Last year, venture capitalists poured a record $4.2 billion into U.S.-based companies founded by Black entrepreneurs. That was nearly four times the amount invested in 2020.
Despite the considerable increase in VC funding, investment in Black-owned businesses remains miniscule (1.3%) compared to the total venture capital funding in the United States.
Many organizations, including America’s life insurers, have vowed to drive solutions to address systemic inequality such as this. Through its Economic Empowerment and Racial Equity Initiative, the American Council of Life Insurers and its member companies are taking concrete steps to help more Black Americans enhance their family’s prosperity and financial security across generations.
An example is the MM Catalyst Fund (MMCF) started in 2020 by MassMutual. MMCF is a $50 million commitment to invest in Black-led businesses in Massachusetts and in businesses based outside Boston that often are overlooked. MMCF is concentrating on investments that seek to both deliver meaningful societal impacts while also generating solid financial returns.
In its first year, MMCF invested $7.25 million in 10 incredible companies, including five with Black founders.
One of those companies was MeetCaregivers, an AI-driven platform and online marketplace to match providers and families and improve continuity of care, founded by Florence Furaha. Prior to MMCF, Florence, through her own sweat equity was able to build her company from the ground up to $1.5 million in annual revenue over the course of a couple of years.
By that impressive trajectory alone venture capitalists should have been knocking on her door. Florence got a lot of meetings but no investments. In other words, she was unnetworked and when you are not networked, your lived experience is not readily understood. It is unlikely that many venture capitalists could effectively evaluate Florence’s deep experience in home health care. At MMCF we make it a point to look at an entrepreneur’s experience and how that experience informs the business and its potential.
In addition to crucial funding, venture capitalists provide a valuable source of guidance, expertise and consultation to young firms. MassMutual professionals provide the leaders at these companies with mentorship, networking and other intellectual capital to help them succeed.
This year we plan to make about 12 new investments. Our MMCF team is excited to build on the foundational work and success of the past year. We hope other VCs and funding institutions across the country join us by investing in diverse and overlooked companies to create financial and social returns.
Through these strategic investments, we can help more entrepreneurs from underserved communities access opportunities that will allow them to better protect the financial future of their families.
Liz Roberts is Head of Impact Investing at MassMutual.
