Venture capital firm Transform Capital is raising $100 million for a growth fund that seeks to inspire more venture capital philanthropy by committing a portion of the returns to nonprofits chosen by its LPs.
Why is this important: Many investors claim to “do well by doing good,” but few have incorporated philanthropic giving into the very structure of their fund.
How it works: Many impact funds seek to make a difference by investing exclusively in mission-driven companies. Transform Capital takes a different approach.
- Unlike the usual 80-20 split with LPs, the general partners – former BlueRun Ventures GP Jonathan Ebinger and serial entrepreneur Aihui Ong – drop half of their carry and dedicate 10% of any return to causes close to their limited partners’ hearts whenever there are any. is a liquidity event.
- “For [LPs]it feels like a 90-10 fund,” Ebinger told Axios. the entire fund is refunded.”
Between the lines: With $100 million expected when the fund closes, its general partners plan to invest in 30 companies and are aiming for a 3x return.
- But you won’t see Transform Capital directing investments or taking big early bets on unproven companies. Instead, it plans to invest exclusively in late-stage companies with a high probability of exit.
- “This fund writes smaller checks to bigger unions,” he says. “We’re not looking for ownership – we’re looking to invest in the best late-stage companies, which have oversubscribed funding rounds that we can participate in through the mandate we have around philanthropy.”
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