Black LP promotes a16z’s third cultural leadership fund – Meczyki.Net

Venture Capital Firm Andreessen Horowitz announced last week that it closed its third Cultural Leadership Fund (CLF), an investment channel led by partner Megan Holston-Alexander.

The fund was created four years ago with a mission to raise money clearly from completely black investors. As part of the new fund’s rollout, a16z enlisted dozens of new investors, many of them high-wattage names like singer Pharrell Williams, Abel “The Weeknd” Tesfaye and Lionel Richie.

The Debut Fund, which closed in 2018, was an investment vehicle of $18 million, while Fund II filings indicated close to $23.6 million. While the firm declined to disclose the exact size of Fund III, our calculations show it was somewhere around the $18 million mark. A16z says it has raised over $60 million from all of its Cultural Leadership Funds.

The fund co-invests with the core funds of A16z and thus has stakes in north of 300 companies in crypto, consumer, enterprise, fintech, healthcare and biotech. The firm declined to close what steps it focused on, along with the average check size and its target ownership percentage.

CLF’s focus is on bringing as many black investors as possible to the cap table, and, if all goes well, a future exit could fuel wealth creation and a contagion cycle. The firm declined to answer whether its focus on diversity also extends to the startup it wants to co-invest with; But the firm has a separate fund that focuses on diversified founders.

Two years ago, in the wake of the murder of George Floyd, the firm launched Talent X Opportunities, or TxO, a donor-aided fund for under-served founders, with $2.2M in initial contributions. Entrepreneur Nathan Jones first led the effort, but the investor left after less than two years to serve as head of development at Royal. The fund’s efforts are now led by GP Jeff Jordan as well as investors Tauri Lodge-Phillips and Kofi Ampadu.

So far, only two groups of founders have gone public through the TxO accelerator, while a16z says it has a new group launching in July.

Txo differs from CLF in that the former offers an accelerator-like program and a $100,000 check in exchange for 7% equity. Txo LPs do not make a profit from the fund’s investments, as all earnings are put back into the fund to be reinvested in other entrepreneurs.

“TxO will not invest in deals in which a16z has already invested,” reads a16z’s FAQ page. “Rather, the fund seeks to invest in entrepreneurs who are building companies around cultural successes that typically lack access to traditional venture capital investments.” The firm further said that it is “not an active target” of the initiative to get TxO graduates to receive follow-on investments from a16z’s venture fund.

CLF feels more traditional, but it still involves a donation angle. All management fees and carry of a16z are donated to non-profit organizations to help African Americans break into technology roles. So far, the firm has donated over $2.5 million.

The announcement came just weeks after the firm announced a $4.5 billion Web3 fund and a $600 million gaming fund. In early 2022, A16z raised $9 billion for its venture, development and bio fund.