Illustration: Sarah Grillo/Axios
Former SoftBank exec Marcelo Claure and tech veteran Paul Judge want to redefine how the investing world thinks about diversity.
Why it matters: As corporate America's embrace of diversity and inclusion — ignited by racial tensions laid bare in 2020 — is being quietly walked back, venture capital support for startups founded by people of color has waned notably.
The big picture: According to Crunchbase data released in February, total funding for Black-founded startups failed to top $1 billion in 2023 for the first time since 2016.
- More broadly, financial and moral support for diversity initiatives is slowly being sacrificed as economic conditions tighten, Bloomberg reported this week.
Between the lines: Claure calls the initial wave of commitments birthed by 2020's turmoil "just pure talk" in a recent interview with Axios.
- Claure, a Bolivian American entrepreneur and investor, cites his own early experience struggling to raise capital as easily as white founders did.
- Yet he rejects the idea of cutting checks in the name of a surface-level commitment to racial diversity.
Claure and Judge took over SoftBank's $100 million Open Opportunity Fund in December to enable the duo to pursue their ambition to scale it further.
- The portfolio, whose main focus is software startups, still stands at 75 companies.
- The fund's investment sweet spot is Series A rounds, usually putting in a check of $3 million to $5 million.
- It's also funded dozens of seed-round companies, with the average investment in that segment between $750k to $1 million, per Judge.
What they're saying: "This is not charity or philanthropy; this is a fund that will deliver great returns," Claure tells Axios.
- In doing so, "we're going to prove … that Black and Hispanic entrepreneurs are as good as anybody else.… That's what makes us different."
- With Judge, Claure plans to raise $200 million for Open Opportunity Fund 2.
Be smart: This is nothing new for investors focused on backing entrepreneurs from underrepresented backgrounds.
- Pioneering firms like Urban National Corp. had to made the same arguments in the '70s and '80s.
Yes, but: Not everyone is walking away from their commitment to DEI.
- JPMorgan Chase CEO Jamie Dimon recently proclaimed his "full-throated" backing for diversity initiatives, using his annual letter last week to explain why it was still important despite the backlash.
The bottom line: "This is not a problem you solve on Day 1; this is a process," Claure tells Axios. "The more Black and Hispanic entrepreneurs we fund, the more they become an example for others."