Sunday, June 20, 2021

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After years of promises from the venture-capital industry to invest in more startup founders of color, one firm is taking a novel approach: sharing their investment profits with students at predominantly Black universities.

San Francisco-based Base10 Partners said Thursday it has raised a $250 million venture fund to invest in tech companies, and that a portion of the profit from that fund would be given to historically Black colleges and universities to fund student scholarships, with a focus on majors relevant to a career in tech.

Venture-capital partners typically claim carried interest—a share of a fund’s profit—as a large part of their income. Base10 partners said they will forgo half of their carried interest—which is 20%—and donate it for scholarships and other forms of financial aid for students at HBCUs.

Base10 Partners, founded in 2017, is the largest Black-led venture capital firm in the country. About $50 million of the new fund came from HBCUs themselves through their endowments, said Adeyemi Ajao, Base10 co-founder and managing partner.

HBCU endowments are about half the size of those of other schools, according to a government report from 2018. That has limited their involvement in venture-capital funds, which can be lucrative but highly risky investments, said Mr. Ajao. Base10 said it welcomed smaller-than-typical check sizes from the HBCUs and waived fees for them. By creating a pipeline for more HBCUs to engage with venture capital, and more Black students to get a start in tech, Base10 hopes to begin to expand opportunities and support for underrepresented minorities in Silicon Valley.

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