Black Capital: Black-owned businesses boosted by venture capital fund

Black-owned businesses often have trouble starting up and thriving in the Sacramento region. Black Capital, a venture capital fund, wants to change that.


Elise Fisher

75 percent of Black Capital’s funding is dedicated to Black entrepreneurs as opposed to most venture capital funds where only 1.2 percent are dedicated to Black entrepreneurs.

Though Black people make up over 13% of the United States’ population, a mere 1.2% of investments made in businesses are in ones with Black founders, leaving many entrepreneurs out. 

Black Capital, local to Sacramento, wants to change that statistic.

A venture capital fund, put simply, is a pool of money created by a group of investors that is used to invest in a variety of companies and people, with the belief that they will have success and benefit from the startup money provided.

Typically, the biggest goal in venture capital is the return- more money for investors who risk what they contribute in hopes of a high reward.

Black Capital, founded by former Mayor of Sacramento and NBA player Kevin Johnson, has a larger goal, as they set out to fund small businesses. The particular focus will be providing startup needs to companies with Black and underrepresented founders.

“Black capital was born out of Kevin’s Johnson’s experience as a mayor in Sacramento… economic empowerment was the one topic that was just reoccurring and demanded again and again,” said Marcus Hollhon, a Senior Associate that has collaborated with Johnson since the beginning of Black Capital. 

Johnson felt that as Mayor, he couldn’t adequately address the consistent concern he saw for entrepreneurial opportunities in his community.

Black Capital knows the benefits both business owners and communities can get from a fund like this, but also wanted to focus on a more specific group- one often overlooked by investors.

“Within the Black community, even though we make up 14% of the population… only 1% goes to Black entrepreneurs,” Hollhon said. 

This statistic, as well as the desire to break from the typical elite status, was the main motivation and drive that got Black Capital invested into 17 companies only through their first year after they began raising funds in April of 2020.               

Their goal, conceptualized in November 2019, was to invest half of the capital available in Black founders, something that they have been more than successful in so far. 

“The majority of our capital is raised to go specifically to Black founders. And then the other half, that’s what’s going to go into other diverse founders… right now 75% of our portfolio is Black,” Hollhon said. 

That remaining 25% isn’t just going to the typical investee, but to other minorities when it comes to getting investments- such as women. 

The accessibility Johnson and Hollhon have created is something that goes further in impact than to individuals they invest in. 

Hollhon sees the money impacting more than the companies themselves, as the outcome involves the business owner’s family, community, and allows them to bring technology into a market that a lot of people can and have benefitted from. 

“It just fundamentally means there’s more money available, it’s never been easier if you have a great idea that has great potential… irrespective of how old you are, irrespective of what you look like, and where you come from, chances are there’s going to be an investor out there who is willing to give you money… if you’re able to get them to believe in your vision,” Hollhon said.

Even if individuals don’t have a business idea or a direct need for the money Black Capital is looking for , Hollhon believes that they witness firsthand the positive changes, including from the equal playing field they aim to open up.

“Being able to help people maximize their own potential, and give them the opportunity that they otherwise wouldn’t have to go on to do something great… it’s possible, and it’s never been more possible than before, and that’s all that really matters,” Hollhon said. 

Some individuals that have been able to grow their businesses in part due to investments they have received from Black Capital include Partake foods and Air Protein, both innovative and quickly growing health and food based companies that meet the Capital’s criteria. 

Partake Foods was founded by Denise Woodward, a Black woman who falls within a group that receives even less money from venture capital funds on average, around 40% of what Black men get, which is already an extremely low number. 

As the CEO, Woodward created cookies that are allergy safe and healthy, and with the help of investments like the one Black Capital made, she was able to sell her products in stores like Trader Joes and Target. 

“She’s a Black female founder yet Black founders receive about 1% of capital, when it comes to Black female founders, they received a fraction of that. So, you know, we’re very focused on also backing, Black female entrepreneurs and Denise Woodward is just a rock star,” Hollhon said. 

Not all companies that they have invested in are as developed, such as Air Protein, which is in its earlier, experimental stages, an example of the risk investors agree to take. 

Hollhon is excited about Air Protein though, which has set out to create a sustainable substitute for meat, a growing issue that, if they can address, will change how we produce and consume food, and impact the planet for the better.

“By introducing our new air-based agriculture, we are able to transform elements found in the air and convert them into nutritious protein, but in a matter of days instead of months, and without the reliance of agricultural land,” as described by the company’s website.  

Johnson and Hollhon both saw a need in their community that they are addressing, and Hollhon draws from his own experiences as inspiration, considering his childhood and time growing up in the Queensbridge housing projects of New York.

“There (were) limited options, especially in those low income communities, public city schools, it seemed like the system was just set up for failure.”

After college, Hollhon began working for banks in New York, which achieved his goal of getting money.

“Getting rich is just a byproduct of me living my mission, and fulfilling my purpose, helping everyone else, especially those from my community. So, I hated what I was doing at the bank and it was terrible. You know I was making money but I was the only person of color on my entire floor,” Hollhon said.

With the position Hollhon has now, he is eager to continue contributing and working with Black Capital to foster change and growth.

“The idea of making money… is a byproduct of helping these founders bring in new technologies and ideas into the world and to change themselves, their families, (have) financial freedom and liberation, because they were able to go on and do something special,” Hollhon said.