CityRock, a part of H/L Ventures, recently closed a $24 million Fund II aimed at investing in founders from diverse backgrounds. The fund will focus on backing companies in sectors such as climate, healthcare, and the future of work. This announcement comes as CityRock continues to expand its reach in the venture capital space, with various legs to its operations that range from a venture studio to standard funds.
Within its venture studio, CityRock has three funds and two CityRock funds, which specifically target Series A investments. The firm also runs a seed program that supports pre-Series A companies within the broader H/L portfolio. This comprehensive approach allows CityRock to provide holistic support and investment opportunities to its portfolio companies.
CityRock Fund, the inaugural fund under this initiative, was launched in late 2019. Oliver Libby, co-founder and managing partner of H/L Ventures, highlighted the fund’s mission to offer a platform of support and investment for portfolio companies. The average check size for CityRock Fund II will be $2 million, with a reserve set aside for follow-on investments in companies backed by CityRock Fund I. The fund is currently being deployed and expects to invest in 14 Series A companies, as well as a similar number of seed-stage companies through its seed program.
CityRock Fund I, which closed in 2021 with a total of $17 million, has already invested in 15 companies. Notably, nearly 85% of the founders in CityRock’s portfolio come from underrepresented backgrounds. The firm defines underrepresented broadly, encompassing gender, race, socio-economic background, sexual orientation, and military service. While diversity is not a strict requirement for investment, it is a strong preference for CityRock. Libby emphasized the firm’s commitment to supporting diverse founding teams and highlighted research that shows the positive outcomes associated with diverse teams.
Despite the challenges faced by the firm’s general partners during the fundraising process, CityRock successfully secured sufficient LP support for its investment strategy. Libby acknowledged that the current climate and economic conditions have presented obstacles but expressed optimism about the appetite for diversity within investment strategies. The firm remains dedicated to its mission, recognizing that supporting diverse founders in areas like healthcare and climate is crucial for driving innovation. Diverse founders often bring unique perspectives and insights that can lead to solutions addressing specific community needs and societal issues.
H/L Ventures, founded in 2009 by Eric Hatzimemos and Libby, will deploy Fund II over a four-year period. The average check size for investments will be $1 million. Ultimately, CityRock aims to back a diverse group of founders with a positive mission, contributing to both financial success and societal impact.
In conclusion, CityRock’s $24 million Fund II underscores its commitment to supporting diverse founders in sectors that have the potential to drive meaningful change. The firm’s comprehensive approach, encompassing venture studios, standard funds, and seed programs, allows it to provide holistic support and investment opportunities. By focusing on underrepresented backgrounds and promoting diversity, CityRock recognizes the importance of inclusive innovation for a better future.