The Atlanta Hawks, an NBA franchise, recently announced the launch of Hawks Ventures, a $50 million venture capital fund aimed at supporting early-stage businesses, particularly those owned by women and minorities who often face difficulties in obtaining financing through traditional channels. The fund will not only provide funding but also assistance with customer service, food, entertainment, media, and other services, according to the team’s CEO, Steve Koonin.
Venture Capital as a Critical Source of Early-Stage Funding
Venture capital is an essential source of early-stage financing for startups, but it can also be a high-risk, high-reward investment due to the high failure rate among new businesses. In 2022, Georgia venture capital funding dropped by 43% from its record-setting $4 billion in 2021, according to the Atlanta Business Chronicle, in line with a trend seen across the US as venture capitalists pull back due to high inflation, rising interest rates, and economic uncertainty.
Hawks Ventures is a continuation of the franchise’s community-driven efforts, which include a historic agreement with Black-owned banks to refinance a $35 million loan for its practice facility in December 2020. The State Farm Arena, the team’s home court, also served as the state’s largest voting precinct during the 2020 general election and subsequent double U.S. Senate runoffs, providing increased in-person voting access during the COVID-19 pandemic.
Empowering Underrepresented Communities
Tony Ressler, the principal owner of the Hawks, committed $40 million to multiple Black and minority entrepreneurial efforts in 2020, separate from Hawks Ventures. David Garcia, who will lead Hawks Ventures as senior vice president and managing director of innovation and investments, stated that the fund is a natural evolution of those efforts to provide economic empowerment to underrepresented communities.
Criteria for Receiving Support
Garcia stressed that startups seeking support from Hawks Ventures must focus on improving customer experiences. The initial seed funding will be approximately $1 million per startup, with some funds reserved for additional investments. Koonin indicated that the team intends to provide support beyond just writing a check.
Overcoming Underfunding of Women and Minority-Led Startups
Koonin noted that venture capitalists often overlook women- and minority-led businesses. Crunchbase data showed that during the first two quarters of 2022, startups with at least one Black founder received only 1.2% of all venture funds across the US. Koonin believes that minority- and women-led startups have fantastic ideas that are not receiving adequate traction and funding due to the low number of investors.
Commitment to Empowering Underrepresented Entrepreneurs
Over the next five years, Hawks Ventures has pledged to allocate the majority of its capital to minority- and women-led startups. Koonin emphasized that the fund is not an act of philanthropy but a wise business strategy to tap into the untapped potential of minority- and women-led entrepreneurs.