Black Private Equity Funds Get $400 Million Commitment From Billionaire Steve Ballmer

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Black Private Equity Funds Get 0 Million Commitment From Billionaire Steve Ballmer

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Investment vehicles run by two of the nation’s largest Black businesses — Ariel Investments and Fairview Capital — will gain a combined commitment of $250 million, courtesy of billionaire Steve Ballmer.

The funding is part of the $400 million the former Microsoft Corp. CEO and his wife, Connie Ballmer, invested this year into four vehicles centered on helping cure insufficient capital accessible to Black American entrepreneurs, according to The Wall Street Journal.

The vows are intended for Black venture capital and private equity managers. The dealings were not publicly disclosed.

An aggregate of $150 million in commitments will go to two new vehicles. One is managed by investment bank Goldman Sachs Group Inc. and another by alternative asset manager GCM Grosvenor Inc., along with banking giant JPMorgan Chase & Co. supervising fundraising, per The WSJ.

The other vehicles are tied to Ariel Investments and Fairview Capital. Ariel Investment is no. 1 on the BE Asset Managers list, while Fairview Capital is no. 2 on the BE Private Equity list. The fresh investments will reportedly apply fund-of-fund strategies to support Black-owned or Black-led firms. A large share of the money will then be targeted to Black entrepreneurs or Black-owned businesses for investment.

Ballmer, owner of the Los Angeles Clippers NBA basketball team, said he made the investment with his own assets, instead of from his philanthropic organization, The WSJ reported. His net worth is estimated at around $84 billion. That makes him the world’s ninth-wealthiest person, per the Bloomberg Billionaires Index

The money is truly needed as funding has dropped drastically. Black startups gained $324 million in venture capital funds in this year’s second quarter. But that was down from $1.2 billion in this year’s first quarter and $866 million in last year’s second quarter. The figures are from the analytics firm, Crunchbase.

Simultaneously, Blacks and other minorities make up a measly number of fund managers, though some progress has occurred in recent years. Across America, 5.1% of private-equity firms are owned by minorities, including Blacks, Latinos, and Asians, based on this report.

Ballmer told The WSJ that he hopes the $400 million commitment will help fix the imbalance in access to capital between Black and white fund managers. “The money is not flowing to Black fund managers. And for Black VCs I have talked to, it’s just a little harder than for their white counterparts to raise that money.”

Ballmer’s investment could help cut the nation’s racial wealth gap. He was supposedly driven to act following the turmoil from the 2020 murder of George Floyd. However, Ballmer has had longtime concerns about the funding unevenness between Black and white investment firms.

The largest new commitment from the Ballmers is $200 million for Project Black, a private-equity fund managed by Chicago-based asset manager Ariel Investments’ alternatives arm, The WSJ reported. Private-markets investor Fairview Capital, based in West Hartford, Connecticut, will manage a $50 million single-investor fund that supports Black private-fund managers.

Some encouraging news is the number of Black-owned private-fund managers is increasing, with multiple new and young firms starting up. Laurence Morse, Fairview Capital’s co-founder and managing partner, told The WSJ that his firm “tracked 84 Black-owned venture-capital and private-equity funds raising money last year, up 25% from 2020.” He noted that the number could surpass 90 this year. Morse added that it is “a large enough group to create a diversified fund-of-funds portfolio.”

“We know what the opportunity set looks like, and we think we’re able to build a portfolio and have appropriate shots on goal,” he stated.