Institutional Investors Beginning to Recognize Strategic Opportunity Presented by Diverse and First Fund Managers
BOSTON, MA — Boston-based impact venture capital fund Reinventure Capital (Reinventure) today announced it has secured a $5M catalytic investment plus an additional $5M matching challenge to other limited partners (LPs) from Massachusetts Mutual Life Insurance Company (MassMutual).
In institutional investing circles, a generally accepted truism is that diverse managers are difficult to find, and first funds are high risk. The combination of scarcity and risk is often cited as the primary barrier to increasing the number and size of investment funds led by female and non-white managers. That perception may be starting to change, as evidenced by today’s announcement.
Led by veteran impact investor Edward Dugger III, Reinventure is among a growing number of funds pursuing racial and gender equity strategies. The Black- and women-led firm invests exclusively in US-based companies led and controlled by BIPOC and/or womxn founders, at breakeven and poised to grow profitably.
According to Dugger, the Reinventure strategy is a direct carry forward from the strategy he successfully pioneered with Boston-based UNC Ventures in the 1990s. “Internally, we refer to this as the bad good news: now, as then, we see tremendous entrepreneurial talent and abundant investment opportunity which the mainstream venture community simply overlooks. It means that there is a devastatingly vast quantity of lost financial, economic, innovation and social value, but also that the investment case for backing companies led by people of color and women is better now than it has ever been before.”
Dugger is far from alone in this perspective. Organizations as varied as New Financial, Stanford SPARQ, Goldman Sachs, SSIR and Morgan Stanley among others have released reports finding that limited partners (LPs) would be well advised to recognize that underrepresented founders and fund managers can actually represent higher return and lower risk than their white male peers.
MassMutual’s investment in Reinventure is made through its Emerging Manager program, which supports general partners of investment funds that are led by underrepresented managers. In addition to a $5M base investment, MassMutual made a further commitment to Reinventure of up to $5M as a catalytic matching challenge to other LPs.
“MassMutual recognizes that measurable positive social and environmental impact is not at odds with market rate financial returns. On the contrary, our commitment to diversity, equity and inclusion is at the core of our investment and operational practices, because we believe that inclusion drives innovation, creativity and financial performance,” said Liz Roberts, Impact Investing Director at MassMutual. Roberts acknowledged that MassMutual chose to make one of the first investments with Reinventure because of Dugger’s legacy in the field.
For his part, Dugger credits MassMutual with being uniquely creative in structuring its investment in Reinventure as a base plus catalytic commitment. He also places the MassMutual investment in context of an unfolding shift among institutional LPs. Dugger elaborated, “It has taken over 20 years for institutional investors to catch on to the kinds of returns and impact outcomes we created with UNC Ventures in the 1990s. More recently, we’ve seen LP leadership primarily from private entities such as 4S Bay Partners, Akonadi Foundation and Stardust Equity. We are thrilled to see leading institutional LPs like MassMutual begin to shift capital to Reinventure and other diverse managers. Contrary to widespread misperception, there is more than enough high-quality investment opportunity to support many more LPs and much larger capital commitments.”
About Reinventure Capital
Reinventure Capital is advancing the Third Reconstruction by investing in a more perfect multicultural, equitable and prosperous union. Reinventure invests exclusively in US-based companies led and controlled by BIPOC and/or womxn founders, at breakeven and poised to grow profitably. Our high impact + high return strategy and investment process has been proven to deliver nonconcessionary financial returns along with intentional, measurable, and meaningful racial/social justice impact. For more information, see https://reinventurecapital.com.
About MassMutual
MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. Founded in 1851, the company has been continually guided by one consistent purpose: we help people secure their future and protect the ones they love. With a focus on delivering long-term value, MassMutual offers a wide range of protection, accumulation, wealth management and retirement products and services. For more information, visit www.massmutual.com.