With the help of just Black LPs as a source of funding, Andreessen Horowitz closed Cultural Leadership Fund III

The third Cultural Leadership Fund (CLF), an investment vehicle run by Andreessen Horowitz partner Megan Holston-Alexander, was closed last week.

For the last four years, the fund has had a singular goal: to raise money only from African American investors. Many well-known musicians, including Pharrell Williams, Abel “The Weeknd” Tesfaye, and Lionel Ritchie, invested in the new fund as part of its launch.

There was a 18 million investment vehicle in the first fund, which closed in 2018, and a 23.6 million investment vehicle in the second fund, which closed in 2019. Fund III’s actual amount was not disclosed by the company, but based on our estimates, it was in the neighbourhood of 18 million. Across all of its Cultural Leadership funds, A16z claims to have amassed more than 60 million in donations.

There are over 300 firms in the cryptocurrency, consumer and enterprise markets, fintech, healthcare and biotech sectors that the fund invests in along with A16z’s major funds. Asked about typical check size, desired ownership percentage, and the phases in which the business is focused, the company refused to answer.

CLF’s goal is to increase the number of Black investors on the company’s cap tables, which, if everything goes well, may lead to a wealth-creating cycle. When asked whether the business’s diversity policy extends to which firms it chooses to co-invest, the firm refused to comment, although it does have a separate fund that invests in diverse founders alone.

Talent X Opportunity (TxO), a donor-advised fund for underprivileged entrepreneurs, was founded in the aftermath of George Floyd’s death in 2013. It was started by Naithan Jones, an entrepreneur who departed to serve as the head of growth at Royal after less than two years. GP Jeff Jordan and investors Tauri Laws-Phillips and Kofi Ampadu are currently leading the fund’s operations.

As of yet, the TxO accelerator has only announced the completion of two cohorts of entrepreneurs, whereas a16z claims to have a third cohort beginning in July.

When compared to CLF, TxO provides an accelerator-style programme and a 100,000 payout in return for 7% ownership. There are no returns for TxO LPs from the fund’s investments since all earnings are reinvested in the fund.

In a FAQ website, A16z said, “TxO would not invest in ventures that a16z has previously invested in. An alternative strategy of investing in entrepreneurs developing businesses on cultural discoveries is pursued by the Fund. The business went on to clarify that getting follow-on investments from a16z’s venture fund for TxO grads is “not an active aim” of the campaign.

However, CLF still has a donation component to it. Management fees and carry from a16z are all contributed to organisations that assist African-Americans enter into technical positions. The company has provided almost 2.5 million thus far.

Comes after the corporation unveiled a 4.5 billion web3 fund and a 600 million gaming fund only a few weeks before to this announcement. A16z raised 9 billion for its venture, growth, and bio funds at the start of 2022.