SoftBank, the Japanese investment bank, has announced it will be creating a $100 million fund specifically to invest in companies led by people of colour (POC), Axios reports.
The bank’s chief operating officer (COO) Marcelo Claure sent a letter to SoftBank’s employees on Wednesday announcing the $100 million fund which “will only invest in companies led by founders and entrepreneurs of colour”.
Called the Opportunity Growth Fund, it marks one of the first funds to be created with significant capital behind it to tackle race inequality. It follows the killing of African American George Floyd on 25 May by US police officer Derek Chauvin, who has been charged with second-degree murder.
Protesters in the US have also cited the killings of Breonna Taylor and Ahmaud Arbery. Taylor was shot dead by police on 13 March in a stop and search house raid, whilst Arbery was shot dead on 23 February whilst jogging after being pursued by a white man and his son who said they suspected Arbery of being a burglar.
“The Opportunity Growth Fund will be the biggest fund providing capital to black Americans and people of colour,” SoftBank’s Claure said in the letter to employees.
“Founders and entrepreneurs of colour have so much potential, but they face unfair barriers that white founders don’t face. This is our opportunity [to] remove those barriers for a new generation of founders,” Claure wrote.
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Tthe bank is also creating an internal diversity and inclusion programme
Task Rabbit CEO Stacy Brown-Philpot and TechSquare Labs co-founder Paul Judge are set to serve as “founding members” and “fund advisors”, but will not be directly involved in company selection.
The fund will invest in “companies that use technology to disrupt traditional business models,” and will donate a – as of yet unspecified – portion of the fund’s investment gains to organisations focused on “creating opportunities for people of colour”.
The bank says it “will not take a traditional management fee” on the fund, and it will donate half of the earnings from all investments to future programmes with similar aims. The fund is yet to identify any companies or capital per company.
SoftBank’s managing partner Shu Nyatta, who works on the company’s $1 billion Innovation Fund, will oversee all the investments.
Alongside the fund, the bank is also creating an internal diversity and inclusion programme. The company said it needs to “do better at hiring underrepresented groups for open roles at SoftBank and our portfolio companies — especially for leadership and board seats”.
Yesterday, US venture capital firm Andreessen Horowitz announced its ‘Talent x Opportunity Fund’ which has been kickstarted with $2.2 million from the firms owners. The fund, which has been in the workings for the last six months, is designed for those who “lack the typical background and resources” to become successful entrepreneurs. It will be based on donations, and the owners say they will match $5 million of any further contributions.
Earlier this week, Bank of America pledged $1 billion in a four-year programme to “address economic and racial inequality” by funding virus testing and minority-owned small businesses, as well as making investments in affordable housing.
Other US banks have condemned the racism in America, but no others have pledged money to the cause for change.
Read more: What kind of workplace ally are you?
Source: https://www.fintechfutures.com/2020/06/softbank-unveils-100m-fund-for-founders-of-colour/
