Aiming to help enlarge Black wealth, Bank of America is boosting its investment in venture capital funds supporting minority entrepreneurs.
The nation’s second-largest bank is raising its target for equity investment in minority-focused funds to $350 million from $200 million. The new move will allow the Charlotte, North Carolina-based lender to increase its direct equity investments in funds that provide capital to Black, Hispanic-Latino, Asian, Native American, along with other underrepresented minority and women entrepreneurs.
The bank is adding the extra $150 million because it surpassed a goal it set last fall sooner than
projected. In September, the bank stated it would invest
$200 million over four years and topped that in a matter of months instead.
The fresh funding is geared to help the targeted firms establish and grow their businesses moving forward. The additional money will enable the bank to expand its investments to more minority funds.
Further, the bank also noted it has already
committed over $250 million to 90 minority-focused investment funds in the U.S. Some firms that will benefit include Jumpstart, Elevate Capital, Avenue Growth Partners, and Greenwood. A list of others gaining from the funding is here. The bank reports the action articulates the need for more capital in funds led by diverse managers as well as the need for more growth equity funding for the minority entrepreneurs they support.
The bank has completed a total of 17 direct equity investments—including investments in additional institutions—in minority depository institutions and community development financial institution banks as part of its
$50 million commitment made last year.
As part of that commitment, the bank says it will acquire up to 4.9% of common equity in MDIs and CDFI banks facilitating benefits in the communities the institutions serve through lending, housing, neighborhood revitalization, and other banking services. See the list of where new investments were made
here.
“Equity investments in minority-focused funds, MDIs, and CDFI banks help address a persistent gap in access to growth capital,” Brian Moynihan, CEO of Bank of America, stated in a news release. “By providing this capital, we’re helping to level the playing field and open more doors for minority-led businesses, entrepreneurs, and innovation.”
The investments are part of Bank of America’s $1.25 billion racial equality and economic opportunity commitment. The pledge focuses on addressing and advancing social issues in minority populations, such as health, jobs, education, housing, and capital inequality, and will facilitate benefits across multiple states and communities.
Bank of America joins other large U.S. banks who last year made major financial commitments to battle racism after the police shooting of George Floyd and Black Lives Matter protests.