A group of graduate students at Goizueta Business School in Georgia started to look at the challenge of getting Black and other underrepresented founders access to capital. They thought raising a generation of investors who would pay more attention to these groups was one way to do that.
The goal of the fund is to teach students about venture capital while investing in real companies with minorities. As the idea came to life in the classroom, the fund just finished its first group of investments.
The inaugural class worked with the student managing partners to learn about being a venture capitalist.
The fund is functioning. A group of students are doing due diligence on our investments. We are just keeping this ball going and growing.
Three companies received funding from this year's group. CommunityX, an app for organizing around particular causes, was the first investment from the fund.
Ecotone Renewables, a startup producing liquid plant fertilization from food waste, received an additional $15,000 from the firm.
The three startup meet the fund's criteria of having a diverse founding team with a good idea.
Bonnie E. Schipper, a student in the program, observed a path for underrepresented founders that the fund was attempting to address.
To ensure we were putting forth the best investment opportunities rather than falling prey to historical practices that give unfair advantages to more privileged populations, our team made it a priority to look past a lack of funding history or fancy top-tier degree.
Ardalan Javadi said he was drawn to this program because he wants to work in venture capital. He said that his team focused on the business and financial services and went through all the due diligence on the minority startup founders.
One startup was recommended to the investment committee by us. This is unique to the fund. You can learn all aspects of the venture fund that focuses on minority founders and make a real impact by investing in it.
While the students are running the fund, it's up to the professors in charge of the classroom to prepare them and help them understand what goes into investing in companies
There is a focus on understanding the nature of investing in historically underrepresented groups, as well as addressing the challenges they face in raising money, according to Professor Robert Kazanjian, who is teaching the classroom component this semester.
He said that people from the fund's target groups don't have access to capital from family and friends due to decades of economic structural inequality.
The under funding has proved persistent despite the fact that many VC firms are working diligently to address these imbalances.
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He said that he taught a deep understanding of the full range of activities required by VC professionals, such as due diligence, legal considerations, and direct data collection from the ventures.
Four students launched the project and graduated before the first class arrived. According to Willie Sullivan, one of the original students, they wanted to solve the problem of investing in Black owned businesses.
One of the main things that came up when we conducted interviews was the issue of access to capital for black entrepreneurs. We were going to come up with our recommendations. Sullivan said at the time, "How can we as a university address this issue?"
The school gave $1 million to the fund. When the founding group graduated, a group of first year students took over. Willie and the second year came up with the idea. They put together the skeleton, all the documents, all the paperwork, the investment vehicles, while working with the dean to get that million dollar funding.
The program is designed to keep going each year by preparing a group of incoming managing partners who will take over when the prior group graduates.
The course and associated fund aim to raise awareness and solve a real access problem that exists for underrepresented founders while creating a new generation of investors who are being trained to look at people with good ideas.
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