Living Cities, in partnership with the Ewing Marion Kauffman Foundation, has announced the launch of a $100 million fund aimed at addressing underinvestment in Black, Indigenous, and people of color (BIPOC) communities.

The Kauffman Foundation committed to a $10 million anchor investment in the Catalyst Fund III, which will leverage a “Fund of Funds” approach to support the ecosystem for high-growth entrepreneurs and business owners of color. Recognizing that business ownership is a proven pathway to closing the racial wealth gap, the fund will help increase investment in BIPOC communities by providing emerging fund managers of color with access to seed capital and technical support, reducing the time it takes to raise initial capital, and enabling them to establish a track record, gain credibility, and be well positioned for future rounds of funding. In October 2020, the foundation awarded Living Cities a $1.67 million seed grant in support of research on and the launch of an investment vehicle for fund managers of color.

Research from the Kauffman Foundation and Living Cities has shown that 83 percent of entrepreneurs do not access bank loans or venture capital at the time of startup, which disproportionately impacts entrepreneurs from underrepresented communities, and that entrepreneurs from underrepresented populations face greater challenges in building wealth.

“Entrepreneurship is fundamentally different for those who have access to capital,” said Philip Gaskin, vice president of entrepreneurship at the Kauffman Foundation. “To increase capital access for Black and brown entrepreneurs, we need to ensure that capital decision makers are knowledgeable about the history and root causes of the country's racial wealth gaps. We must explore new ways of investing in fund managers of color.”

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