Insight Partners, a global tech investor, has successfully raised $118 million for its second 20/20 Vision Capital fund, aimed at investing in venture capital funds led by diverse managers, Reuters news report said.
This fund expansion builds upon the strategy initiated by Insight in 2020 when its employees committed $15 million of their personal capital to support diverse early-stage fund managers. The first fund deployed capital to 14 venture capital (VC) funds led by women, Black, Latinx, or LGBTQ managers. The Vision Capital II will continue this approach by providing financial support to managers and offering follow-up capital for their subsequent funds.
The objective of Insight Partners’ Vision Capital funds is to address the need for neutral capital in the VC funding industry. While there are existing philanthropic efforts supporting underrepresented managers, Insight recognizes the importance of providing financial backing that allows these managers to demonstrate their ability to generate strong returns, similar to any other manager.
Dionne Chingkoe, Managing Director at Insight Partners, emphasizes the significance of neutral capital to enable diverse managers to prove their capabilities and achieve top quartile performance.
The new 20/20 Vision fund received contributions primarily from external limited partners, including prominent institutional investors such as Massachusetts Pensions Reserves Investment Management Board, Pennsylvania Public School Employees’ Retirement System, and New York State Common Retirement Fund. These partnerships highlight the increasing recognition among institutional investors of the importance of diversity and inclusion in the venture capital ecosystem.
The fundraising environment for VC managers in the United States is experiencing a slowdown, with the first half of this year on track to be the lowest since 2018. PitchBook data reveals that only $33.3 billion was raised in the first half of 2023, compared to $167.3 billion in 2022. Limited partners face the challenge of balancing their allocations between public and private markets, and the recent performance of venture capital returns has led to a deceleration in VC investments. However, this environment poses even greater challenges for underrepresented and first-time fund managers who struggle to secure funding. In 2022, only 2.6 percent of the $170.8 billion in capital raised by VCs in the U.S. went to female-led VC firms, while Black investors make up just 4 percent of venture capitalists, according to non-profit organization BLCK VC.
Insight Partners’ Vision Capital II fund aims to address these disparities by actively supporting diverse managers and providing them with the necessary financial backing to thrive. Already, several funds, including Ansa Capital Management, Hannah Grey Ventures, and Wischoff Ventures, have received backing from Vision Capital II, signaling the fund’s commitment to promoting diversity and inclusion in the VC industry.
Insight Partners’ ongoing efforts to raise capital for diverse fund managers are a positive step towards addressing the underrepresentation and limited access to funding that these managers face. By providing the necessary financial support, Insight Partners is not only fostering diversity and inclusion but also recognizing the potential for exceptional returns from diverse-led venture capital funds. This initiative sets an example for the broader investment community to follow, encouraging the allocation of capital towards underrepresented managers and driving positive change in the VC industry.