SoftBank has launched a second fund under its Opportunity Growth Fund to raise $150 million and invest in black and Latino-led startups.
The Japanese conglomerate is also changing the initiative’s name, calling it “Open Opportunity Fund,” and has appointed Paul Judge as the fund’s chairman. Judge, who served on the fund’s investment committee prior to the rebrand, will become a co-owner of Open Opportunity Fund (OOF) alongside SoftBank and some affiliates.
The second fund aims to surpass the initial scope of the first effort, which invested $100 million in 75 companies led by black and Latino individuals, including Greenwood, Career Karma and Praxis Labs. The new fund hopes to deploy the $150 million within three years. SoftBank becomes a limited partner in OOF.
“The key point in changing the name is that we’re opening up access for others to invest in the fund and grow more scale,” Judge told Acutely.info. “The lack of funding for Black and Latino founders is still tens of billions away from parity; this is another step to ensure we provide more opportunities for those talented founders.”
The Opportunity Growth Fund was launched in 2020 by SoftBank’s then COO Marcelo Claure, alongside Judge, managing partner Shu Nyatta and TaskRabbit CEO Stacy Brown-Philpot. It has seen seven exits to date and invested in five unicorns, including Cityblock Health and Brex.
Last year, the fund briefly became an evergreen fund, meaning it had an open-ended fund structure that allowed it to reinvest capital without restrictions and in stages.
Judge says OOF goes one step further: “Fund 2 is a traditional closed-end vehicle rather than an open-ended evergreen fund. The main distinction is the transition from SoftBank’s single LP to opening up access for other LPs to invest.
Funding raised by black founders fell last year from 2021, representing just 1% of the $215.9 billion invested in U.S. startups last year, according to Crunchbase.
Judge hopes that the organizations that have pledged to support minority founders in recent years will see this fund as an opportunity to finally do so with the option to become a limited partner.
SoftBank said its other funds, such as Vision Fund 2, will continue to invest selectively within the OOF portfolio. Sixty-one percent of the fund’s portfolio is black companies, while 43% are Latino-founded (the number exceeds 100% because some companies identify as Afro-Latino.) Women-founded companies, including non-Black and Latino -women make up 12% of the portfolio.
OOF plans to continue to invest at different stages (about half of Fund 1 was invested in early-stage companies and the rest in growth-stage companies). This is good news for founders of color who need to fund their growth-stage startups as they scale.
SoftBank appears confident in its ability to perform. It says its Vision Fund 2 and Latin America Fund have invested nearly $600 million in portfolio companies within OOF. That, combined with the $100 million initial investment from OOF’s Fund 1, means that SB has invested $700 million in Black and Latino-led companies (excluding other diversity efforts, such as the Hispanic Funds and separate investments in Black and Latino-led companies). Latino founded companies). ).
“This scaling up is really about empowering more founders to solve problems,” said Judge. “They make the world a better place; they build a business that is valuable and generates returns for investors. It creates impact on many different levels.”
This story was updated after publication to reflect Judge’s title as fund chairman and to remove references to Panoramic Ventures.