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Fifth Star Funds is a nonprofit organization founded in Chicago to provide early-stage capital to founders who have faced barriers due to racial discrimination. Established as the first Friends & Family fund in America, it aims to create a more equitable startup ecosystem by reducing bias in deal sourcing and equalizing access to opportunity. The organization primarily focuses on supporting the Black community but is open to applicants of all races who can demonstrate similar experiences.
Currently, Fifth Star Funds manages a portfolio of 12 companies and operates with a check size range of $23,000 to $25,000, matching the average Friends & Family round in the U.S. The organization emphasizes not only financial support but also access to a network of resources that help founders navigate the challenges of building their businesses. This dual approach aims to foster a more inclusive tech ecosystem.
Fifth Star Funds invests in early-stage companies led by founders who have experienced material barriers to accessing capital, particularly due to racial discrimination. The fund's investment strategy is designed to create a more inclusive tech ecosystem by providing not only capital but also network access and support services. The organization primarily addresses challenges faced by the Black community, but it welcomes applicants from all races who can demonstrate similar experiences.
Investment sectors include healthcare, consumer, fintech, AI, energy, mobility, edtech, creator economy, climate, and commerce. The fund typically invests between $23,000 and $25,000, focusing on the Friends & Family and Seed stages. Fifth Star Funds seeks founders who demonstrate resilience and a commitment to overcoming obstacles, valuing diverse perspectives and experiences in their investment decisions.
Fifth Star Funds has a diverse portfolio of 12 companies, showcasing a range of innovative solutions across various sectors:
Kyle Backer: Board Member with experience in venture capital and a background in supporting diverse founders.
Stella Ashaolu: Board Member with expertise in community engagement and a focus on racial equity in entrepreneurship.
Tim Huelskamp: Board Member with a background in technology and investment, dedicated to fostering inclusive business practices.
Osa Osarenkhoe: Board Member with experience in nonprofit management and a commitment to supporting underrepresented entrepreneurs.
Nate Pelzer: Board Member with a focus on strategic partnerships and enhancing access to capital for diverse founders.
Tracey Suppo: Board Member with expertise in business development and a passion for promoting equity in the startup ecosystem.
To pitch Fifth Star Funds, founders should submit their proposals through the official website. A well-structured pitch deck is essential, including details about the business model, market opportunity, and the founder's background. It is advisable to include information on how the founder's experiences have shaped their approach to the business.
Response times may vary, but founders can expect to hear back within a few weeks. Warm introductions are preferred, but cold submissions are also accepted.
As of March 2023, Fifth Star Funds continues to promote its mission to empower overlooked founders through various initiatives. The organization highlights its unique investment model and diverse portfolio, which includes companies across sectors such as consumer, SaaS, healthcare, mobility, and fintech.
Fifth Star Funds remains active in the Chicago startup scene, engaging with local entrepreneurs and participating in events aimed at enhancing diversity in venture funding.
What are the investment criteria for Fifth Star Funds?
Fifth Star Funds invests in early-stage companies led by founders who have faced material barriers to accessing capital, particularly due to racial discrimination. The fund is open to applicants of all races who can demonstrate similar experiences.
How can founders apply or pitch to Fifth Star Funds?
Founders can apply through the Fifth Star Funds website. It is recommended to provide a detailed pitch deck that outlines the business model, market opportunity, and the founder's background.
What makes Fifth Star Funds different from other venture capital firms?
This organization is the first Friends & Family fund in America, focusing specifically on supporting founders who have faced barriers due to racial discrimination. It combines capital investment with access to a supportive network and resources.
What is the geographic scope of Fifth Star Funds?
Fifth Star Funds primarily invests in North America, with a focus on Chicago and surrounding areas.
What is the typical check size for investments?
The fund typically invests between $23,000 and $25,000 in each company, aligning with the average Friends & Family round in the U.S.
What kind of post-investment involvement does Fifth Star Funds have?
Fifth Star Funds provides ongoing support to its portfolio companies, including access to a network of resources and mentorship to help founders navigate the challenges of building their businesses.
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