A Growing Force
Updated: Oct 9, 2020
The views portrayed in A Growing Force blog are subject to change at any time based upon market or other conditions and are current as of September 25th, 2020. While all material is deemed to be reliable, accuracy and completeness cannot be guaranteed.
“S.T.O.P. = Start To Open Possibilities” ― Richie Norton
Pushing for diversity and inclusion throughout society isn't only a product of the racial inequality protests of 2020. This movement has been building positive momentum over the past several years. The focus and urge to get big pensions and other asset owners to use their financial clout to drive change through the $70 trillion asset-management industry is happening. Optimistically, we believe that the current landscape is changing, and the market is recognizing the tremendous opportunity to grow within these underserved markets.
At AFZA Capital, we were always determined to do good while striving for revenue producing companies. Prior to Covid-19, we had hoped to add a teammate and back a female founded company. We want our actions to be louder than our words. In a profession still dominated by male investors, many women are now well-established general partners. We believe in the next 10 years we will see more billion dollar exists from startups started by female and minority founders.
It is a fact that venture capital funds led by people from underrepresented ethnic and racial backgrounds have performed as well as their industry peers, with some studies showing they have better-than-average returns. The statistic that shows the most promise is that they currently only manage 1% of the capital across the industry as of 2019. This figure can and will grow. The current low rate of participation isn't for lack of available talent. We witnessed this firsthand during our launch week. Across the private equity and venture capital industries combined, women-owned and minority-owned firms (252 in total) represented 5.2% and 3.8%, respectively, of the industry total. Advocates and scholars who have been working on the issue say the opportunity gap for underrepresented managers is mainly a result of unconscious bias and a failure to intentionally seek out investors outside of asset owners' existing, mostly white networks.
The current challenges have made us more aware that we cannot do this alone. We need more diversity-focused funds, as there is only a handful so far and yet there are some many great female and minority-led startups that are underserved and remain undiscovered. Our team continues to build relationships across the globe. We are open to ALL possibilities!