Colorful Capital, a venture capital firm launched in 2022 with a focus on investing in LGBTQIA+ identifying founders, has decided to halt its efforts in raising a fund, as per an email obtained by TechCrunch. The future of the firm remains uncertain.
The co-founders of Colorful Capital, William Burckart and Megan Kashner, have chosen not to provide comments at this time.
A former employee, who requested anonymity for fear of repercussions, revealed to TechCrunch that Colorful Capital has been struggling to raise its first fund since its inception two years ago. The firm aimed to raise a minimum of $10 million to invest in 13 pre-seed deals and 12 seed deals with initial check sizes of $300,000. The employee, who was familiar with the matter, mentioned that Colorful intended to co-lead deals and provide follow-on funding as well. According to PitchBook data, the firm has made four investments since its launch, including backing companies like Springrose and Mate Fertility in the clothing and health tech sectors.
Despite the challenges, the former employee expressed disappointment over the current situation.
This development comes at a time when there is a noticeable investor pullback from entities emphasizing diversity, equity, and inclusion. Reports indicate that funding for Black founders has decreased, while organizations such as Girls in Tech and Women Who Code have faced closure. The fundraising landscape for venture capital firms and entrepreneurs, especially emerging managers, has become increasingly challenging. Unless backed by a significant reputation or operating in the AI sector, securing investments has become more difficult.
The former employee further mentioned, “We’re likely to witness more similar stories as the market continues to consolidate.”
During its operation, Colorful Capital generated awareness about the insufficient flow of venture capital to LGBTQIA+ founders through white papers. While expressing gratitude for the support received from the community, Burckart and Kashner affirmed their commitment to advancing capital access for the LGBTQIA+ community in their personal endeavors.
The email concluded with the promise that both co-founders will remain active in advocating for LGBTQIA+ capital access.
