CityRock announced Wednesday the closing of a $24 million Fund II to invest in diverse founders. The fund, which is part of H/L Ventureswill seek to support businesses in areas such as climate, health and the future of work.
The firm has multiple arms, ranging from a venture studio to standard funds, where it handles everything from co-founding companies to deploying capital. It has three funds within its venture studio and now two CityRock funds, which will focus on Series A investing. It also has a seed program that backs pre-Series A companies within H/L’s broader portfolio.
The CityRock Fund is focused on Series A investments, with the CityRock Fund expected to launch in late 2019. “It is part of H/L Ventures’ mission to provide a holistic platform of support and investment for our portfolio companies,” Olivier Libbyco-founder and managing partner of H/L Ventures, told TechCrunch. The average check size for CityRock Fund II will be $2 million, with a reserve for follow-on investments in companies that were backed by CityRock Fund I. The fund is currently rolling out and plans to invest in 14 Series A companies and a similar number of seed-stage companies through its seed program.
Fund I, with $17 million, closed in 2021. It is fully deployed and has backed 15 companies, including AndieSwim, Group Black and Aunt Flow. The firm says that nearly 85% of the founders in the CityRock portfolio come from what it describes as underrepresented backgrounds, but it defines them quite broadly, including identifiers such as gender, race, socioeconomic status, sexual orientation and military service. “Diversity is a strong preference for the fund, not a requirement, but the vast majority of our founding teams have underrepresented founder-CEOs,” Libby said.
He says fundraising has been a challenge for the firm’s general partners. “A sufficient number of limited partners have actually supported our strategy, which is to invest at the intersection of growth, impact and diversity,” he said, adding that there always seems to be an appetite for diversity in an investment strategy, particularly with Study shows diverse founding teams lead to good results“The situation has become more difficult, both because of the polarized climate and also because in times of economic crisis, support for impact and diversity always tends to recede.”
The firm remains focused on its commitment, however, saying it’s important for innovation to back diverse founders in the areas the fund wants to focus on, such as health and climate. “Diverse founders often come from backgrounds that allow them to see or understand solutions that more privileged founders might sometimes miss,” Libby said, citing topics like energy efficiency in certain communities and health disparities. “We need innovation that’s not just coming from the same homogenous places, from the top down, but from all places in our society.”
H/L was founded in 2009 by Eric Hatzimemos and Libby. Fund II will be rolled out over a four-year period, with an average check size of $1 million, according to the firm. Ultimately, it hopes to support a diverse group of founders “with a positive mission” that can “lead to great financial success and benefit to society and the world.”
