Illumen Capital – an impact fund of funds addressing systemic inequity by reducing racial and gender bias in investing – announced the raising of its $32.75 million Catalyst Fund, a vehicle designed for supporting first-time fund managers and entrepreneurs, particularly those from underrepresented backgrounds.
Even though there has been a growing presence in private markets, diverse managers often struggle to gain access to institutional capital. Often subject to familiarity bias – the tendency for investors to gravitate to familiar options over unfamiliar ones – these underrepresented fund managers are usually overlooked compared to their white counterparts, according to Illumen Capital’s research with Stanford SPARQ. And investors increasingly favor well-known names and larger funds, making it even more challenging for emerging companies and funds to secure the initial funding essential for success.
The Illumen Catalyst Fund will address this lack of capital by investing in diverse-led funds and early-stage companies, marking the first time Illumen Capital has integrated direct investments into its broader strategy. Directly addressing these inequalities is especially urgent, as biases tend to rise during high inflation, market volatility, and political divisiveness.
The Catalyst Fund included capital from Health Forward Foundation, the California Wellness Foundation, the Winthrop Rockefeller Foundation, and others.
For many investors, the Catalyst Fund is not their first investment in Illumen Capital, demonstrating their continued confidence in the firm’s mission to leverage their influence in reducing bias in venture capital and private equity decision-making.
Before the Catalyst Fund, Illumen Capital closed its nearly $170 million Fund II in 2023.
KEY QUOTES:
“Despite years of acknowledging racial inequities, the institutional investing landscape has seen little progress and, in some respects, has deteriorated since our nation’s racial reckoning in the summer of 2020. With the closing of the Catalyst Fund, Illumen Capital aims to directly confront the barriers these fund managers face. Our thesis and strategy remain strong, and the continued investment from our partners highlights the immense value that often goes unrecognized in underestimated managers and entrepreneurs.”
– Daryn Dodson, Managing Partner of Illumen Capital
“The Illumen Catalyst Fund provided a compelling opportunity to support the next generation of Black and Latino/a/x venture managers and early-stage companies. With its strong sourcing networks, expertise in backing first-time managers, and capacity to make smaller investments, Illumen Capital is an invaluable partner in our efforts to promote racial equity.”
– Christie Zarkovich, Chief Administrative, Financial and Investment Officer, Health Forward Foundation
