Tally of diverse firms in United States soars toward 1,000

The number of women and minority-owned private equity and venture capital firms in the United States has grown rapidly in recent years, to more than 900.

Still, they tend to have subdued fundraising ambitions compared with the larger market. They seek just 6 percent of the total pool of money targeted by all PE and VC firms.

Such are the findings of the 2023 diversity “market review” released last month by West Hartford, Connecticut-based money manager Fairview Capital, a long-time champion of backing emerging managers. Here are other highlights:

  • A record 417 diverse-owned firms were in the market raising money last year. That was up from 346 the prior year. Of the 417, 230 were raising debut funds.
  • Those 417 firms sought a median target of $100 million for their funds, consistent with the prior year.
  • Nearly three-quarters (72 percent) of diverse-owned firms raising money last year were raising venture capital funds.
  • Since 2014, when Fairview Capital first started publishing its annual report, the number of diverse-owned firms has grown at a 26 percent compound annual growth rate. That translates into a population of firms that is doubling just about every three to four years.

To qualify as a diverse manager in the report, PE and VC firms must be majority-owned by either women or ethnic minorities. They also must be of “institutional quality” and be based in the United States.

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