A Power Couple With a $50M Venture Fund for the Overlooked - OZY | A Modern Media Company

WHY YOU SHOULD CARE

Because their fund is the first of its kind.

By Nick Fouriezos

  • Candice Matthews Brackeen and Brian Brackeen have launched a first-of-its-kind $50 million venture fund for underrepresented founders in the Midwest.
  • They want to capture a market inefficiency to find returns in an overlooked part of the country, among overlooked demographics of founders.
  • Their extreme form of due diligence includes living with founders for a week.

When Candice Matthews and Brian Brackeen ran into each other at the 2018 Black Tech Week in Miami, they were both at a pivotal moment in their lives. Two weeks earlier, Candice had finalized her divorce and was a year into her work as CEO of Cincinnati-based Hillman Accelerator. Brian was in the middle of exiting his $120-million-valuation artificial intelligence startup Kairos over disagreements about whether or not its technology should be provided to law enforcement.

The two had met before, but this time was different — they struck up an extended conversation and went out for dinner. Six weeks later, in January 2019, they were engaged. “We’re good at picking talent,” Brian says, laughing, about their whirlwind romance that led to his leaving Miami and moving to Ohio.

Their story is partly about two Black entrepreneurs who found love, but it’s also about the powerful effect of having spaces that cater to communities of color. In July, Candice and Brian, both 42, announced that their venture capital firm Lightship Capital was partnering with SecondMuse to create a $50 million fund to invest in underrepresented founders in the Midwest, from racial minorities to the LGBTQ and disabled communities. It instantly became the only fund dedicated to backing minorities in the Midwest, as well as the largest fund launch by a Black woman to date.

We’re making it clear this is not a social impact fund.… We’re capitalists at heart.

Candice Matthews Brackeen

“The venture capital market has failed BIPOC and, ultimately, itself,” Candice says, referring to statistics that show only 1 percent of U.S. venture-backed funds have Black founders and just 11 percent of funding went to startups led by women. Her goal? To prove that by investing in places, and people, that normally receive less attention, investors can actually make stronger returns. “We’re making it clear this is not a social impact fund.… We’re capitalists at heart. We’re here to respect the money and get a market rate return,” she says. “When people see our teams win, then you’ll see a model that works.”

The fund plans to invest in approximately 35 businesses to start, ranging from AI and e-commerce to sustainability, health care and consumer packaged goods companies. It has attracted plenty of attention, especially since comedian Hannibal Buress became an early investor and a guest judge on the Brackeens’ “Twitch Pitch” series (think Shark Tank for the streaming platform Twitch). They plan to expand to Chicago, Indianapolis and Tulsa, Oklahoma, to capture a market inefficiency.

Businesswoman leading informal meeting in modern open plan office

Lightship Capital aims to show that by investing in places, and people, that normally receive less attention, investors can actually make stronger returns.

Source Getty

“Most of the funding goes to the coasts, as opposed to the center of the country. It’s an overlooked opportunity, which in investment-speak tends to translate to opportunity,” says Todd Khozein, co-CEO of SecondMuse. He especially liked the fact that Candice and Brian took time to personally vet the companies they invest in — by renting a home and spending a week with founders to get a sense of how they think and act outside of boardroom settings. “They have a fantastic sense of actually digging into the details and weeds and understanding a business as opposed to investing from an ivory tower,” Khozein says.

Brian says temporarily moving in with potential partners — a tactic that may strike some as a bit intrusive — is a way to perform “the ultimate” due diligence. “The thing about living with someone for a week is it’s easy for a founder to be really polished for a one-hour pitch meeting, but it’s hard for them not to show their true selves living with you.” The fund was already in the works before the Black Lives Matter protests that arose in the wake of the deaths of George Floyd and Breonna Taylor, but the moment helped turn maybes into yeses from investment companies. “What I’m heartened by is that people are taking active steps to do what they can for these communities, and we are the vessel for that,” Brian says.

The fund will face pressure as investors will be watching closely to see if its core conceit — targeting diverse Midwest-based founders — will lead to outsize gains. And some on the left may question its capitalistic approach and willingness to work within a system many BIPOC progressives argue is beyond repair and must be replaced with a more equitable economic model.

“When you see it not serving you, or your friends, your mama or her cousin, you do start to wonder if it’s really for you,” Brian says. But he believes the solution is to engage, a theory he compares to Hidden Figures, the story of how mathematician Katherine Johnson broke through the color barrier at NASA. The people who followed her “aren’t jaded by the space program. They saw her example, and decided to go into the space program.” His point? “We are making capitalism for everyone, by doing it as well as anyone.”

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