Living Cities and Ewing Marion Kauffman Foundation Launch $100 Million Fund to Grow People of Color-Led Businesses and Close Wealth Gaps

Kauffman Foundation's $10 million commitment will anchor vehicle investing in BIPOC fund managers

NEW YORK, May 2, 2022 /PRNewswire/ -- Living Cities, in partnership with the Ewing Marion Kauffman Foundation, launched its $100 million Catalyst Fund III, an investment vehicle to confront and address underinvestment in BIPOC (Black, Indigenous, People of Color) communities.

The Kauffman Foundation committed to a $10 million anchor investment in the fund, which was announced at the annual Milken Institute Global Conference during a panel discussion on capital access. This investment follows Kauffman's $1.67 million seed grant to Living Cities to better understand the root cause of the country's racial disparities in income and wealth.

The fund will leverage a "Fund of Funds" approach to support the ecosystem for high-growth entrepreneurs and business owners of color, recognizing that business ownership is a proven pathway to closing the racial wealth gap.

"Entrepreneurship is fundamentally different for those who have access to capital," said Philip Gaskin, Vice President, Entrepreneurship, at the Kauffman Foundation. "To increase capital access for Black and brown entrepreneurs, we need to ensure that capital decision-makers are knowledgeable about the history and root causes of the country's racial wealth gaps. We must explore new ways of investing in fund managers of color."

The fund seeks to increase investment in BIPOC communities by:

• providing emerging fund managers of color access to seed capital and technical support;
• reducing the time it typically takes for fund managers of color to raise initial capital; and
• enabling the emerging fund managers of color to establish a track record, gain credibility, and be positioned for future rounds of funding.

The Kauffman Foundation's capital access research reports that 83% of entrepreneurs do not access bank loans or venture capital at the time of startup, which disproportionately impacts entrepreneurs from underrepresented communities. Living Cities' research shows that U.S. entrepreneurs in underrepresented populations face greater challenges with building wealth.

Research also suggests that although total gross receipts at firms owned by people of color are growing faster than white-owned firms, at least 77% of venture capital is invested in college-educated white men while just 1% of venture-backed founders are Black. These stark racial disparities are deepened by the relatively low percentage of people of color in capital allocation decision making positions.

"The Catalyst Fund III draws on Living Cities' more than 13 years of impact investing activity in financial intermediaries in both debt and equity capacities," said Demetric Duckett, Managing Director at Living Cities. "Our approach applies proven strategies working with capital managers focused on BIPOC needs, and we have the investing know-how and operational support to effectively deploy capital to generate strong returns for investors while achieving substantial impact with BIPOC communities."

About Living Cities
Founded in 1991, Living Cities is a collaborative of the world's largest foundations and financial institutions. Living Cities fosters transformational relationships across sectors to connect those who are willing to do the hard work of closing racial income and wealth gaps. The organization partners with cross-sector leaders in cities across the country to imagine and create an America in which all people are economically secure, building wealth and living abundant, dignified, and connected lives. To learn more about Living Cities and its member institutions, visit www.livingcities.org.

About the Ewing Marion Kauffman Foundation
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation based in Kansas City, Mo., that seeks to build inclusive prosperity through a prepared workforce and entrepreneur-focused economic development. The Foundation uses its $3 billion in assets to change conditions, address root causes, and break down systemic barriers so that all people – regardless of race, gender, or geography – have the opportunity to achieve economic stability, mobility, and prosperity. For more information, visit www.kauffman.org and connect with us at www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

Media Contacts
Jeff Raderstrong, Living Cities, [email protected], 646-442-3236
Kim Wallace Carlson, Kauffman Foundation, [email protected], 816-932-1254

SOURCE Living Cities