By Ryan Hibbison
The debut Rising America fund has generated a TVPI of 3.2x and a gross IRR of 40 percent, lead investor Juliana Garaizar tells Venture Capital Journal.
Portfolia has held a first close on its third Rising America fund, an early-stage vehicle that will invest in companies overlooked by other investors, typically start-ups led by women, people of color and members of the LGBTQ+ community.
Portfolia, which is based in San Mateo, California, has also introduced a separate vehicle specifically for institutional investors. Dubbed the “qualified fund” by the firm, the institutional investor fund is targeting $50 million and will mirror the investments of the accredited fund, which has an undisclosed target.
“For our accredited fund, every day we’re having checks come in and the numbers are higher than they were for Fund II, so we are very confident we’ll get the numbers,” says Rising America fund lead investor Juliana Garaizar, speaking exclusively with Venture Capital Journal .
“Our numbers are so staggering we thought it would be foolish not to take advantage of this and mirror the fund with a qualified one so that family offices and everyone else can take advantage of this.”
Rising America is believed to be the venPture industry’sr first fund series led by five women of color. Its lead investors are Garaizar, Noramay Cadena, Lorine Pendleton and Karen Kerr, while Daphne Dufresne acts as an adviser.
The Rising America team members also work full time on their own projects. Garaizar is founding partner of Energy Tech Nexus, an energy and carbon tech founder community in Houston; Cadena is co-founder and managing partner of 125 Ventures, Kerr is managing director at Exposition Ventures, and Dufresne is managing partner of JBD Holdings.
“Data is the biggest weapon against bias, so the more data we have the easier it is to convince people to invest” - Juliana Garaizar, Portfolia Rising America Fund
Rising America Fund I closed on $5.12 million in October 2020, and Rising America Fund II closed on $6.29 million in December 2022, according to fundraising data from affiliate title Buyouts (registration required). Fund II just recently deployed its last bit of dry powder into Spanish content media provider Canela Media, which is a portfolio company of both Fund I and Fund II, Garaizar says.
Garaizar declined to share the terms of Fund III or name any of its LPs, but says investors that participated in the first close for the accredited fund were return backers of Fund I and II. About half a dozen of them committed more to Fund III than they had to the previous funds, she adds.
The accredited fund is for high-net-worth individuals, which Portfolia has traditionally raised from in the past. The qualified vehicle is the firm’s first fund targeted at institutions, including endowments and family offices.
Institutional LPs that invested in Rising America Fund I and II include financial media company The Motley Fool and impact advisory firm High Impact Ventures.
Up to the Challenge
Raising two funds at the same time may seem like a daunting task given the challenging market for fundraising, but Portfolia is confident that the performance of Rising America Funds I and II will make the process easier.
Rising America Fund I currently sits at a TVPI of 3.2x and a gross IRR of 40 percent, Garaizar tells VCJ well above both the top-quartile TVPI of 1.27x and IRR of 12.9 percent for vintage-2020 venture funds according to fund performance data from Buyouts. Garaizar adds that fund II is doing “extremely well”, despite closing only recently.
Rising America’s thesis is part of the reason its vehicles have performed so well, Garaizar believes. “Data is the biggest weapon against bias, so the more data we have the easier it is to convince people to invest. These funds are amazing and I think one of the reasons is because these companies are overlooked, their valuations are not that high because of that, which is part of the reason we grow as we have.”
Fund III has not made any investments yet but Garaizar tells VCJ that “it won’t take long” to get started, as the firm “may have some pro rata to deploy” in some of its best-performing companies from Funds I and II.
Fund III plans to invest in 15 companies, and it may have some overlap with its predecessor funds, which have built a portfolio of 27 companies. Both the accredited and qualified funds will make the same investments, though the firm declined to share how the capital allocation will be split between the two vehicles.
Garaizar says Rising America III will specifically target sectors where founders from the hispanic, African American, and LGBTQ+ communities are placing the most emphasis.
“A lot of our previous deals have been in healthtech because these are specific businesses that are more prevalent in these communities,” she tells VCJ. “Fintech because we think a lot about our financial literacy, anything that has to do with food and beverage because we have different tastes, and of course anything that has to do with media because we consume very different kinds, and anything that has to do with fashion.
Some of Portfolia’s previous investments out of the Rising America fund series include the aforementioned Canela Media, which, combined with Portflia’s investment in women- and family-focused digital health platform Maven, drove the performance metrics for Fund I, according to Garaziar. Other representative investments from the funds include personal finance platform MoCaF (Portfolia participated in its $13 million Series A round in 2021) and family-focused saving and financial literacy application developer Goal Setter (the firm invested in its $3.89 million seed round in 2021).
Garaizar tells VCJ that Portfolia’s model of “learning by doing” and its focus on bringing underrepresented groups into the venture ecosystem has had widespread effects. “We are a fund, but we are also a sort of angel network and educational foundation,” she says.
“What we do is really empower [HNWI] women into feeling like they belong and make sure that these LPs become the leading investors of either Portfolia funds or potentially other [women-led] funds. I think that a lot of other funds out there that are led by women have been built on Portfolia’s track record,of success and all kinds of education.”
Portfolia was founded in 2013 by Trish Costello, who also founded and is CEO emeritus of the Kauffman Fellows Program. Its aim from the start was to invest broadly in underrepresented founders, and companies targeting underrepresented communities. The firm has since amassed an AUM of more than $70 million across 26 funds and special purpose vehicles, and has made moe than 150 investments in companies across sectors, and from pre-seed to pre-IPO.