Photo by Ringo Chiu.
West LA-based Backstage Capital has revealed plans to raise up to $ 30 million for its latest fund which could more than double its current level of investment in minority-led startups.
The fund is called Opportunity Fund I and aims to finance the majority of companies in which Backstage has already invested, “as a result of those previous rounds,” according to Backstage founder and managing partner Arlan Hamilton.
Backstage has invested over $ 20 million in 200 companies since its inception in 2015.
The company targets startups whose founders are led by people of color, women, or members of the LGBTQ community.
In a video posted to its Backstage website, Hamilton gave the public a first look at the Opportunity Fund, which is intended for accredited investors only. This means that investors must earn $ 200,000 per year, or combined $ 300,000 or more with a spouse, or have a net worth of $ 1 million.
The minimum investment is $ 50,000.
Under SEC guidelines, Hamilton may discuss fundraising for the Opportunity Fund as his organization is registered as a 506 (c) under the SEC rules on sales of securities.
“I can do an airship in the air if I want to, and that’s what I’m doing right now,” Hamilton said in the video released this week.
“The target is $ 30 million, although we have a model that is more or less fundraising,” Hamilton said.
This spring, Backstage launched a crowdfunding campaign to raise $ 5 million. The venture capital firm hit its target on April 1, two months after launch.
By allowing ordinary investors, even non-accredited ones, to allocate as little as $ 100 through an online investment platform, the company has broken down old barriers in a venture capital ecosystem traditionally dominated by institutional investors. and family offices, Hamilton explained.
Run through the online platform Republic, the Backstage campaign was made possible by Regulation Crowdfunding, or Reg CF, a rule of the Securities and Exchange Commission that allows companies to raise $ 5 million through crowdfunding on a period of one year.
The Reg CF rule was changed on March 15 to allow for the higher fundraising target of $ 5 million, up from the previous cap of $ 1.07 million.
Hamilton said the campaign has attracted more than 7,000 investors.
The crowdfunding industry is small, but it has exploded during a pandemic.
Crowdfund Capital Advisors estimates that 2020 capital commitments to Reg CF issuers like Backstage Capital increased nearly 78% to $ 239 million in 2020, from $ 135 million the year before. The $ 5 million cap stimulates capital increases.
Hamilton partners with Mark Cuban, owner of the Dallas Mavericks of the National Basketball Association and an investor in the ABC reality show “Shark Tank”.
Backstage was an early investor in San Francisco-based Akash Systems Inc., which creates breakthrough technology for satellite infrastructure and raised $ 14.5 million in a Series A funding round.
Other companies the company has invested in include Detroit-based toy company Healthy Roots Inc., which operates as Healthy Roots Dolls, and Chicago-based CurlMix Inc., a hair products company. by subscription.
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