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The Equity Alliance closes an oversubscribed $28m Fund I

By Edlyn Cardoza

February 08, 2022

  • Asset Management
  • Bank of America
  • Equity Alliance

The Equity Alliance, New York City, USA, Fund I, Venture Capital, Asset Management, R&R Venture Partners, Bank of AmericaThe Equity Alliance, a New York City-based investment fund run by CEO Claude Grunitzky, recently announced the close of Fund I, an oversubscribed $28 million fund focused on diverse, emerging VC firms and early-stage ventures. Original investors Dick Parsons, Ronald S. Lauder, Eric Zinterhofer, Scott Kapnick, Michael Novogratz, and Lerer Hippeau are joined by a group of limited partners including Schusterman Family Investments, Bank of America, Ford Foundation, LionTree, Women Moving Millions co-founder Jacki Zehner, and Celo co-founder Rene Reinsberg.

The Equity Alliance was born out of a desire to help democratize venture capital across America and build wealth among diverse fund managers and founders. While asset management is an $82 trillion industry, only 1.4% of those assets are managed by diverse-owned firms, according to a 2021 study by Bella Private Markets and the Knight Foundation.

During the racial reckoning that followed George Floyd’s murder in May 2020, many institutional investors responded to protests with pledges to increase funding for communities of colour, but many promises remain unfulfilled. Dick Parsons and Kenneth Lerer surveyed the funding landscape in that moment of national reflection. They devised the Equity Alliance, which invests along with the thesis that talent is equally distributed, but access to opportunity is not. They brought the Equity Alliance to life with a handful of mission-aligned partners to help create a differentiated approach to building wealth for underrepresented investors and underserved communities.

“Access to capital is key to participation in economic growth and wealth creation,” said Dick Parsons, Chairman of the Equity Alliance. “Our purpose here is to create a model that others can follow which ensures that people of color and women have a fair shot at gaining that access and, with it, the opportunity to help build America. We are focused on an important part of the financial ecosystem that we think is an enabler and starting point for a broader and more equitable system.”

Parsons is also the co-founder of R&R Venture Partners, the former Chairman of the Board of Trustees of the Rockefeller Foundation, the former Chairman of Citigroup, and the former Chairman and CEO of Time Warner.

“The Equity Alliance is uniquely positioned to provide funding and make introductions for underrepresented fund managers and founders,” said Kenneth Lerer, Managing Partner of Lerer Hippeau, New York’s most active early-stage VC. “Dick Parsons and CEO Claude Grunitzky are the right team to lead this important work, and we are glad to support their efforts.”

Other early backers of the Equity Alliance include Scott Kapnick, CEO of HPS Investment Partners, a leading global investment firm that seeks to provide creative capital solutions and generate attractive risk-adjusted returns for its clients.

“We are thrilled to partner with Dick Parsons and Claude Grunitzky to provide operating capital and business counsel to this important mission,” said Scott Kapnick, CEO of HPS Investment Partners. “Under their leadership, the Equity Alliance will be yet another example of doing well while doing good, building a broad ecosystem of excellent and diverse investment talent to democratize access to capital and deliver attractive risk-adjusted returns to its investors.”

Bank of America, which in 2021 increased its initiative to advance racial equity and economic opportunity to $1.25 billion, committed to the Equity Alliance as the fund’s first strategic partner. Omar Eissa, Managing Director at Bank of America, sees this funding as a catalyst for similar efforts benefiting communities of colour in the venture capital space.

“Our commitment to the Equity Alliance is squarely aligned with our mission to address the persistent gap in access to capital,” said Omar Eissa, Managing Director at Bank of America. “The leadership team, along with the broader strategic network they have assembled, is uniquely positioned to provide underrepresented entrepreneurs with the support to build innovative companies, while driving value creation and meaningful impact within our communities.”

The Equity Alliance, which made 12 investments in 2021, believes it will deliver outsized returns to investors by providing access to capital, networks, and mentorship to founders and investors who have been traditionally overlooked. The fund seeks competitive market returns by investing in outstanding emerging managers through rigorous diligence and selection processes.

The VC firms the Equity Alliance has invested in are Concrete Rose Capital, Cleo Capital, Fearless Fund, Collab Capital, Moxxie Ventures, Serena Ventures, Inspired Capital, Visible Hands VC, Hometeam Ventures, Divergent Capital, and Volt Capital. The Equity Alliance made its first direct investment in Esusu, a fast-growing FinTech start-up, a portfolio company of Concrete Rose Capital and Serena Ventures.

A 2020 Cambridge Associates report demonstrated that new and developing fund managers consistently rank as some of the best performers in venture capital, lending further credibility to the Equity Alliance thesis about investing exclusively in the first time and emerging fund managers led by people of colour and women. The Equity Alliance also co-invests in select early-stage ventures alongside the VC firms it backs. The founders of the Equity Alliance have spoken of a bigger vision around building out a much larger platform with future funds on the back of this solid foundation laid down by Fund I.

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