A New Wave of Diverse Fund Managers Emerge with the Equity Alliance
The Equity Alliance is a $28M fund-of-funds launched in 2021 by legendary business executive Dick Parsons and serial entrepreneur Claude Grunitzky, among other founding partners, including billionaire Ronald Lauder, with the mission of investing in diverse venture capital fund managers.
To date, Equity Alliance has deployed over $15.4M into 22 funds, representing 49 fund managers, including Serena Ventures, Concrete Rose, Collide Capital, Noemis Ventures, Visible Hands VC, and Debut Capital.
Feedback from its portfolio funds speaks volumes of the impact Equity Alliance is already making:
The Equity Alliance has not only been a mission-aligned partner to The Venture Collective, but a thoughtful aggregator of incredible people who we look forward to collaborating with as we drive more diversity, equity, and inclusion across the tech ecosystem. It takes a village to change the status quo and truly move the needle, and we feel privileged to be part of the community they’ve built so far and the doors that they continue to open for underrepresented emerging funders and founders alike. —Cat Hernandez, The Venture Collective
Investors can no longer afford to just “show up” in founder ecosystems and expect to build genuine connections with entrepreneurs. The next generation of great investors will be strongly rooted in the communities they source deals from, and organizations like Equity Alliance represent that philosophy.” —Aaron Samuels, Founder & Managing Partner, Collide Capital
BLACK ENTERPRISE sat down with Parsons and Grunitzky at the inaugural Equity Alliance Summit hosted in upstate New York to learn more about the vision and mission behind the fund.
What inspired you to start the Equity Alliance?
Parsons: We recognize that the key ingredient to creating sustainable economic growth and prosperity is capital. Without it, we can neither invest in our communities nor in our own prosperity. And the “on-ramp” to accessing the capital needed to grow businesses and individual wealth is found in the venture capital sector. These are the investors who take the risk on new ventures launched by not yet established founders. Historically, minorities and women have been shut out of this space, so we wanted to set up a fund focused on just this population to help democratize access to startup funding.
Can you describe the journey to raising the $28M fund? What were some obstacles you encountered?
Grunitzky: Dick, a couple of early advisors, and myself, we all felt that we should reach out to a group of founding investors in Dick’s network, and these investors, all big-name entrepreneurs and business leaders, they each wrote a million-dollar check. The first $5 million got us started and allowed us to start investing.
Then, I reached out to a lot of high-net-worth individuals and family offices we knew. The obstacles had to do with the answers I got back from institutional investors who were looking for a track record. I kept wondering how anyone could get a foot in the door if the track record was the first thing institutional investors used as a filter. I really didn’t expect that so many institutions would be so suspicious of first-time funds. Luckily, we were able to convince a couple of foundations, including the Ford Foundation in New York and the Bonfils-Stanton Foundation in Denver, to write seven-figure checks.
I tend to look at everything as a learning experience. The rejection from various institutional investors—that was OK. I’m the kind of person who likes to go back. The harder the mission, the more I like it because I always make it a point to not get discouraged. Those same people who rejected the very idea of the Equity Alliance, I have them on my target list for Fund II, which we will start raising in January 2023. The only difference is, this time, I will be able to tell them what we were able to achieve with Fund I, which is create solid returns after just one year.
What do you look for in fund managers? What’s your thesis?
Grunitzky: Having been a first-generation founder starting when I was 23 years old, I know what it feels like to be a Black man looking for funding at some of America’s most storied financial institutions. I know how hard it is to be undercapitalized. But I was eventually able to secure funding from investors like Goldman Sachs, which funded my previous media company, TRACE, and Google, which funded my last media company, TRUE Africa.
I took those learnings and applied them to a new lens and methodology that I lean on as an investor. I look for fund managers who are resilient, nimble, and imaginative – folks who understand how specific industries are being disrupted by technology, how underserved communities are changing, and how American mindsets are shifting, mostly due to demographic changes and societal evolutions.
Right now, we are seeing a lot of promise in the approaches chosen by some African American fund managers we’ve backed. Black women, for instance, get only 0.01% of the capital that goes into venture capital each year. So it’s very important for us to be investing in the most talented Black women who understand where America is going. And because of our hybrid model, which allows us to invest in some of the most promising and mission-aligned companies of the VC funds we’ve backed, we are also able to make direct investments into some great startups.
We have backed financial technology startups like Esusu, which became a unicorn six months after we invested in their Series A, and Altro, which helps millennials build credit through the recurring payments and subscriptions they use every day. Both startups are growing fast, and I love that they were founded by Black founders in their 20s.
What’s been the most surprising aspect of the journey?
Parsons: The depth and strength of the management talent waiting to take advantage of newly available capital investment. The number of highly qualified minority and women venture fund managers, as well as the investment opportunities in underserved communities, is far greater than I imagined.
Why was it important to host your first annual Equity Alliance Summit for your fund managers in the format that you did – in upstate New York, in a more relaxed setting?
Grunitzky: Most of the investments we made were based on decisions we came to after a series of Zoom conversations. Throughout the due diligence process, we got to know the people we backed, but it was all electronic communications, and we felt that we needed to get some real face time because we are all going to be in business with each other for a long time. So, for the inaugural edition of the Equity Alliance Summit, we invited all our investors, fund managers, founders, and allies to a retreat in the Hudson Valley. And the result was an incredibly dynamic bonding experience—in a safe, protected space where we could all share thoughts, feelings, dreams, [and] anxieties even, in a peaceful setting.
The post-summit feedback we received was tremendous:
“It was so encouraging to experience the full power and passion of the Equity Alliance community. I left with such renewed energy and excitement about our ability to create material change and improvement in the venture community.” —Jason Robart, Seae Ventures
“The community the Equity Alliance is building is really special. The simple truth is that diverse fund managers and founders that have a unique perspective, network, and community drive differentiated returns—both on the social and financial side of things.” —Dustin Shay, Director, Impact Labs
“The Equity Alliance has assembled an exceptional group of diverse fund managers. It was so meaningful to spend time with these folks and discuss their visions for a more inclusive future.” —Emily Libresco, Lerer Hippeau, a Limited Partner in the Equity Alliance
What’s next for Equity Alliance, and how can the BE community support it?
We would love for Black Enterprise readers to follow our journey, spread the word about what we are building, and consider investing in our next fund, launching in the first quarter of 2023!