Venture Capital

SoftBank Opportunity Fund Invests $50 Million in Tech Startups

Read more at www.bloomberg.com

SoftBank created the Opportunity Fund barely a week after the murder of George Floyd. The firm committed to invest $100 million in companies led by underrepresented racial minorities, establishing the largest fund of its kind. A year later, SoftBank has already allocated half the cash and anticipates creating a second fund by year-end.

It’s far too early to tell whether the investments will be successful. The money is reaching about 50 young technology companies around the U.S. and giving them a chance to prove the merits of their businesses before going on to seek more capital from SoftBank or elsewhere.

All of the investments are in startups founded by Black or Latinx entrepreneurs. The average check is for $1 million, and a half-dozen or so are already gearing up to raise their next round of funding. “Seed and A, that’s where you can make the most difference,” said Shu Nyatta, a managing partner at SoftBank Group International who leads the fund. “The wrong way to do it is to have a pile of money.”

Historically, minority entrepreneurs have rarely had access to seed capital, let alone piles of money. Of those who received venture capital from 1990 to 2016, 4.2% were Black or Hispanic, according to a Harvard Business School study.

Floyd’s death served as a catalyst for venture capitalists, as it did for racial justice protests that swept the globe. In addition to SoftBank’s fund, a new firm called Concrete Rose Capital raised $15 million to invest in underrepresented founders and companies that cater to minorities. Base10, the largest Black-led VC firm, said a year ago it would donate 1% of profits to racial equality organizations and outlined a new plan to Bloomberg Businessweek last month to bolster the endowments of historically Black colleges and universities.

Read more at www.bloomberg.com

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