Venture Capital: Impact X Capital’s Thesis For Investing £100M In Black Founders

July 30, 2020 | News, Venture Capital

Only 1% of VC funding goes to Black founders. Impact X Capital wants to change that.

Profits and purpose. Those are the two bottom lines for Impact X Capital, the London-based venture firm conceived by Eric Collins to support underrepresented entrepreneurs across Europe. The firm was in operation long before the birth of the Black Lives Matter movement. It now has £100 million to invest in such entrepreneurs. (Forbes)

Eric Collins’ Thesis

According to Collins, VC funding is a closed club where the limited partners, venture capitalists, and founders shared similar backgrounds (and color).

It’s also about networking – the privileged introductions through friends and connections – all inaccessible to the not-so-fortunate.

Black-led businesses are more likely to be rejected because the reality is most investment goes to companies founded and led by white men, Collins observed in a recent opinion in Sifted.

Recognizing that black founders receive only 1% of VC funding and female entrepreneurs 4%, Collins says this under-funding was a “market inefficiency.”

It could be an opportunity to invest and make a significant profit. Additionally, the investments would have a measurable social impact (the double bottom line).

Impact X Capital, therefore, decided to invest in underrepresented entrepreneurs in Europe at the seed or series A stage. The chosen sectors were digital technology, health, education, lifestyle, media, and entertainment.

The firm would select top-flight entrepreneurs with scalable and proven products that could deliver exponential growth with the help of capital.

In addition, the target companies should have great potential to create jobs and have a positive impact on lives. Further, they should be led by strong management that has invested time and money.

The above-average returns from such investments would be the magnet for more funding to under-privileged founders.

Quick growth

Collins’ thesis was spot on.

Today, Impact X boasts of a diverse set of limited partners and an executive team that managed over £12 billion pounds. The firm helped deliver solid exits that delivered impressive returns.

Related Story:    Collab Capital Makes Profit-Sharing Investments, and Only in Black Founders                                             

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
Private Equity: Vitruvian Partners Pulls In $4.7 Billion

Capital Raise Brings Firm Assets to Nearly $12 Billion.  Vitruvian Partners, a UK-based private equity fund, has closed its fourth buyout fund after raking in $4.7 billion.  Vitruvian Partners launched…
Liquid Alternatives Enable Access for Individuals to Alternative Investments

Liquid Alts Offer Endowment Style Investing to Individuals.  Liquid alternatives consist of a wide variety of investment options, strategies and portfolio options.  Alternative investment prevalence has been growing in recent…
Private Equity Powers Global Sustainability Initiative
August 5, 2020     Investments, Latest News, News, Private Equity

A “New Normal” and Driving Force From Private Equity.  The global private equity community is buzzing over news that several private equity powerhouses have come together in a bold move…
FinTech: Intuit-Credit Karma Deal Under DOJ Lens (ProPublica)
August 4, 2020     FinTech, News, Takeovers and Buyouts

According to ProPublica, a non-profit newsroom that investigates abuse of power, the US Justice Department will investigate Intuit Inc (NASDAQ: INTU)’s $7.1 billion acquisition of Credit Karma announced in February….