Please welcome the Equity Alliance, a fund investing in diverse, emerging venture capital fund managers and founders
Meet the Equity Alliance, the latest addition to Lerer Hippeau’s portfolio.
HQ: New York
Fund operators: Richard “Dick” Parsons (Chairman), Claude Grunitzky (CEO)
The problem: Asset management is an $82 trillion industry, but only 1.4% of assets are managed by diverse-owned firms. Venture capital funding is similarly un-diverse — underrepresented fund managers and founders receive far less funding than their counterparts. (The precise figures vary slightly depending on the source.) These disparities are troubling for so many reasons, including that they inhibit diverse managers’ and founders’ abilities to build wealth in the same way as their peers. The COVID-19 pandemic and racial justice reckoning that began in 2020 have further displayed systemic inequalities and injustices in American society. They’ve always existed, but haven’t yet been challenged thoroughly enough.
Equity Alliance’s solution: The Equity Alliance is a fund-of-funds tackling a piece of this puzzle by helping to create wealth for underrepresented managers and founders, with the aim of closing the racial and gender wealth gaps that contribute to pervasive and systemic issues in American society. The fund envisions a future in which, through investment, collaboration, and education, diverse fund managers and founders gain access to capital and become a more central part of asset management. And, the team believes that diversity of background, thought, and perspective leads to better investment decisions and company performance. So although the Equity Alliance aims to make impact, it also plans to generate top returns.
Origin story: The Equity Alliance is helmed by CEO Claude Grunitzky and Chairman Dick Parsons. The Lerer Hippeau team has known Dick for quite some time, through his work at Time Warner, Citigroup, the Rockefeller Foundation, and R&R Venture Partners. He came to our Managing Partner, Kenneth Lerer, to discuss the project, and Dick and Ken worked together to devise the Equity Alliance. As a seed fund, we typically invest in individual companies. But the chance to partner with the Equity Alliance team in its fund-of-funds format, structured for impact, was too great to ignore.
Why we’re betting on it: Claude and Dick, and the robust team of advisors they’ve assembled, are uniquely positioned to move the needle on wealth generation for underrepresented minorities in America. The Equity Alliance’s fund-of-funds model is a differentiated approach, and it allows for nimble, varied funding (for example, the Equity Alliance is able to invest in individual ventures just as easily as it can invest in emerging fund managers’ funds). Data consistently show that new and emerging fund managers rank among the best performers in VC. The Equity Alliance also knows that the check is important, but so is mentorship and guidance, especially for first-time managers and founders. The team’s unparalleled network is primed to make connections and furnish entrepreneurs with the social capital they need to succeed as well.
Our take: The Equity Alliance is off to the races — the fund made twelve investments in 2021 while raising Fund I, including in Serena Ventures, Inspired Capital, and Cleo Capital, among others. This fund may be among the first, but it shouldn’t be the last to ensure that people of color and women have a fairer shot at gaining access to capital, thereby helping to build America and build generational wealth. That’s why Lerer Hippeau is investing in other aspects of the entrepreneurial ecosystem as well. We also work with Colorwave, a fellowship and hiring platform providing leaders of color access to venture-backed startups, and with BLCK VC’s Path Program, a fellowship creating pathways for Black professionals to enter the VC industry. We think focusing on the entrepreneurial aspect of the financial ecosystem is a smart place to start, and will serve as an enabler for a more broadly equitable system.
Further reading: “Equity Alliance, Investor in Minority- and Female-Led Venture Funds, Raises $28.6 Million” via The Wall Street Journal