Earlier today, Kapor Capital announced that it has closed its largest fund to date, a $126 million investment vehicle set to back early-stage founders of color and social impact ventures. The new fund, which has been in the works since February 2021, was raised by managing partners Uriridiakoghene “Ulili” Onovakpuri and Brian Dixon, who succeeded the firm’s co-founders Mitch Kapor and Freada Kapor Klein earlier this year.
TechCrunch conducted a Q&A with the new managing partners to get a better look into how the firm will operate from here.
It's been four months since Freada and Mitch Kapor announced that they are stepping back from the firm. How did that departure go over with LPs and did it impact the fundraising process at all?
Onovakpuri: We’ve worked closely with both Mitch and Freada for over a decade, and we are extremely appreciative of their support and guidance over the years. With the launch of Fund III, we are excited to build upon the strong foundation they built for Kapor Capital and take the firm to new heights with our largest fund to date.
Dixon: There is no such thing as an easy raise for Black investors, especially when it’s an all-Black, mixed gender GP team. But on the whole, partners have been enthusiastic given the strong vision behind the fund’s investment strategy and our own track records.
With the biggest fund to date, what’s changing about Kapor Capital? More investments? Broader aperture? Would love to know what’s new here!
Onovakpuri: This is our biggest fund to date, but also the first time Kapor Capital is partnering with multiple LPs. Given the size, we’re investing in more companies, and writing bigger checks, all while working with like-minded investors who are equally as committed to supporting companies driving social impact.
What are you hoping to do differently in Fund III versus Fund II and I?
Dixon: Fund III is taking things to a whole new level. I’ve been an investor at Kapor Capital for over 10 years, and this is the first time our firm has partnered with external LPs. This is huge for us, and it offers a new level of access to our investment strategy for people who’ve long championed our work from afar. We have over 50 LPs invested in Fund III and supporting our growth and expansion. It’s truly an exciting time!
Who are your biggest LPs and what is the diversity breakdown?
Our LPs include Cambridge Associates, Align Impact, Ford Foundation, Bank of America, PayPal, Twilio, Footlocker, Blue Cross and Blue Shield of Louisiana, EIP Elevate Future Fund, Southern Poverty Law, The California Wellness Foundation, National Geographic Society, Winthrop Rockefeller Foundation and Stardust Equity. (Kapor did not disclose the diversity break down of its LP base).
What ownership percentage are you targeting?
We’re not able to share more at this time.
What is your most valuable investment in the portfolio right now?
We’re not able to disclose specific investments at this time.
Can you share the IRR goal for this fund?
We have a 30% IRR Goal
How are you investing the money? What stages and what is your average check size?
Dixon: We’ve written checks as small as $250K, and as large as $3M. We primarily invest in pre-seed and seed rounds, and our portfolio spans edtech, fintech, healthtech, future of work, and more. All of our portfolio companies have one consistent theme: they are all committed to closing gaps in access, opportunity, and outcomes for low-income communities and communities of color in the United States. We began raising Fund III in 2021 and have already invested in 15 companies, including Cayaba Care, a maternity support service, Daylight, the first digital banking platform designed for the LGBT+ community by the LGBT+ community, and TomoCredit, a credit card for young adults, students and immigrants.
Can you tell me more about the Founders Commitment and what kind of goals are set? How is this different from other DEI focused work done in the past from other firms and how does Kapor help once goals are set? I know the effort has been going on since 2016, so would love to know anything about the impact of the commitment over time!
Onovakpuri: Of course! Our Founders Commitment is a first-of-its-kind initiative where all of our portfolio founders set diversity and inclusion goals for their individual companies. It’s essentially a four-part roadmap to:
Establish DEI goals. We make sure these are appropriate for the company’s funding stage, employee size, customer base, and core business. Progress on these diversity and inclusion goals must be included in your quarterly investor updates.
Invest in tools, training programs, and other resources that assist with mitigating bias in recruiting, hiring, and employment.
Organize volunteer opportunities for employees to engage with underrepresented communities, especially those that reflect the company’s customer base
Participate in DEI sessions to learn about what works and what doesn’t - - these sessions are hosted by Kapor Capital.