Colorful Capital, a firm that was launched in 2022 with a focus on investing in LGBTQIA+-identifying founders, has announced that it will no longer attempt to raise a fund, as revealed in an email obtained by TechCrunch. The future of the firm remains uncertain, as it is unclear if this decision signifies a permanent shutdown.
Colorful Capital, co-founded by William Burckart and Megan Kashner, has declined to comment on the matter. However, a former employee who wishes to remain anonymous due to fear of retaliation has shed some light on the situation. According to the employee, this fund would have been the firm’s first, and Colorful Capital has been struggling to raise it since its inception two years ago. The firm aimed to raise a minimum of $10 million to invest in 13 pre-seed deals and 12 seed deals, with check sizes starting at $300,000. The employee, who was familiar with the matter, stated that Colorful Capital intended to co-lead deals and provide follow-on checks as well. Despite its efforts, PitchBook data shows that the firm has only made four investments so far, including one in clothing company Springrose and another in health tech company Mate Fertility.
The news of Colorful Capital’s struggles comes at a time when there is a broader investor pullback from businesses and organizations focused on diversity, equity, and inclusion. Funding for Black founders has seen a decline, and tech organizations like Girls in Tech and Women Who Code have had to shut down. Bloomberg has reported that the venture fundraising market has become challenging for many firms and founders, particularly emerging fund managers. Unless one has an established reputation or operates in the AI sector, the competition for funding from investors and limited partners has become significantly more intense.
The former employee predicts that more stories like Colorful Capital’s will emerge as the market continues to consolidate. However, it is important to highlight the impact that Colorful Capital has made during its existence. The firm wrote white papers addressing the lack of venture capital funding for LGBTQIA+ founders, and it garnered support from the wider community in its mission to achieve venture equity. In the email, Burckart and Kashner expressed pride in the support they have received over the past few years and affirmed their commitment to advancing capital access for the LGBTQIA+ community, albeit in individual capacities.
While the future of Colorful Capital remains uncertain, Burckart and Kashner assured their supporters that they will continue to be active in advocating for change. They emphasized their determination to remain on the front lines, indicating that their commitment to supporting LGBTQIA+ founders and advancing capital access for underrepresented communities remains unwavering.