Price was first recruited to Fairview in 1992, tasked with getting the firm off the ground and raising money from public pension funds and other institutional investors to back it. At the time, pension funds had only invested an estimated $50 million—ever—in minority-led venture capital firms. Price wasn’t the first choice for the job: “Of course, they were looking for a man,” she recalls. “But at the end of the day, all of those super-duper men were not willing to take that level of risk.”

Three decades later, Price is seeing some glimmers of hope in terms of her industry’s willingness to bet on more women and people of color. Both the VC firms that she invests in, and the “limited partner” institutional investors (LPs) that she raises money from, are pledging more capital to underrepresented founders and fund managers. The aim: to create a more equitable startup ecosystem, in which people of color and women of all races share in the enormous wealth created by billion-dollar IPOs and sales of venture-backed companies.

We’re still a long way away from that ecosystem, but right now Price is celebrating progress in one corner of it. There were at least 627 private-equity and venture-capital firms majority-owned by women and/or ethnic minorities in the United States in 2021, up 25% from a year earlier and an all-time high, according to a new annual report published Monday by Fairview. When it started publishing this data in 2014, Fairview found only about 100 investment firms that were majority-owned by underrepresented fund managers.

Based in West Hartford, Conn., the firm, which has $10 billion in assets under management and which Black Enterprise calls the second-largest Black-owned PE firm in the United States, says it attempts to meet with every PE or VC firm owned by women or people of color. (In 2021, 76% of the funds raised by those firms were focused specifically on venture capital.)

“We built a diverse company with a specific belief system. Now other people are beginning to believe it,” says Price, adding that big companies and institutional investors are realizing “that the moment is going to be with us—and either you get on board or get left behind.”

More big, well-connected investors are indeed getting on board. In late January, former Time Warner CEO Richard Parsons and other boldfaced business names announced that they had raised $28.6 million from LPs including Bank of America and the Ford Foundation to launch Equity Alliance, a new firm that will invest in female and minority fund managers. Equity Alliance joins several other investors with a similar focus, including First Close Partners and a new fund from Accolade Partners. “The underfunding in this market segment has been so persistent and dramatic—you can’t really put enough dollars into the market to quench the thirst,” says Ed Zimmerman, the Lowenstein Sandler tech lawyer who cofounded First Close.

Like these newer entrants, Fairview Capital is a “fund of funds,” meaning it acts as a middleman between LPs and other investment firms rather than investing in startups directly (although Fairview sometimes does that, too). Last year it raised a $150 million fund from New York Life; other recent LPs include the Ford Foundation and the state-employee pension fund for Connecticut. Price and her cofounder, Laurence C. Morse, are lesser-known names than Parsons, but their similar goals—and track record—over the past three decades have earned them praise among many Silicon Valley insiders.

“They’re the unsung heroes,” says Miriam Rivera, the former deputy general counsel at Google who’s now the CEO and cofounder of seed-stage tech fund Ulu Ventures, in which Fairview has invested. “Every person of color in the industry probably knows Fairview Capital.”

‘Still a drop in the bucket’

The pension funds and other big asset managers who dominate the LP world have increasingly pledged to direct more money toward underrepresented founders and funders, especially in the wake of 2020’s sweeping anti-racism protests. In October of that year, the chief of Yale’s now $42 billion endowment explicitly called for more diversity among fund managers.

But Price has been making that case for most of her life. She grew up learning to make space for herself in places where she initially stood out, starting with her childhood in the overwhelmingly white Philadelphia suburb of North Wales. (She compares the experience to the monochrome fantasies of Hallmark’s holiday movies, which Price has been watching recently as a break from the news. “It’s the most ridiculous thing. They have two Black people, and that’s it,” she jokes. “Then one day I realized: That’s the town I grew up in.”)

After attending Howard University and going to work on Capitol Hill as an aide to Sen. Richard Schweiker, Price joined and eventually ran the National Association of Investment Companies, a trade group for underrepresented investors. Then, in 1992, NAIC sought to establish a fund that would actively woo public pension funds to invest in women and people of color. Price eventually agreed to run the resulting firm, which closed its first fund in 1994, and recruited Morse as her cofounder and co–managing partner. “Superfund set up to aid minority businesses,” the 1992 USA Today headline declared of her efforts to raise an initial $250 million.

Not surprisingly, Price has plenty of war stories from her early days on the road pitching pension funds. There were the investors who belittled the size of the market, or who asked if there were even any Black entrepreneurs starting businesses larger than “successful barbershops and beauty shops,” she recalls. “They were asking what they felt were very legitimate questions. But I never allowed that to get in the way of the goal.”

She doesn’t have to deal with quite that level of cluelessness anymore, for the most part—even if the investing industry hasn’t made as many strides as you might hope since the early 1990s. Of the 627 female- or minority-owned firms Fairview tracked in 2021, a record 280 sought to raise money from institutional investors or “limited partners” last year.  

Still, what these fund managers actually raised from LPs remains a tiny sliver of the market: Funds owned by women and ethnic minorities targeted just a 6% share of all private equity raised in 2021, up from 4% a year earlier, according to Fairview Capital. (A larger Knight Foundation industry survey in September found that underrepresented managers have only 1.4% of all U.S. assets under management, including PE and VC.)

“It’s unfortunately still a drop in the bucket,” says Aakar Vachhani, a partner at Fairview. “Large endowments and pension funds and foundations—they make announcements, and they have initiatives, but it’s hard for them to move.”

Some of the forces holding these LPs back are structural. The median fund size raised by underrepresented managers was $100 million last year, according to Fairview—significantly smaller than the billions of dollars sometimes raised by the best-known VC firms. And many large pensions and sovereign wealth funds aren’t willing, or able, to cut the smaller checks that newer investors usually raise.

“They’re not really organized to do the diligence that’s necessary on something small—and so you miss out,” says venture capitalist Carmichael Roberts, who co-leads the investment committee of Bill Gates’ Breakthrough Energy Ventures and runs his own firm, Material Impact (in which Fairview is an investor). “We could never really get access to [these] LPs, if not for the Fairview Capitals of the world.”

Yet fund-of-funds like Fairview still have to operate under something of a stigma in private-equity circles, in part because they charge LPs an additional layer of fees for serving as an intermediary. One 2017 academic study found that fund-of-funds focused specifically on venture capital are worth the extra fees, because they perform as well, on average, as direct VC funds and “likely deliver added value by being able to access venture-capital managers who other investors would be unable to invest with on their own.”

And some VCs argue that any additional costs to LPs—especially for the services of a long-established specialist like Fairview Capital—should be worth the extra expense.

“If you really care about diversity, you should be willing to pay a bit more for somebody actually doing all of the work of developing these networks, identifying the talent, and developing a track record,” says Ulu’s Rivera. “But, you know, people like to get a lot of things without paying extra for them.”