Wege Foundation’s $ 1million investment in minority-focused venture capital fund could attract more nonprofit donations

GRAND RAPIDS – The Wege Foundationthe investment of $ 1 million committed to the New Community Transformation Fund comes from a shared vision to support greater economic diversity and inclusion in the West Michigan economy.

It can also act as a springboard for the new Grand Rapids-based venture capital fund to attract investment from similarly aligned foundations, as it aims for a fundraising goal of $ 25 million.


Want more news like this every day of the week? Receive the MiBiz Morning Edition newsletter for free.

The objective of the New Community Transformation Fund is consistent with the private family foundation’s policy on ethical investing and the emphasis on environmental, social and governance issues, including the promotion of “generation of wealth among entrepreneurs and business leaders of color ”at the local level, said Mark Van Putten, President and CEO of the Wege Foundation. MiBiz.

“This latest opportunity fits well with a philosophy of trying to move the mission forward through investments,” said Van Putten. “It’s not just about providing grants in West Michigan that advance diversity and wealth creation and those values, but also about investing in the investment of the organization that advances this. mission.”

The Grand Rapids-based foundation, which gives out $ 19 million in grants each year, also appreciated the venture capital fund’s “explicit focus on western Michigan,” he said.

Deploy capital

Wege Foundation’s investment brings the New Community Transformation Fund ‘a hair’s breadth’ away from reaching the $ 10 million in commitments needed to start investing in companies, said Birgit Klohs, fund manager and CEO general retired from an economic development organization. The good place inc.

“Most importantly, it is certainly appreciated that the foundation has truly seen the purpose of what the New Community Transformation Fund is trying to achieve, and which creates generational wealth in our entrepreneurs and entrepreneurial communities of color,” said Klohs.

Citing the need to focus more on diversity, equity and inclusion and to create economic diversity in the region, Klohs conceived two years ago the idea of ​​forming a venture capital fund to support entrepreneurs of color. She assembled a team of founders in 2020 to create the New Community Transformation Fund, which aims to raise $ 25 million.

The New Community Transformation Fund recently hired a managing director, Ollie Howie, who came to Grand Rapids from global investment manager SoftBank Group. He was based in Atlanta with SoftBank’s SB Opportunity Fund, which pledged $ 100 million to support black, Latin, and Native American business founders.

The West Michigan-based fund will invest $ 250,000 to $ 500,000 in second-stage minority companies in the advanced manufacturing, food and agri-food, e-commerce and technology sectors. information, life sciences and financial technologies. The fund will also support entrepreneurs of color who buy businesses in transition of ownership, including businesses based outside the region that are ready to relocate to western Michigan.

Foundations fishing

The New Community Transformation Fund has several inquiries from potential investors as it pursues the fundraising goal of $ 25 million, Klohs said. The Wege Foundation’s investment provides a demonstration pledge that the venture capital fund can use to seek support from other foundations, she said.

Investing “really indicates that we’re on to something really positive and other foundations can say, ‘If they can do that, let’s look at what we can invest,” Klohs said.

“There are demands out there,” she added. “We certainly anticipate that – with the Wege Foundation taking this step to invest – others will step up, and we will contact other foundations as well. This opens a way to raise funds. Every dollar is important, but by taking this step, they open up avenues that we have not explored to the fullest, and therefore that opens other doors for us.

Foundations rank among large and small family businesses, corporations and pension funds as the main sources of investment in venture capital funds.

Of the 23 Michigan venture capital firms that raised capital in 2020, nine received investments from charitable foundations, according to an annual report by the Michigan Venture Capital Association. In the past year, 11 of Michigan’s 27 venture capital firms that raised capital secured foundational investments.

New management

The commitment to the New Community Transformation Fund is the Wege Foundation’s first venture capital investment, said Van Putten.

The foundation, with assets of around $ 380 million, currently holds around $ 22 million in private equity fund investments, Van Putten said. Many private equity investments have a mission aligned with environmental goals and advance gender and race equity, he said.

When first approached last spring about investing in the New Community Transformation Fund, the foundation’s first response was “a strong endorsement of the purpose and vision, and the only question was to assess it from an investment point of view and then to deal with it internally, ”said Van Putten. .

The investment advisers performed due diligence on the request and an investment committee approved the investment last month, he said.

In reviewing the New Community Transformation Fund’s request to become a sponsor, the Wege Foundation took the same approach as other potential investments, Van Putten said.

“All investments come with risk, so it’s no different,” he said. “But by assessing the risks, undertaking due diligence and reviewing the objectives, it seemed perfectly suited to the foundation. We see this as a good investment as much as to further the mission of the foundation. “

Source link

Comments are closed.