MassMutual allocates $100 million for diverse first-time fund managers
The initiative seeks to promote racial equity.
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Massachusetts Mutual Life Insurance Company (MassMutual), a company that focuses on funds led by Black, Latino and Indigenous fund managers, recently announced this new effort, adding to the $50 million previously invested.
Diane Henry, head of impact investment funds at MassMutual, who is responsible for overseeing the First Fund Initiative, stated:
We believe more equitable access to capital will play a pivotal role in unlocking untapped growth in the US economy and are excited to continue investing in the next generation of diverse fund managers.
An untapped market
According to a study by the National Association of Investment Firms (NAIC), the largest organization of diversely owned alternative investment firms, its members outperformed Burgiss Median in 83.3% of periods measured as a net multiple of equity (MOIC), which underscores how diverse fund managers represent an outperforming but untapped market.
This is known by MassMutual, which since 2021 has invested in seven funds led by diverse early-stage fund managers through the First Fund Initiative, including its most recent investment in the Impact America Fund, a venture fund that supports early-stage companies growing the economy, and L'Attitude Ventures, a venture fund that invests exclusively in early-stage Latin American companies with high growth potential.
“We are moving beyond just examining the problem of a lack of diversity in capital access. With this additional capital, we are doubling down on the opportunity to back these high-performing investment managers. Through our First Fund Initiative and leadership in this space, we hope to open the door for other institutions to follow,” added Henry.
We are dedicating an additional $100 million to continue investing in funds led by Black, Latinx, and Indigenous first-time fund managers through our First Fund Initiative. Learn how impact investing drives financial returns and advances racial equity. https://t.co/Afx8mIW9y4 pic.twitter.com/nDa9XMfTbp— MassMutual (@massmutual) October 6, 2022
MassMutual also launched the Catalyst Fund (MMCF) last year, with an investment of $50 million, bringing the company's total impact investing commitment to $200 million.
This fund makes direct investments in Black-led companies based in the company's home state of Massachusetts, as well as companies based outside of Boston to drive innovation throughout the Commonwealth.
“There is tremendous opportunity in the companies and funds that are getting overlooked because of systemic barriers. Through impact investing, MassMutual is building innovative approaches and alternatives in deal sourcing, selection, diligence and underwriting to identify high potential investments that are also reducing structural inequities and advancing racial equity. We look forward to expanding upon the foundational work and success with these initiatives to drive financial returns and social change,” said Liz Roberts, MassMutual head of impact investing.