Black Records Fuel A16z’s Third Cultural Leadership Fund

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

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The fund was created four years ago to raise money exclusively from black investors. As part of the rollout of the new fund, a16z listed dozens of new investors, many of whom were big names like singers Pharrell Williams, Abel “The Weeknd” Tesfaye, and Lionel Richie.

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The Debut Fund, which closed in 2018, was an $18 million investment vehicle, while Fund II documents show a $23.6 million close. While the firm declined to disclose the exact size of Fund III, we estimate it was around $18 million. A16z says it has raised over $60 million through all of its cultural leadership funds.

The fund invests jointly with A16z core funds and thus has stakes in more than 300 crypto, consumer goods, enterprise, fintech, healthcare and biotech companies. The firm declined to disclose the average check size and target percentage of ownership, as well as the milestones it is focusing on.

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The goal of the CLF is to get more black investors on the cap tables, and if all goes well, future exits could contribute to wealth creation and a happy cycle. The firm declined to say whether its focus extends to diversity and which startups it wants to co-invest with; but the firm has a separate fund focused on different founders.

Two years ago, after the murder of George Floyd, the firm launched a donor-recommended fund. Talent X Opportunity or TxOfor low-income founders with a $2.2 million down payment. Entrepreneur Nathan Jones led the project when it first debuted, but the investor left after less than two years to work as head of growth at Royal. The fund’s efforts are now being led by CEO Jeff Jordan, as well as investors Tauri Lowes-Phillips and Kofi Ampadu.

So far, only two founding cohorts have publicly gone through the TxO accelerator, while a16z says a new group is launching in July.

TxO is different from CLF because the former offers an accelerator-like program and a $100,000 check in exchange for 7% capital. TxO LPs do not profit from the fund’s investments as all proceeds are returned to the fund to be reinvested in other entrepreneurs.

“TxO will not invest in trades that a16z has already invested in,” A16z wrote on the FAQ page. “Rather, the Fund seeks to invest in entrepreneurs who are building companies on cultural breakthroughs who typically don’t have access to traditional venture capital investments.” The firm went on to say that the “non-active goal” of the initiative is for TxO alumni to receive additional investment from venture capital fund a16z.

CLF sounds more traditional but still includes a donation. All of a16z’s royalties and management fees are donated to non-profit organizations to help African Americans break into technology positions. The firm has donated more than $2.5 million so far.

The announcement comes a few weeks after the firm announced a $4.5 billion web3 fund. and $600 million gaming fund. At the beginning of 2022, the A16z raised $9 billion for venture capital, growth and bio funds.




Credit: techcrunch.com /

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