Colorful Capital, which was founded in 2022 to focus on investing in founders who identify as LGBTQIA+, is ending its fundraising efforts, according to an email reviewed by TechCrunch. It's unclear if the firm is shutting down for good.
Colorful Capital co-founders William Burkhart and Megan Kashner declined to comment.
A former employee who previously worked on the investment team, who asked not to be named for fear of retribution, told TechCrunch that the fund was meant to be the firm's first, but Colorful has struggled to raise capital since it launched two years ago. At the time, the firm was looking to raise at least $10 million to fund 13 pre-seed and 12 seed deals, which started at $300,000. It was hoping to co-lead the deal and make follow-on investments, said an employee familiar with the matter. The firm has made four investments since launch, including in clothing company Springrose and health tech company Mate Fertility, according to PitchBook.
“It's a shame,” the former employee said.
The news comes amid a broader pullback by investors from companies and organizations focused on diversity, equity, and inclusion. Funding for Black founders has declined, and tech organizations like Girls in Tech and Women Who Code have been forced to close. The venture funding market has been tough for many companies and founders, especially emerging fund managers, Bloomberg reported. Unless you're an already well-known, well-known company, or one that's raising money in the AI space, the risk to get money from investors and LPs has become much higher.
“As the market consolidates, we will likely see more stories like this,” the former employee said.
During their tenure, Colorful Capital wrote a white paper about the lack of venture capital funding flowing to LGBTQIA+ founders and garnered support from the broader community to raise venture equity, according to the email. Burkhart and Kashner said they were proud of the support they had received over the past few years and that they would continue to personally work to improve access to capital for the LGBTQIA+ community.
“Rest assured,” the email concluded, “we will continue to be at the forefront.”