ILLUMEN CAPITAL RELEASES ANNUAL IMPACT REPORT ON IMPACT OF RACIAL & GENDER BIAS TRAINING IN ASSET MANAGEMENT

Report findings reveal that, despite increased industry attention to DEI, investors continue to seek guidance on making effective and lasting change

OAKLAND, Calif., July 19, 2023 /PRNewswire/ — Illumen Capital, an impact fund of funds addressing systemic inequity by reducing racial and gender bias in investing, released its Annual Impact Report today, as part of a larger effort to understand the influence of the firm’s bias reduction programming and stewardship efforts. Collected quantitative and qualitative data showcases the impact of the firm’s unique approach to supporting fund managers in their efforts to build a more optimal and inclusive asset management industry.

As the US financial markets experienced economic volatility over the past two years, prioritization in investing in funds and companies led by diverse managers has dwindled: financing for Black startup businesses fell by over 50% from 2021 to 2022¹. Further, startups with all-women teams received just 1.9% in venture funding, also down from the previous year². At the same time, Illumen Capital has deepened its strategy of investing in funds led by underrepresented people of color and women and supporting fund managers in scaling in a diverse and inclusive manner. As of the end of 2022, with over $169 million of capital committed across its portfolio, Illumen Capital’s portfolio has 9.5x women partners, 6x underrepresented partners of color, and 7x underrepresented women of color in venture capital compared to industry benchmarks³.

“As I reflect on the past few years and the strides we’ve made as a nation and an industry in tackling racial bias, I’m aware there is still much work to be done to achieve greater equity in asset management,” said Daryn Dodson, Managing Director of Illumen Capital. “By releasing the Annual Impact Report, we hope to hold a mirror to an evolving industry, allowing it to see that uplifting underrepresented people of color is not a checkpoint along our journey to a more optimal future but an ongoing commitment to addressing industry inefficiencies.”

Illumen Capital’s Annual Impact Report utilizes a novel approach of enriching quantitative portfolio reporting with qualitative survey data on the mindsets of portfolio fund managers and staff. This qualitative data allows Illumen Capital to contextualize portfolio demographic data on diversity, equity, and inclusion (DEI) barriers and opportunities at both the individual and organizational level. Key takeaways include:

• Compared to 2021, there is an increasing alignment in the moral and financial reasons to improve the representation of underrepresented people of color (URPOC) in investing. This indicates a growing belief that DEI is not just the right thing to do, it’s also good for the bottom line;
• According to 55% of respondents, not knowing what to do was a top barrier to making progress on diversity of URPOC and women at investment firms;
• Despite increased attention to DEI and racial equity work since 2020, even when respondents indicate a want to contribute as individuals, they still do not feel either autonomy or power to act. This shows an increased need for customized training and support to empower effective institutional change at the individual and firm level;
• Lack of network access was identified by over half of respondents as contributing a great deal to disparities in URPOC recruitment by over 50% of respondents;
• Nearly 95% of respondents believe they should act to increase DEI at their firm, yet only 60% indicate they have changed their behavior to increase DEI in investing in the last year.

Led by Illumen Capital’s Joanna Kuang and Leila Mengesha, the firm uses a theory of change to remain thesis-driven in the firm’s diversity, equity and inclusion work. Unique aspects of the firm’s model include a proprietary toolkit of templates and examples to support fund managers in reducing individual and organizational biases in processes, such as hiring and promotion, and personalized coaching of fund manager staff and leadership. Illumen Capital uses data to inform how bias reduction programming is implemented and seeks to share best practices and learnings within the field to drive further DEI progress. Selected key learnings from Illumen Capital’s bias reduction partnership with portfolio fund managers include:

• There has been an increased focus on inclusion work, with a number of firms requesting support in building holistic firm changes, as well as addressing individual biases.
• Fund managers are leveraging their non-investment capital creatively to reduce bias in the ecosystem. Illumen Capital has seen an increased interest in diverse vendor suggestions from investors and managers alike, indicating a growing awareness and acknowledgement of the sphere of capital influence outside of traditional investments.
• Even with a growing portfolio, this is the first year that Illumen Capital has had each fund return complete and high-quality quantitative reporting, indicating an increased industry interest and expectation for demographic and impact reporting data.

Recently, Illumen Capital successfully raised a $168 million Fund II, allowing the firm to further scale these efforts. Additionally, the fund of funds has a long-standing relationship with Stanford SPARQ and has launched a new project to expand on their joint foundational study published in PNAS. Illumen Capital is excited to continue using their financial capital to create accountability and trust-based support for fund managers.

For additional information, or to view the full report, please visit https://www.illumencapital.com/.

ABOUT ILLUMEN CAPITAL
Illumen Capital is a Black-owned and led manager dedicated to achieving racial and gender equity across investing. Illumen Capital invests in venture, growth, and private equity funds, and then works closely with fund managers to install a set of strategies and tools designed to reduce racial and gender bias in the hiring, investment, and company support processes. This research-informed bias reduction program – supported by a strategic relationship with Stanford SPARQ – empowers fund managers to expand their investable landscape and better support entrepreneurs who have historically been overlooked and underestimated.

¹ Special Series: VC Dollars To Black Startup Founders Fell More Than 50% In 2022 /
² Women-founded startups raised 1.9% of all VC funds in 2022, a drop from 2021 | TechCrunch /
³ VC Human Capital Survey ,Women-founded startups raised 1.9% of all VC funds in 2022, a drop from 2021

MEDIA CONTACTS
Catherine Toor
5W Public Relations
[email protected]

SOURCE Illumen Capital