Harlem Capital, A Backer Of Minority And Women-Run Companies, Wins Investment From $108 Billion In Assets TPG
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Three weeks ago, Jarrid Tingle and Henri Pierre-Jacques were celebrating alongside other graduates of Harvard Business School’s class of 2019 and soaking in the advice of their commencement speaker, billionaire Michael Bloomberg, who lectured on restoring “faith in the promise of America and the future of the American dream.”
Tingle, 28, and Pierre-Jacques, 27, are already hard at work trying to do just that by opening the gears of capitalism to a broader swath of people in this country. Their firm, Harlem Capital, is trying funnel venture and private capital towards minority and women entrepreneurs, who have received what may be as little as 3% of the current tidal wave of investment cash aimed at startups. Harlem Capital plans to back 1,000 young companies with diverse founders over the next two decades, opening these channels of private capital to those who are often overlooked by traditional investors.
Just weeks after graduation, Tingle and Pierre-Jacques, and Harlem Capital’s two other cofounders, Brandon Bryant, 29, and John Henry, 26, are making a big breakthrough. TPG Capital, the $108 billion in assets private equity giant cofounded by billionaires David Bonderman and Jim Coulter, is taking a minority stake in Harlem Capital and becoming a limited partner in its first pooled fund.
TPG’s investment will give Harlem Capital growth funding as Tingle and Pierre-Jacques grow the firm and continue investing their first fund. It also is expected to open deep ties between the two firms. TPG is creating a “Harlem Council” inside the firm, which is expected to offer resources and investing expertise to Harlem Capital. “If you look at the amount of capital that has been available for minority or women entrepreneurs, the data shows they’re dramatically underfunded,” Jon Winkelried, co-CEO of TPG tells Forbes. “Most of the funding dollars have gone to white males who are starting companies.”
With Harlem Capital as a partner, TPG plans to increase the diversity of its employee base and inside its portfolio companies. Over half of TPG’s 2019 and 2020 associate classes identify as women or minorities (or both), and the firm has added 35 women to its company boards.
TPG also stands to benefit financially. Winkelried believes the diverse network Tingle and Pierre-Jacques have built at Harlem Capital will yield new investment opportunities for TPG. “This is’t about just making an investment,” he says. Buying a stake in the general partnership “will give them working capital to invest in the business.” By investing in HCP’s first fund, Winkelried notes, “we'’re also putting our money where our mouth is when it comes to their investing.” (Winkelried declined to disclose the size of TPG’s commitment.) Harlem Capital’s innaugural fund has invested in companies like Aunt Flow, a womens-hygiene startup; Paladin, a platform for legal teams to manage pro-bono cases; and Moving Analytics, which is aimed at cardiac health and prevention.
TPG has made other investments off of its balance sheet, including CircleUp, a financial technology firm aimed at putting a spotlight on promising consumer brand startups, and NewQuest, a firm focused on secondary private equity fund investments in Asia. These deals underscore the new ways in which even the world’s most connected investment firms are looking to uncover investment opportunities. “We are attracted to the idea of expanding our own network and seeing opportunities that come from the partnership that we would not otherwise see,” Winkelried says. “We want to be early in participating in these new channels of deal sourcing opportunities.”
Private equity giants are also becoming increasingly attuned to diversity and pushing hard to groom internal talent of different races and gender. TPG isn’t alone in seeing promise in Harlem Capital's unique model. All four of its cofounders made Forbes’ 2019 class of 30 Under 30 in social entrepreneurship. Harlem Capital was also on TPG’s radar after being introduced by Anilu Vazquez-Ubarri, its chief human resources officer, who was poached from Goldman Sachs a year ago.
A month ago, another financial giant, KKR & Co., struck a big partnership with Harlem Capital, in which the $200 billion in assets firm will use its network to try and bring diverse talent inside its walls. That partnership will focus on applicants to Harlem Capital’s internship program who are interested in careers in investment management, potentially matching them with opportunities across KKR’s broad and global reach. The partnership will focus on early-career professionals, undergraduates and M.B.A. candidates. George Roberts, a cofounder of KKR, told Forbes in April that increasing racial and gender diversity is one of the firm’s biggest strategic efforts. “By every measurement or statistic you over time, diverse organizations do better,” he said.
While KKR and TPG are the first to strike formal partnerships with Harlem Capital, its managing partners Tingle, who was named a Baker Scholar at Harvard, and Pierre-Jacques, are becoming well known in private investing channels and on the radar of large firms like Goldman.
“These guys are very hungry,” says Winkelried. “They’ve caught people’s eye because they are exceptionally hard workers, and they’ve been very creative and innovative about the way they built their firm.”
Source: Forbes
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