Oakland-based Illumen is expanding its investment strategies to include first-time managers and direct co-investments, particularly from diverse and underrepresented backgrounds.
The Catalyst Fund “aims to directly confront the barriers these fund managers face,” said Illumen’s Daryn Dodson, including lack of a track record, small size and “familiarity bias” that deters many institutional investors (related: “Mission Driven Finance seeks to help new impact managers get going”).
Ford Foundation and Kansas City-based Health Forward Foundation anchored the fund, which also includes the California Wellness and Winthrop Rockefeller foundations and brings Illumen’s assets under management to more than $285 million. About one-third of the fund can be co-invested directly into companies sourced by managers in Illumen’s portfolios, the first time Illumen has pursued such investments into individual ventures.
Bias reduction
The fund marks a change in strategy for Illumen, which has focused on helping more experienced managers flush out bias in their and their portfolio companies’ investment and human resource processes with 10 years of anti-bias training. The thesis: such bias reduction uncovers and delivers untapped financial and economic value.
The bias-reduction programming won’t be required for Catalyst Fund managers. Dodson said addressing racial inequities in asset management has stalled since the racial reckoning of 2020.
“Directly addressing these inequalities is especially urgent now, as biases tend to rise during periods of high inflation, market volatility and political divisiveness.”
