LPs could have 'dramatic impact' on diversity

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The Daily Pitch: VC

September 14, 2020

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Diverse managers driving change—and returns

The Rev. Al Sharpton called on elite universities including Stanford and Yale to disclose the diversity of their endowment managers. (Spencer Platt/Getty Images)

Pushing for diversity and inclusion in the workplace and throughout society isn't only a product of the racial inequality protests of 2020. A movement has been building in recent years to get big pensions and other asset owners to use their financial clout to drive change through the $70 trillion asset-management industry:

Colonial Consulting, for example, launched a "diverse managers" initiative in 2016 to advise clients on investing with private equity and other asset management funds that are owned or substantially run by women and people of color.

Roughly 10% of the $37 billion in assets overseen by Colonial has been invested with diverse managers, compared with about $313 million in 2013, according to Angela Matheny, who heads the New York-based firm's initiative.

Robert Raben, a former deputy attorney general, is leading a public-awareness campaign to bring more transparency to how public and private asset owners select outside management firms. Even the Rev. Al Sharpton has taken up the cause, calling attention to diverse-manager selections by the endowments of Ivy League and other top universities.

Colonial Capital's rationale is simultaneously about social justice and fiduciary duty. Said Matheny, "It is our goal to build better portfolios, which will naturally lead to more racial equity and equal opportunity."

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VC Deals

Korro Bio picks up $91.5M

Korro Bio has raised a $91.5 million Series A led by Wu Capital, with participation from investors including NEA and Atlas Ventures. Founded in 2018, the company is developing RNA editing therapeutics to repair disease-causing mutations.

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Alexandria Venture Investments, Citadel (Hedge Fund), Cormorant Asset Management, MP Healthcare Venture Management, Qiming Venture Partners

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Roam raises seed round at $200M valuation

Roam has collected $9 million in seed financing from investors including True Ventures and Lux Capital at a $200 million valuation, according to The Information. The Oakland, Calif.-based company is the developer of a note-taking app and other workplace productivity and collaboration tools. Stripe co-founders John Collison and Patrick Collison also reportedly took part in the round.

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Portfolio Companies

NS8 lays off hundreds, faces fraud investigation

NS8, a Las Vegas-based startup that makes fraud prevention software, has laid off hundreds of employees and faces a fraud investigation by the SEC, according to reports. The startup raised $123 million in a June round led by Lightspeed that valued it at $436 million, according to PitchBook data. NS8 CEO Adam Rogas left the company last week, Forbes reported.

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Exits & IPOs

Opendoor in talks to merge with Chamath Palihapitiya's SPAC

Real estate tech startup Opendoor is in advanced talks to go public through a $5 billion merger with Social Capital Hedosophia Holdings Corp. II, a special-purpose acquisition company helmed by Chamath Palihapitiya, according to Bloomberg. Opendoor was valued at $3.8 billion last year and is backed by investors including GV, General Atlantic and Norwest Venture Partners, according to PitchBook data. Palihapitiya oversaw the merger of Virgin Galactic with the original Social Capital Hedosophia SPAC last year.

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Fundraising

Anthony Pompliano launches rolling fund

Morgan Creek Digital co-founder Anthony Pompliano has launched a rolling VC fund to invest in early-stage tech companies. Pompliano, who also produces a popular podcast and newsletter, will continue his work at Morgan Creek Digital and with its portfolio companies. Accredited investors are able to invest in the fund through AngelList on a quarterly basis with a $40,000 minimum annual commitment.

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JP Morgan launches private stock trading team

JP Morgan has forged a new team focused on trading shares in larger private companies like SpaceX, Robinhood and Airbnb, according to CNBC. The bank has reportedly recruited Andrew Tuthill, a senior VP at trading platform provider Forge Global, to lead the team. Institutional investors have asked JP Morgan to find stock in private companies, while the bank has seen more demand from VC funds, founders and wealth management clients to sell their stakes, the report said.

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Corporate M&A

SoftBank liquidity gains on Arm sale

SoftBank has taken a big step forward in its push to sell off assets. The operator of the behemoth Vision Fund reached a deal to sell UK-based chip designer Arm to Nvidia, the Silicon Valley semiconductor powerhouse, for $40 billion in cash and stock. SoftBank, which acquired Arm in 2016 for $32 billion, set out earlier this year to raise cash through asset sales following a series of losses marked by its disastrous investment in WeWork.

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