Illumen Capital is doubling down on its support for fund managers and founders from underrepresented communities. 

The firm is an impact fund of funds that has previously supported ways to address racial bias in investing. Yesterday, the firm, founded by Daryn Dodson, announced the raise of a $32.75 million “Catalyst Fund “to once again support emerging fund managers and founders, especially those hailing from underrepresented backgrounds.

The news comes during a fraught time for many diverse funding managers and founders, who are seeing less financial support than in the years before. Black founders raised less than 1% of venture capital funding last year, according to Crunchbase, and as of H1, that group was on track to continue seeing a funding decline.

Speaking to TechCrunch, Dodson said, “During terms of economic uncertainty, political polarization, and concerns of ongoing inflation, we’ve seen biases increase,” adding that these biases are also playing out in the venture space, where billions of capital is still going to the same people. 

When asked about fundraising, Dodson said that the firm was fortunate enough to have “established deep relationships,” with limited partners that are “committed to backing the next generation of VC and PE managers.” 

The firm has approximately $285 million in assets under management, it said. It last raised a $168 million Fund II in 2023 to also address racial and gender bias in investing. 

Dodson said the Catalyst Fund is a complementary strategy to its first two funds. “Whereas our Fund I and Fund II focused on more established managers, the Catalyst Fund prioritizes first-time managers and early-stage founders,” he continued. “It was intentionally a smaller vehicle, and we were fortunate that two of our anchor investors from our Fund II — Ford Foundation and Health Forward Foundation — backed this latest fund.” 

The Fund hopes to invest at least 65% of capital into first-time venture managers and up to 35% of capital as direct co-investments into companies sourced through any of its active funds. “At least 90% of the fund will likely be focused domestically,” Dodson continued. “And up to 20% in emerging markets.”

The fund will look generally at managers working in education, health and wellness, financial inclusion, climate, and sustainability, he said. 

Dodson hopes to deploy the fund within the next year and a half. “We see our Catalyst Fund taking advantage of a market inefficiency,” he said. “With the Catalyst Fund, we hope to demonstrate the intrinsic value of backing diverse-led funds, and identify the best of the next generation of venture managers.”