Impact investing makes up a tiny sliver of the overall investment market, but it’s growing at a rapid pace. The global impact investment market is estimated at more than $423 billion in 2022 and is expected to increase to almost $824 billion by 2026, according to a press release from Research and Markets.
Paralleling the rise in impact investments has been a similar rise in the number of funds and investment firms that focus exclusively on impact investing, a niche that aims to generate strong financial returns while also contributing to a positive social or environmental impact. But not all of these firms have leadership teams representative of the kinds of demographic groups that stand to gain the most from impact investing.
One that does is Kapor Capital, an Oakland-based venture capital firm founded in 2011 with a stated mission of contributing to a “more fair, just, and equitable society for low-income communities and underrepresented communities of color.”
Kapor is led by African American managing partners Uriridiakoghene “Ulili” Onovakpuri and Brian Dixon, who have transformed the company into one of the nation’s biggest Black-led VC firms.
Its portfolio includes more than 170 startups across numerous sectors, including education, work, finance, justice, food, financial services, and healthcare.
Dixon, a former project manager at Education First, became a partner at Kapor Capital in 2015. Onovakpuri was on the original Kapor Capital team in 2011 and launched the firm’s Fellows program for summer interns before leaving to start a healthcare startup. She later rejoined Kapor Capital and was promoted to partner in 2018.
Kapor Capital was founded by Mitch Kapor and Freada Kapor Klein when impact investing was barely a blip on the overall investment radar. The founders, who are white, had long planned for Onovakpuri and Dixon to take over the leadership role at Kapor Capital.
As managing partners, Dixon and Onovakpuri have set certain goals about the kinds of startups Kapor Capital would invest in – including their leadership teams.
The firm put a priority on identifying innovative companies with strong growth potential and senior management comprised of women and people of color.
So far, they have exceeded their targets. According to a recent article on TechCrunch, 59% of the companies in Kapor Capital’s current portfolio have a founder who identifies as a woman and/or an underrepresented person of color.
One thing that hasn’t changed through the years is Kapor Capital’s original mission: to produce elite returns through impact investing.
“Sometimes when people hear ‘impact,’ they hear ‘subpar returns,’” Dixon told Forbes in an interview. “They hear tradeoffs of impact versus returns. Our fund, and our thesis, is fundamentally to build on ‘You can do both.’”
Kapor Capital’s fund size has doubled under Onovakpuri and Dixon, thanks partly to the recent launch of its largest fund to date – Fund III, valued at $126 million. Fund III marks a departure because it’s the first time the firm has partnered with multiple limited partners, including Align Impact, the Ford Foundation, Bank of America, PayPal, Footlocker, Southern Poverty Law, the National Geographic Society, and the Winthrop Rockefeller Foundation.
As of early September, the fund had already invested in 15 companies. Among the newer additions to its portfolio are Cayaba Care, a maternity support service; Daylight, the first digital banking platform designed for the LGBTQ+ community by the LGBTQ+ community; and TomoCredit, a credit card for young adults, students, and immigrants.
“Investing in innovative people and ideas is what fuels economic and societal progress, but far too often access to that capital is unequal and unbalanced,” Roy Swan, Director of Mission Investments at Ford Foundation, said in a press release. “We are thrilled to partner with Kapor Capital to ensure that the bright minds looking to transform our industries have the resources they need to soar.”
All of Fund III’s investments so far have a founder who identifies as an underrepresented person of color. More than half (53%) have a founder who identifies as Black, while 46% have a founder who identifies as a woman.
“Fund III is the culmination of years of work championing tech startups that revolutionize people’s lives across a vast set of industries,” Dixon said in a statement.