The first managing director of a venture capital fund that plans to invest in businesses owned by people of color sees an opportunity to pioneer an initiative for greater economic diversity in West Michigan.
Ollie Howie starts Nov. 15 as managing director of the New Community Transformation Fund that’s in the process of raising $25 million from investors.
A Harvard University graduate with a degree in economics, Howie comes to Grand Rapids from global investment manager SoftBank Group. Since September 2020, he’s been based in Atlanta with SoftBank’s SB Opportunity Fund, which has committed $100 million to backing Black, Latinx and Native American business founders.
A prior entrepreneur who’s previously worked as a senior analyst at venture capital firm Greenspring Associates in Owings Mills, Md., Howie said he’s “really passionate about the issue at hand: Creating financial returns and impacting the community for all.”
“This is one of the first funds of its kind, and we’re trying to prove a model that can scale and help a lot of entrepreneurs,” Howie told MiBiz. “It’s just kind of an extension of what I’ve been doing and hope to do more of, specifically impacting a community that may be overlooked or underserved. We just want to make sure there’s parity in the community for folks of color and folks that are gender-diverse and folks that have the ability to branch out.”
New Community Transformation Fund founders have so far raised nearly $10 million — during much of the COVID-19 pandemic — from investors toward the $25 million goal.
The fund will invest $250,000 to $500,000 in second-stage minority-owned companies in advanced manufacturing, food and agribusiness, e-commerce and information technology, life sciences, and finance technology. The fund will also back entrepreneurs of color who are buying companies going through an ownership transition, including businesses based outside of the region who are willing to relocate to West Michigan.
Howie hopes the fund can close on its first investment by the end of the year.
“We’re ready to go,” he said. “We’re really excited about the potential. We have a great team, a great support system, and we’re just looking for the best entrepreneurs and helping them in every way we can.”
Citing a need to focus more on diversity, equity and inclusion, The Right Place Inc. spearheaded the formation of the New Community Transformation Fund in early 2020. Bank of America and the Consumers Energy Foundation provided $200,000 each in seed money, while DTE Energy provided $100,000.
Renee Tabben, president of Bank of America’s Grand Rapids market and chairperson of the New Community Transformation Fund Board of Directors, described Howie as a “highly regarded, innovative leader in the venture capital space, and bringing his expertise to Western Michigan will ensure that entrepreneurs of color have direct access to capital and support services.”
Howie’s skills and background make for a “really good match” with the New Community Transformation Fund’s focus and he is “very mission-aligned with what we’re doing,” said Skot Welch, the founder of Grand Rapids-based Global Bridgebuilders who helped create the Transformation Fund and serves on the board.
“We share the passion of serving communities of color well through this particular initiative,” said Welch, who also served on the selection committee that sought a managing director. “He comes with some solid experience and he really wants to connect in West Michigan and to be a part of what we’re doing here.”
Birgit Klohs, who retired as The Right Place’s longtime CEO in early 2021 and serves as a director for the New Community Transformation Fund, called Howie’s hiring a “big, big milestone” as fundraising continues and appeals are still out to prospective investors. The fund presently has “a lot of asks out there,” Klohs said.
Having a managing director on board should provide new momentum to fundraising efforts and allow the fund to return to prior prospective investors who were awaiting the hiring of a managing director, she said.
“We’ve raised the funds that we have so far without having someone like him in place, which is a chicken-and-egg thing in this business,” said Klohs, referring to investors’ preference for the position to be filled before committing to the fund. “A lot of the funds we’ve raised so far are really on the strength and premise of the partnership and the fact that people know us in town. (Howie’s hiring is) a huge milestone.”
Venture capital gaps
In 2018, Klohs first came up with the idea for an investment fund that targeted minority entrepreneurs to create a more diverse economy in the region. She approached Welch with the idea, and the two began working to create the fund to focus on an area where venture capital historically has flowed the least.
In 2020, just 15 percent of the 165 startups in Michigan backed by venture capital were led by a person of color, 12 percent were led by women, and a mere 1 percent had a CEO who identified as LGBTQ, according to the Michigan Venture Capital Association’s annual research report. Of the $287 million in venture capital invested in 88 Michigan startups last year, $57.8 million went to a company led by a person from an underrepresented group.
Meanwhile, 14 of the 81 — or 17 percent — venture capital professionals working in Michigan last year were women, compared to 21 percent nationally. An equal number of venture capital professionals in the state last year were racial minorities.
The fund presently has a “robust” pipeline of investment prospects from entrepreneurs of color, Welch said.
“There is a nice pipeline of talent out there, and it’s never been a function of them not being there. I think that the scope of many funds is too narrow or (they) had a particular leaning toward a particular community,” Welch said. “Our scope is bigger, and there are certainly founders of color out there. If we can find the ones that fit, we’d like to be a part of their success.”