Northwestern Mutual Targets Resources to Black Tech Founders

The company added it was allocating $20 million exclusively for Black entrepreneurs from its $150 million Northwestern Mutual Future Ventures fund. The moves are part of a broader effort at the company to address racial inequities in society, prompted in part by the killing of George Floyd in May.

“It’s a very proud moment for the company, and we’re able to walk the walk,” said Abim Kolawole, Northwestern Mutual’s vice president of digital innovation. “And, as an African-American executive at the company, I think it is absolutely critical that we move with this kind of speed.”

The funding pool and the accelerator are among the latest corporate efforts to connect Black entrepreneurs to venture capital. As of January, only about 330 Black-founded tech startups in the U.S. had ever received venture-capital funding, compared with the more than 3,000 U.S. tech startups funded in 2019 alone, according to Transparent Collective, a Oakland, Calif.-based nonprofit focused on removing barriers for minority-led startups.

Several factors play into the funding disparities, said James Norman, a Transparent Collective co-founder and chief executive at market research technology company Pilotly Inc. Some of it is related to a lack of cultural understanding on the part of investors.

“The construct under which venture capital is deployed was built for and by the dominant demographic receiving the capital,” he said. “This in its own nature is biased and doesn’t account for different markets, different team styles and approaches to market that different types of founders have.”

Similar initiatives elsewhere are under way to help change this. SoftBank Group Corp. this summer unveiled a $100 million Opportunity Growth Fund to invest in U.S. startups launched by entrepreneurs of color, with a focus on Black and Hispanic founders. Andreessen Horowitz launched a venture-style philanthropic effort, Talent x Opportunity Fund, to provide seed capital and training to entrepreneurs from underserved communities.

There are even efforts aimed at increasing diversity on the investor side.

More than $15 billion has been raised by Black and Latino founders in the U.S. since 2015, but that accounted for 2.4% of all venture capital raised during that time, according to a recent report from Crunchbase.

Craig Schedler, managing director at Northwestern Mutual Future Ventures, said such numbers helped prompt the new efforts. Northwestern Mutual Future Ventures has three Black-founded companies of the 28 in its portfolio, Mr. Schedler said, including Dallas-based digital health-care startup Mountain Health Technologies Inc., which does business as River Health.

“Our deal flow largely represented the diversity of our network,” said Mr. Schedler. “By allocating $20 million of funding to Black founders, we’re taking intentional and proactive steps to expand our networks to reach more Black founders and investors.”

The three Black-founded companies backed by Northwestern Mutual Future Ventures were funded before the recent announcements and aren’t likely to participate in the accelerator.

Northwestern officials said they believe the new initiative can help by not only dedicating money to Black entrepreneurs, but also offering business support. That includes access to mentors, sector expertise and potential customers. Northwestern will make its executives and employees available to serve as mentors.

The 12-week program will have five cohort startups, which haven’t been selected yet. It will focus on Black-led startups in financial technology, digital health, data analytics and the future of the client experience.

The $20 million funding pool will target companies in the accelerator and other Black-founded companies seeking Series A financing rounds.

Mr. Norman said he wasn’t familiar with the details of the Northwestern Mutual program, but said it is important that it and efforts like it have personnel that are familiar with the barriers facing Black tech entrepreneurs. He said their focus on supporting Black entrepreneurs in particular, rather than diversity in general, is a good start.

“The problems are different for different communities,” he said. “You can’t solve them all at one time.”

Write to Jared Council at [email protected]

The company added it was allocating $20 million exclusively for Black entrepreneurs from its $150 million Northwestern Mutual Future Ventures fund. The moves are part of a broader effort at the company to address racial inequities in society, prompted in part by the killing of George Floyd in May.

“It’s a very proud moment for the company, and we’re able to walk the walk,” said Abim Kolawole, Northwestern Mutual’s vice president of digital innovation. “And, as an African-American executive at the company, I think it is absolutely critical that we move with this kind of speed.”

The funding pool and the accelerator are among the latest corporate efforts to connect Black entrepreneurs to venture capital. As of January, only about 330 Black-founded tech startups in the U.S. had ever received venture-capital funding, compared with the more than 3,000 U.S. tech startups funded in 2019 alone, according to Transparent Collective, a Oakland, Calif.-based nonprofit focused on removing barriers for minority-led startups.

Several factors play into the funding disparities, said James Norman, a Transparent Collective co-founder and chief executive at market research technology company Pilotly Inc. Some of it is related to a lack of cultural understanding on the part of investors.

“The construct under which venture capital is deployed was built for and by the dominant demographic receiving the capital,” he said. “This in its own nature is biased and doesn’t account for different markets, different team styles and approaches to market that different types of founders have.”

Similar initiatives elsewhere are under way to help change this. SoftBank Group Corp. this summer unveiled a $100 million Opportunity Growth Fund to invest in U.S. startups launched by entrepreneurs of color, with a focus on Black and Hispanic founders. Andreessen Horowitz launched a venture-style philanthropic effort, Talent x Opportunity Fund, to provide seed capital and training to entrepreneurs from underserved communities.

There are even efforts aimed at increasing diversity on the investor side.

More than $15 billion has been raised by Black and Latino founders in the U.S. since 2015, but that accounted for 2.4% of all venture capital raised during that time, according to a recent report from Crunchbase.

Craig Schedler, managing director at Northwestern Mutual Future Ventures, said such numbers helped prompt the new efforts. Northwestern Mutual Future Ventures has three Black-founded companies of the 28 in its portfolio, Mr. Schedler said, including Dallas-based digital health-care startup Mountain Health Technologies Inc., which does business as River Health.

“Our deal flow largely represented the diversity of our network,” said Mr. Schedler. “By allocating $20 million of funding to Black founders, we’re taking intentional and proactive steps to expand our networks to reach more Black founders and investors.”

The three Black-founded companies backed by Northwestern Mutual Future Ventures were funded before the recent announcements and aren’t likely to participate in the accelerator.

Northwestern officials said they believe the new initiative can help by not only dedicating money to Black entrepreneurs, but also offering business support. That includes access to mentors, sector expertise and potential customers. Northwestern will make its executives and employees available to serve as mentors.

The 12-week program will have five cohort startups, which haven’t been selected yet. It will focus on Black-led startups in financial technology, digital health, data analytics and the future of the client experience.

The $20 million funding pool will target companies in the accelerator and other Black-founded companies seeking Series A financing rounds.

Mr. Norman said he wasn’t familiar with the details of the Northwestern Mutual program, but said it is important that it and efforts like it have personnel that are familiar with the barriers facing Black tech entrepreneurs. He said their focus on supporting Black entrepreneurs in particular, rather than diversity in general, is a good start.

“The problems are different for different communities,” he said. “You can’t solve them all at one time.”

Write to Jared Council at [email protected]