Illumen Capital is reinforcing its commitment to supporting fund managers and founders from communities that are often underrepresented.

Previously, this firm, which acts as an impact fund of funds, has backed initiatives aimed at tackling racial inequality in investment. Recently, the firm, established by Daryn Dodson, revealed the collection of a $32.75 million “Catalyst Fund” to once more assist budding fund managers and founders, particularly those originating from underrepresented groups.

This development emerges during challenging times for various diverse funding leaders and entrepreneurs, who are witnessing reduced financial backing compared to previous years. As reported by Crunchbase, Black founders secured less than 1% of venture capital financing last year, and mid-year indications showed this trend of diminishing funding continuing.

In a conversation with TechCrunch, Dodson mentioned, “In periods marked by economic instability, political divides, and inflation worries, we’ve observed a rise in biases,” further noting that these prejudices are also evident in the venture sector, where significant capital continues to be funneled to the usual recipients.

Regarding the fundraising process, Dodson noted that the firm was privileged to have “cultivated profound connections” with limited partners who are “dedicated to supporting the forthcoming wave of VC and PE leaders.”

According to the firm, it currently manages approximately $285 million in assets. It had previously secured a $168 million Fund II in 2023, also intending to tackle racial and gender disparities in investing.

Dodson explained that the Catalyst Fund serves as a complementary strategy to the preceding two funds. “While our Fund I and Fund II concentrated on more renowned managers, the Catalyst Fund gives precedence to first-time managers and early-stage founders,” he elaborated. “This was purposefully a smaller mechanism, and we were fortunate to have continued backing from two principal investors of our Fund II — Ford Foundation and Health Forward Foundation — for this new fund.”

This Fund aims to allocate at least 65% of its capital to first-time venture managers, with up to 35% as direct co-investments in companies sourced from any active funds. “Predominantly, at least 80% of the fund is projected to focus domestically,” Dodson added. “And up to 20% in emerging markets.”

The fund will generally focus on managers working in education, health and wellness, financial inclusion, climate, and sustainability, he mentioned.

Dodson anticipates deploying the fund within the upcoming year and a half. “We perceive our Catalyst Fund as an opportunity to capitalize on a market inefficiency,” he stated. “With the Catalyst Fund, we aspire to showcase the inherent value of backing diversity-led funds, and identify the premier talent among the upcoming generation of venture managers.”

This article was revised to accurately reflect the domestic focus percentage of the fund.