $1.6 million seed round in August. The startup, founded by CEO Kimberly Wilson, has developed a digital health platform that connects members of Black, Indigenous, and Latinx communities with healthcare professionals who understand patients from those respective cultures.
BFM also participated in a funding round with entertainment mogul Issa Rae at New York-based Glow Up Games in the second half of 2021. Co-founded by CEO Mitu Khandaker and Chief Experience Officer Latoya Peterson, Glow Up Games develops and publishes mobile video games. Their first release is a companion game to the hit HBO series, Insecure.
The fund invested in Saish, a hugely popular Los Angeles-based startup, in the second half of 2021. The shoe company is the brainchild of founder and chairman – and one of America’s most decorated Olympians, with seven gold, three silver and one bronze – Allyson Felix.
Felix left his former sponsor, Nike, in 2019 after the shoe company “wanted to pay [her] 70 percent less than [her prior contract, after the track star gave birth to a daughter in 2018]she wrote in a New York Times op-ed. Due to public pressure and a congressional investigation, Nike eventually developed a new policy offering protections to its sponsored athletes who become mothers.
“Saysh aligned with us so well that we were able to trade one of the largest allocations of the cycle, in addition to creating direct access for our investors through an LP-led SPV,” Rao-Potlapally said.
BFM also made its first investment in the summer of 2020 in Portland-based media company A Kids CO About (formerly A Kids Book About). The company continued to rise in a subsequent cycle to 5x its starting valuation, demonstrating BFM’s investment thesis of investing early and making lucrative gains. The company has been on Oprah’s favorite things list and has co-authored books with LeVar Burton and Evelyn Yang.
About Black Founders Matter
Based in Portland, Oregon, Black Founders Matter is an investment firm that funds early-stage US companies. Industry-agnostic, BFM focuses on innovative, black-led deal flow from a range of sources, including startup accelerators, competitions, fund networks, open-source apps and the universities. BFM operates on a syndication model, partnering to capitalize deals in seed and Series A funding rounds. As a fully BIPOC and queer management group, the team uses its unique lived experience and community connections to revolutionize who the decision makers are in an essentially homogeneous risk industry. Marceau Michel and Himalaya Rao-Potlapally launched the fund in 2020. To learn more, please visit https://www.Blackfoundersmatter.org/.