RareBreed Ventures is trying a new way to fundraise through a new partnership with two venture capital firms to diversify the investment pool to let smaller more diverse groups invest in large funds.
RareBreed’s founder McKeever Conwell II paired up with two of his colleagues in the Kauffman Fellows program for venture capital leadership development — Caroline Lewis, managing partner of Rogue Women’s Fund; and Gale Wilkinson, founder of VITALIZE Venture Capital — to create a single larger entity known as a special purpose vehicle (SPV) and democratize access to the venture capital world. The SPV will allow lower minimum investments to the tune of $40K over four years; by comparison, typically, an investor would need to commit in the six figures. The three funds hope the lower financial barrier to entry will bring in a more diverse pool of investors.
The VC world is a homogeneous space. 58% of the people who work in the venture capital industry are white men, according to 2018 data from Equal Ventures partner Richard Kerby that Forbes cited last year. Forbes, in the same article, further broke down that figure — as not all VC jobs are created equal — and reported that white men control 93% of venture capital dollars.
“It’s really tough to change the game if you don’t also get people investing in the game that don’t look like people that are typically investing,” Lewis told Technical.ly.
The SPV not only lowers the financial commitment to bring in more limited partners but also makes the investment less risky. It disperses the money across all three funds and the 75-plus companies in their collective portfolios.
Lewis explained that Conwell and Wilkinson’s similar missions brought the three companies together on a venture that, due to the lifecycles of their funds, will link them for the next ten years. The SPV is a marriage of the three companies and a solemn vow.
RareBreed focuses on bridging the funding gap for minority founders that leave Black and Latinx women entrepreneurs with only 0.64% of all VC investment. The Rogue Women Fund invests in women-led companies, with over 50% of its investors identifying as women, while the woman-led VITALIZE prioritizes companies in B2B software.
“We trust each other, we think each other’s strategies are differentiated, we trust each other’s fiduciary responsibility in the length of time this SPV,” said Lewis.Donte Kirby is a 2020-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Robert W. Deutsch Foundation.
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