Black Founders Matter Extends Efforts Toward Long-Term Stability, Aiming for a Second Investment Fund
Black Founders Matter Fund Announces Strategy for Second Fund
The Black Founders Matter Fund, an early-stage venture capital firm that invests in Black and underrepresented founders, has announced its strategy for its second fund. The focus will be on sustainable profitability and longer-term growth, aiming to expand support beyond initial investments to help facilitate enduring business success and community impact.
Key strategic elements include:
- Empowering Black Entrepreneurs: The fund will double down on the thesis that Black founders can thrive with fewer resources, as evidenced by all portfolio companies from Fund I being profitable. This validates the fund's belief in the potential of Black entrepreneurs to build sustainable businesses.
- Community-focused Investments: The fund aims to support founders in the broader community and over a longer time horizon, not just through upfront capital but also by helping companies accelerate sustainable growth and maintain steady revenue throughout the year. This stable revenue is crucial for hiring more employees internally and scaling business operations.
- Local Ownership and Decentralization: The fund will encourage business models that avoid centralized corporate power and promote local ownership. This includes exploring succession plans like employee or community ownership transition or mergers with smaller companies, thus creating alternative exit options that keep ownership within the Black community.
- Integrated Capital Fund Models: The fund plans to implement integrated capital fund models combining revenue-based financing loans, grants, and some equity. This mix helps founders retain ownership stakes, fostering wealth retention and the ability to pass businesses on within the community.
In addition to these strategic elements, the fund has already made significant investments. These include HUED, a Black woman-owned healthcare technology startup, and Saysh, an athletic footwear brand co-founded by Olympian Allyson Felix. The fund has also invested in A Kids Company About, a startup that publishes books teaching children about challenging topics such as autism, trauma, and racism.
The Black Founders Matter Fund was launched in 2019 and gained traction in 2020, coinciding with the resurgence of the Black Lives Matter movement. The fund raised $10 million for its first fund in 2021 and has finished deploying its investments this year.
Managing Director Himalaya Rao-Potlapally states that the fund's experience has provided critical insights for both the fund's strategy and the venture ecosystem. She emphasizes the importance of smoothing out revenue from Q1 to Q4 to allow for hiring more internally.
The fund's approach is designed to not just invest capital but build a "less extractive," sustainable ecosystem where Black-owned startups can grow profitably, retain ownership, and create lasting economic value for the founders and their communities.
[1] Source: Black Founders Matter Fund Press Release, [date]
- The Black Founders Matter Fund, having observed success with profitable startups from its first fund, intends to strengthen its investment in underrepresented founders, particularly Black founders, believing in their potential to establish long-term, profitable businesses.
- In line with its commitment to community impact, the fund aims to extend its support to a broader network of founders, ensuring not only initial investments but also assistance in fostering sustainable growth and active revenue throughout the year.
- As part of its strategy for the second fund, the Black Founders Matter Fund is exploring business models that promote local ownership and decentralization, fostering an alternative exit plan that keeps ownership within the Black community.
- To provide founders with a balanced approach to finance, the fund intends to implement integrated capital fund models, combining revenue-based financing loans, grants, and some equity, allowing founders to retain ownership stakes, thus fostering wealth retention and successful business succession within the community.
