A ‘Small but Mighty’ VC Firm Invests in Equity

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Wharton’s Katherine Klein speaks with Stefanie Thomas from Impact America Fund about investing in companies that benefit underserved communities.

Kesha Cash made history last fall when her venture capital firm, Impact America Fund (IAF), closed a $55 million investment vehicle aimed at early-stage startups that benefit communities of color. The amount was reportedly the largest ever raised by a solo Black female general partner.

The milestone is important, especially in a field with a legacy of woeful minority representation. Black employees account for just 3% of the venture capital workforce, while Hispanics comprise 7%, according to a recent Deloitte study. But Cash and her team are more interested in results than accolades. Closing the wealth gap and fixing structural inequality is a “moral imperative” that’s baked into the business model; the firm invests in tech-driven startups and founders who want to uplift marginalized communities.

“I like to call us a boutique fund because we’re small but mighty,” said Stefanie Thomas, founding member and early-stage investor at IAF. “We’re really looking at carefully crafting a portfolio that reflects our thesis but also allows us to be able to work together with our founders.”

Thomas spoke with Katherine Klein, vice dean for the Wharton Social Impact Initiative, during a recent episode of the Dollars and Change podcast. (Listen to the podcast at the top of this page; find more episodes here.)

IAF doesn’t specifically target minority entrepreneurs, but a majority of their partnerships are with them because of shared goals, Thomas said. Those entrepreneurs often come from the same neighborhoods, cultures, and economic strata they want to serve, so the relationships are organic.

“We’re really looking at carefully crafting a portfolio that reflects our thesis but also allows us to be able to work together with our founders.” –Stefanie Thomas

“They’re building in a fast-paced environment. They’re leveraging technology. They’re really solving for these market inefficiencies that also tie very much to the social disparities that we see in communities of color,” Thomas said, pointing to Helen Adeosun as an example.

Adeosun is a Black woman who founded CareAcademy, one of the companies in IAF’s Portfolio. CareAcademy is a platform that helps small home-care agencies keep up with training, compliance, and administrative tools to retain caregivers who are often low-income women of color.

“We are seeing a huge opportunity for her,” Thomas said. “We’re also seeing how she is on a path to be able to train a million caregivers in a labor market where 60% of those workers are actually low-income women of color.”

‘Inside the Circle’

All VCs are looking for returns, and IAF is no exception. The team scouts for innovative startups that show profitability and competitiveness — qualities that aren’t mutually exclusive from social value. Thomas said the team members lean on their personal experiences as people of color to examine how venture capital can be redeployed to address structural racism.

“If you look at our team, the Impact America Fund story is really a story being told from inside the circle,” she said.

Klein asked Thomas, who previously worked as vice president in Citibank’s global banking division, why she joined a niche firm. “That’s a hard road,” Klein said. “You [and Cash] both came out of more traditional financial institutions. There would have been roles for you in larger institutions, but you’ve built a path of your own, and a firm and funds of your own. Why go that route?”

For Thomas, the answer lies in a sense of purpose. In corporate America, she saw how money doesn’t flow from the top financial institutions down to communities where the needs are great, the talent is plenty, but the investments are few. She realized there was a way to work outside the system to help.

“The bigger mission [for IAF] is to set a new standard for what venture capital can look like.” –Stefanie Thomas

“It was a ripe opportunity for us to combine our [professional] privilege [for something meaningful], to be quite frank,” Thomas said. “We had the privilege of working in corporate. We had the privilege of personal networks that we’d built [over time]. We had the privilege of understanding business and having that acumen where we could speak the language and also translate what we knew was happening at the ground level, and be able to articulate [that] in a way that framed it as a real business opportunity.”

That combined acumen has led the firm to land some big investment partners, including the MacArthur Foundation, the Ford Foundation, the California Wellness Foundation, and Kellogg Foundation.

Thomas is proud of the work she and her team members are doing to reshape the conversation around venture capital and put more dollars into communities that have long been ignored. She also hopes for a day when equity means everyone, and when firms like hers are no longer thematically necessary.

“I’d love for our companies to continue to exist — continue to thrive, continue to employ folks, and continue to make a difference,” she said. “But [even beyond that], the bigger mission [for IAF] is to set a new standard for what venture capital can look like.”

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