Global tech investor Insight Partners has raised $118 million in its second 20/20 Vision Capital fund that aims to invest in venture capital funds led by diverse managers, the firm told Reuters.
This new fund expands a strategy Insight first started in 2020, after its own employees pledged $15 million of their personal capital to diverse early-stage fund managers.
Like the first fund, which has deployed capital to 14 VC funds led by women, Black, Latinx or LGBTQ managers, Vision Capital II will continue to write single-digit million checks backing managers and provide follow-up capital for their second fund.
"There are a lot of philanthropic efforts that exist in this space...but what they really need is the neutral capital to go and prove themselves that they are also able to generate top quartile returns, just like any other manager," said Dionne Chingkoe, Managing Director at Insight Partners.
External limited partners, which contributed the majority of the new 20/20 Vision, include Massachusetts Pensions Reserves Investment Management Board, Pennsylvania Public School Employees' Retirement System, and New York State Common Retirement Fund.
The U.S. fundraising environment for VC managers is on pace for the lowest since 2018, with $33.3 billion raised in the first half of the year, versus $167.3 billion raised in 2022, according to PitchBook data.
Limited partners have to balance their public and private market portfolios and slow down allocation to venture capital with returns lagging in the past few years.
The environment is especially challenging for underrepresented and first-time fund managers. Among $170.8 billion in capital raised by VCs in the U.S. last year, only 2.6% went to female-led VC firms. Black investors make up 4% of venture capitalists in the U.S., according to non-profit BLCK VC.
Funds including Ansa Capital Management, Hannah Grey Ventures, and Wischoff Ventures have already received backing from the Vision Capital II.
Richard Wells, Managing Director at Insight Partners, said it's too early to measure fund I returns, as seed investment is a long-term game.
"I think the goal is to make a profit. Have this generate the returns that will continue to attract capital," said Wells. "And if we invest in folks that have a broader set of backgrounds, they will have different considerations of the entrepreneurs they're choosing from.”
