Illumen Capital is intensifying its support for fund managers and founders from historically marginalized groups.
The agency is a significant allocator of funds that has previously supported initiatives addressing racial biases in investment strategies. The Daryn Dodson-founded agency unveiled a $32.75 million Catalyst Fund expansion to further support emerging fund managers and founders, with a focus on those from underrepresented groups.
During a challenging period for many venture capitalists and entrepreneurs, a significantly reduced flow of financial support is being experienced compared to previous years. Black founders secured less than 1% of total venture capital investment last year, with the trend expected to persist in the first half of the year.
According to Dodson’s conversation with TechCrunch, “During periods of financial instability, political polarization, and ongoing inflationary concerns, we’ve witnessed biases intensify.” He noted that these biases are also manifesting in the business sector, where billions of dollars in capital continue to flow towards the same individuals.
According to Dodson, the agency is fortunate to have cultivated strong ties with a select group of committed partners who are dedicated to supporting the next generation of venture capital and private equity leaders.
The agency reported that it had approximately $285 million in assets under its administration. The firm successfully closed its $168 million Fund II in 2023, enabling it to aggressively pursue investment opportunities.
Distinguishing itself as a supplementary strategy, Dodson revealed that the Catalyst Fund serves as a supporting mechanism for its initial two funds. As a departure from our Funds I and II, which focused on well-established managers, the Catalyst Fund is designed to support first-time entrepreneurs and early-stage startup founders. “We intentionally designed the car to be compact, and it’s fortunate that two key investors in our Fund II, Ford Basis and Health Ahead Basis, showed support for our latest initiative.”
The Fund aims to allocate at least 65% of its capital to first-time entrepreneurs, while up to 35% will be dedicated as direct co-investments in companies selected through any of its active funds. “At minimum, 90% of the fund is likely to focus domestically,” Dodson emphasized. “In some instances, the fund has delivered returns of up to 20% in booming markets.”
The fund will typically focus on investment managers operating in the fields of training, wellbeing, and wellness, as well as those promoting financial inclusion, climate resilience, and sustainability, he explained.
Dodson aims to disburse the fund over the next 18 months. “As we’ve identified, our Catalyst Fund capitalizes on a market disparity.” “With the Catalyst Fund, our goal is to showcase the value proposition of investing in diversity-led funds and empower a new generation of exceptional entrepreneurs.”
