A Michigan-based venture capital fund focused on investing in businesses owned by people of color has joined forces with a renowned investment firm, paving the way for expanded growth and a more significant impact for both organizations.
According to Crain’s Grand Rapids Business, the New Community Transformation Fund has partnered with Michigan Capital Network, which will manage fund’s, daily operations, and offer strategic guidance.
Discussions between the two Grand Rapids firms began months ago. Paul D’Amato, CEO and managing director of Michigan Capital Network, said it “made sense” for both organizations from the start of the process.
“We share their goal of creating access to capital for people of color because we know that business growth, entrepreneurship and capital investment strengthens our economy and makes our state more attractive to other businesses looking to relocate,” D’Amato said, Crain’s Grand Rapids reported.
Through the affiliation, which gives the venture capital fund added administrative capacity and access to a broader range of investment opportunities, the Michigan Capital Network will streamline due diligence, vet investment opportunities, ensure compliance, and provide essential operational support.
The New Community Transformation Fund will also help Michigan Capital Network identify new investment opportunities.
Launched in early 2020, the New Community Transformation Fund has raised nearly $12 million to invest in growing mid-stage businesses — either based in or relocating to West Michigan — led by people of color or transitioning to new ownership.
Investments range from $500,000 to $1.5 million and focus on industries such as financial technology, healthcare, advanced manufacturing, and information technology.
So far, the fund has invested in six active portfolio companies, including Functional Fluidics, a health tech firm specializing in red blood cell health; Opnr LLC, a tech startup connecting musical artists with entertainment venues; and RiseKit, a platform linking employers, community organizations, and workforce agencies to create job opportunities and economic mobility.
With 20 years of experience, Michigan Capital Network operates four venture capital funds and five angel investing groups in Grand Rapids, Kalamazoo, Detroit, Flint, and Saginaw.
Birgit Klohs, co-founder and executive chair of the New Community Transformation Fund, describes the affiliation as a “positive step forward” for the fund, which has operated with a small staff and limited resources.
Skot Welch, co-founder and managing partner, echoed Klohs’ sentiments, emphasizing the added momentum Michigan Capital Network brings to the partnership.
“They’re able to increase our momentum that we had as a fund through the operations,” said Welch, Crain’s Grand Rapids Business reported. “They just really add horsepower to what we were doing so that we can actually go further, faster. We can stay focused on what we do, while they add velocity to what we do.”
