• New York-based BBG Ventures has raised a new $60 million fund.
• The latest fund will invest in both female founders and those from diverse backgrounds.
• New investors in the fund include Pivotal Ventures, California Endowment and Mizuho.

Only a handful of venture capital firms were looking for female entrepreneurs when AOL media executives Susan Lyne And Nisha Dua launched BBG Ventures in 2014 to exclusively support female founders. Ten years later, the seed fund has raised a new $60 million fund and goes beyond just supporting female founders to any entrepreneur from diverse backgrounds.

“It’s not about abandoning women, but about expanding our mandate to support a diverse founding team,” Lyne told Business Insider.

Founders from diverse backgrounds have been hit hard by the crisis. decline in venture capital funding. During the first half of 2024, Black-founded U.S. startups received $228 million in funding, or about 0.3% of the nearly $79 billion allocated to U.S.-based startups. according to Crunchbase data. The dollar total represents a 60% decrease compared to the first half of 2023.

Lyne and Dua partnered at AOL in 2014 to create a $10 million fund, BBG, to support female founders and invested early in Spring Health, which launched recently. valued at $3.3 billion, and the toy brand KiwiCo.

When Verizon bought AOL In 2015, BBG Ventures spun off and raised a new $50 million fund. For the first time, it raised capital from institutional investors, including Michigan State Retirement Services and Illumen Capital. Investments include genAI startup Topline Pro and skincare company Starface.

Dua said these LPs came back to support their new fund and also increased their commitments. New investors in the space include Fairview Capital, Pivotal Ventures, California Endowment and Mizuho. Previous investors Nordstrom, Verizon and Bank of America also invested in the $60 million fund.

Dua explained that the decision to move beyond exclusively supporting female founders reflects the duo’s shift in thesis around innovation. “There are underrepresented groups not only in terms of gender, but also race, age and income,” Dua said.

She highlighted that female founders are still a major area of ​​focus, but that the company is excited to support strong, underrepresented female founders in healthcare, fintech and manufacturing. investment area, almost all venture capital companies are demanding their support: AI. The new fund has already backed an AI recruiting startup for hourly workers, UpWage.

However, BBG is not on its way to becoming an AI-driven company, Dua cautioned. “Some funds build a portfolio of just AI companies,” she said. “It’s not us.” She highlighted a recent investment by the new fund in Nara, a startup that created a certified organic, FDA-approved whole milk formula. “It is important for us to be cautious when AI can drive the growth of some startups,” Dua added.

For Dua and Lyne, being one emerging fund manager and raising a new fund is “not easy”. “This year, the vast majority of venture funding is going to a very small pool of funds, and funds under $100 million are having a harder time raising,” Lyne said. She added that because of competition to raise money from LPs, many funds are taking longer to make decisions and are waiting to see a fund’s returns before investing again.

“Many of our LPs believe in impact and are trying to expand access to capital,” Lyne said. “We raised more than our last fund, and I think that validates our thesis.”