When Henri Pierre-Jacques and Jarrid Tingle set out to raise their first venture capital fund in 2018, they had to convince the industry’s traditional backers that their firm, Harlem Capital, was more than a fad. Raising $40 million took well over a year. Eager to invest, the duo closed an initial $2 million after a months just to start writing checks.
“People would ask the question, how does a diversity strategy work?” says Tingle. “And we made the case that it was an asset class, like impact investing 10 years ago.”
Harlem Capital’s managing partners had a very different experience in the fall of 2020 when they set out to raise Fund II. This time, they raised their fund ahead of schedule, in just five months, with anchor checks from Apple, PayPal and return investor TPG Capital. They went a lot bigger, too.
Harlem Capital has raised a second fund of $134 million, its founders say, to back 45 mostly seed-stage companies with founders who are women and people of color. The fund, which the investors don’t plan to call the actual cash for until this summer as they wrap up investing their first, puts Pierre-Jacques and Tingle, both 29, as managers of one of the largest Black-led VC firms by assets — and an even rarer one to focus on investing in under-represented founders with its mission.
Founded in 2015, Harlem Capital started more informally as Pierre-Jacques and Tingle, both of finance backgrounds, teamed up to make angel investments in half a dozen startups, as well as real estate and non-tech businesses. At Harvard Business School, the duo, both of whom are Black, decided to focus their efforts on venture-style investing; next, they narrowed their focus to investing in entrepreneurs under-served by the industry.
“There were no other funds that were racially focused with diverse people at the top,” says Pierre-Jacques. “So we felt like we had to start it ourselves.”
The duo and collaborators Brandon Bryant and John Henry appeared on the Forbes 30 Under 30 list for social entrepreneurs in November 2018. Eventually backed by TPG and co-CEO Jon Winkelried the following year, Harlem Capital scored partnerships with tech accelerator Techstars and private equity giant KKR en route to their final close announced in December 2019. From that $40 million first fund, Pierre-Jacques, Tingle and colleagues invested in 23 companies to date, including 11 Black cofounders and 10 women.
With the new fund, Harlem Capital plans to continue to focus on a few key areas: e-commerce, enterprise software, fintech, HR tech, property tech and wellness, the founders say. They haven’t done any deals in ed tech or cryptocurrency, but have invested personally in crypto and are exploring the possibility, Pierre-Jacques says: “We want to be flexible, things change and how do you adapt to it?”
Harlem Capital’s growing in the meantime, both in headcount and check size. Recently, the firm promoted Bryant, who has overseen its marketing and brand-building in addition to investor, to partner; two others, Gabby Cazeau and Kelly Goldstein, were promoted to principals, and Nicole DeTomasso hired as a senior associate. They’ll be looking to write seed-stage checks of $1 million to $1.5 million for equity stakes targeted at 10% or 12% ownership, Tingle says, more than the $750,000 to $850,000 checks of Harlem Capital’s first fund, which typically brought ownership of about 8.5%.
Harlem Capital expects to invest across the U.S. — of its 23 portfolio companies to date, most hail from outside California or New York. They include CashDrop, a Chicago-based e-commerce app; and Malomo, an Indianapolis-based shipment tracking and customer marketing tool for e-commerce brands.
The firm’s new fund came together fast enough that in the fall, its founders had to receive legal permission to fundraise again so soon. That came about, at least in part, due to heightened inbound interest in the firm and its mission in the wake of the Black Lives Matter movement gaining traction across the country in the summer of 2020 following the death of George Floyd. Harlem Capital participated in several industry programs to come out of that moment, its founders say, but passed on many others.
“You won’t know what is real versus theatrical until two or three years from now,” Pierre-Jacques says. “We’re focused on hiring or wiring, actually hiring people or wiring money,” adds Tingle. “We want to see investing happen, we want to see real dollars move out of core funds. We think having a side-car vehicle isn’t exactly what we consider to be real, meaningful change.”
By bringing on Apple, which announced a gradual $10 million check, and PayPal, which announced Harlem Capital was one of a group of firms to receive some of $50 million in funding, Harlem Capital hopes to bring to bear corporate and business development connections that would otherwise take its partners decades more to achieve given their age, Tingle says. The goal: to build the “Motown of VC,” or help create the most Black and Latinx millionaires ever, the two say.
In the interim, Harlem Capital appears poised to assume more of a leadership position in its industry over time through programs like its internship classes for underrepresented entry-level investors, which draw more than 1,000 applicants for a handful of slots. All three more junior hires at Harlem are among the 17 of 58 graduates so far to go into investing roles; the firm is taking on six more this summer.
But while Pierre-Jacques says he and his co-founder Tingle are no longer daunted by their age or experience levels, they consider themselves the equivalent of a Series A-stage startup relative to their goals. “We feel very honored,” Pierre-Jacques says of the firm’s growth to date. “But we’re nowhere close to what we know we can do, and what we want to do.”
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