New Denver venture fund to invest in minority-led startups
Author: Carol Zichi
Posted Date: July 14, 2022
A new $50 million venture fund that launched in Denver on Thursday will focus its investments on early-stage businesses owned by people of color in Colorado.
The New Community Transformation Fund seeks to provide access to capital for entrepreneurs who have underinvestment because of a racial gap in venture funding. Black and Latino founders raised only 3.5% of venture funding in 2021, according to Crunchbase data.
"There's not another financial system where the equity inequalities are still that deep," said Danielle Shoots, the managing partner of the new fund. "We have to start including people who have been historically excluded from these wealth-building tools because these tools grow full economies, and everybody wins. We're going to be able to show that here."
The fund was launched with grants from The Colorado Health Foundation, The Colorado Trust and Bank of America. It's an affiliate of the first New Community Transformation Fund, which was formed in Grand Rapids, Michigan, at the start of 2020.
Kwame Anku, a board member for the Grand Rapids fund and the chairman of the Black Star Fund, approached Shoots last year with the idea of launching a Denver-based affiliate. Shoots was working as the chief financial officer of The Colorado Trust at the time and felt driven to do it, she said.
"We need these funds across the country," Shoots said. "You don't see funds like this unless you're on the East Coast or West Coast, and they're an economic development engine."
The fund will look to invest in scalable, high-growth, early- to mid-stage companies that are committed to building diverse workforces, Shoots said. It will consider companies across several industries, including advanced manufacturing, food processing, agribusiness, health and beauty, tourism, aerospace, biosciences and information technology.
The fund will work only with founders who are based in Colorado or are willing to relocate their businesses to the state.
The goal of the fund will be to provide suitable, risk-adjusted returns to its investors, and Shoots is optimistic, despite the recent economic downturn. Companies founded by people of color tend to be undervalued, she said.
"We can create even bigger returns because you're talking about companies that are undercapitalized," Shoots said. "We're getting in early and getting good deals."
Along with the new fund, the accelerator program Access Mode plans to launch in Denver. Access Mode, which is currently based in Austin and Houston, plans to support the businesses chosen for the New Community Transformation Fund.
Nikki Wentling- Reporter