Last Friday, Citi announced the Citi Impact Fund, a new initiative that uses $150 million of its own capital to support U.S.-based companies. The Fund will represent a “double bottom line” business investment, or an investment that yields dividends while also driving change.
Citi’s initiative will support companies that play a major role in addressing societal issues across four key areas: workforce development, financial systems, infrastructure, and sustainability. Companies that are advancing in the four key disciplines and that have already undergone rounds of funding can receive support from Citi for as much as $10 million. A portion of the Citi Impact Fund will be allocated for seed funding that is exclusively earmarked for companies led or owned by minorities and women, which Edward Skyler, Citi’s executive vice president of Global Affairs, describes as a “pool of often overlooked, high potential entrepreneurs.”
Citi, and other companies, such as Harlem Capital, a New York-based venture fund, are making a critical impact at a time when minority and female founders have been consistently underrepresented in venture capital gains. As illustrated in a 2019 report by Tech Crunch, white founders represented over 77 percent of venture-funded projects, while women were funded less than 10 percent of the time.
“The gender and ethnic gap in the startup world is very real, with reports showing a small fraction of venture capital funding being allocated to women and minority owned startups,” according to Skyler.
The Citi Impact Fund is being heralded as “the largest fund of its kind to be launched by a bank using its own capital.” The Fund’s launch fosters a hope that Citi’s pioneering efforts will be replicated by other funders seeking to diversify the venture capital landscape and to give greater visibility to more companies that are making an impact.