SoftBank $100 Million Fund to Back Firms Led by People of Color
SoftBank $100 Million Fund to Back Firms Led by People of Color
(Bloomberg) -- SoftBank Group Corp. started a $100 million fund that will exclusively invest in companies led by people of color, a group that’s historically been underrepresented in the venture capital industry.
Marcelo Claure, SoftBank’s chief operating officer, will lead the fund alongside Shu Nyatta, a managing partner who works on the company’s Innovation Fund, according to a statement from the company on Wednesday. The fund will specifically look to support founders from communities that face “systemic disadvantages in building and scaling their businesses,” it said.
The effort by Japan’s SoftBank stems from a reaction to protests sweeping the U.S. this week after George Floyd, an unarmed black man, died after a white Minneapolis police officer knelt on his neck for more than eight minutes. SoftBank and its Vision Fund have been a major backer of many Silicon Valley startups over the years. The new Opportunity Growth Fund fund will be managed by SoftBank Group International, based in San Carlos, California.
The company said it will also adopt a diversity initiative internally and highlighted its Emerge program, which offers mentoring to entrepreneurs from underrepresented groups. The fund’s existence was earlier reported by Axios.
SoftBank’s push to promote minority founders joins some other, smaller-scale efforts at promoting diversity in venture capital. In 2018, Andreessen Horowitz launched a $15 million fund designed to help African-Americans enter the technology industry, the Cultural Leadership Fund, which a spokeswoman described as “quite active.” It invests in Andreessen Horowitz portfolio companies that share the same goal, and invests the proceeds in nonprofits that advance black people in technology. The fund’s investors include prominent black cultural leaders such as athlete Kevin Durant and movie stars Will and Jada Smith.
In recent days, venture capitalists have voiced their outrage at police brutality toward black people, and many have announced donations to related nonprofits, or, in a few instances, investments in black entrepreneurs. Venture investor Lawrence Lenihan, for example, announced a $500,000 initiative offering grants for 10 “creators of color to build and launch their own fashion brand by August.” Robert Reffkin, co-founder and chief executive officer of real estate company Compass, has been raising money for the Equal Justice Initiative and the National Association for the Advancement of Colored People. Reffkin, whose company is backed by the Vision Fund, is one of the industry’s few black CEOs.
“VC-backed startups are overwhelmingly white, male and Ivy-league educated and based in Silicon Valley,” SoftBank’s Claure said in a letter to employees, noting that just 1% of VC-backed founders are black. The Opportunity Growth Fund will be the biggest fund providing capital to black Americans and other people of color, he said.
Part of the gains will be donated to “organizations focused on creating opportunities for people of color,” and 50% will be reinvested in subsequent Growth Opportunity Funds, SoftBank said.
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