VC Firm Base10, Vista Equity CEO Team up to Support HBCUs

• VC firm Base10 is teaming up with Vista Equity Partners’ CEO to support historically Black colleges.
• HBCU endowments have often been barred from investing in venture capital and private equity.
• Vista’s CEO, Robert F. Smith, pledged to pay off student debt for Morehouse’s class of 2019.

The recent boom in venture capital has been very good to universities. But not all schools have shared in the spoils — in particular, historically Black colleges and universities.

That’s something Base10 Partners, the largest Black-led venture firm in assets under management, and Robert F. Smith, the founder, CEO, and chairman of Vista Equity Partners, the largest Black-led private equity firm in assets, are seeking to fix. Base10 and Smith are now combining their efforts to support HBCUs in growing their endowments and preparing their students for tech careers.

Base10 is partnering with the Student Freedom Initiative, a nonprofit organization launched by Smith, to combat debt among Black college students. Smith famously pledged to pay off the student loans of Morehouse College’s class of 2019 during his commencement address at the school that year.

Ade Ajao, Base10’s cofounder and managing partner, told Insider he was encouraged in part by Smith’s pledge at Morehouse to create the VC firm’s Advancement Initiative, a fund that donates half its carried interest to HBCUs. As Base10 devised other ways to support HBCUs, including an internship program for students at such schools, it sought out partnerships with other like-minded institutions.

That mission has personal resonance for Base10’s team, Ajao told Insider. “Basically every single member of our team has experienced or been touched personally by HBCUs in some way,” he said. “What Robert did back in the day was very inspiring to many members of the team and me.”

Smith told Insider he believes that getting more HBCUs into venture capital and private equity is critical to the long-term viability of those schools. Whereas the top 10 college endowments collectively controlled $200 billion in 2020, the top 10 HBCU endowments only had $2 billion in total over that same period, the Brookings Institution wrote in August.

Many HBCU endowments have been restricted by outdated guidelines that prohibit them from investing in venture capital or private equity, Smith said. As a result, they have largely invested in fixed income, which has offered relatively paltry returns since interest rates until recently have been rock-bottom. That has impeded the endowments’ growth.

“There’s a number of HBCUs whose endowments are not sufficient relative to the population and base they support,” Smith said.

SFI is now working with a group of 15 HBCUs, including Virginia Union University. One goal of of the organization is to partner with firms such as Base10 in order to direct more funds to Black-led investment managers, Keith Shoates, SFI’s COO, told Insider. Venture capital firms led by partners from underrepresented backgrounds have often struggled to attract substantial funds.

That has begun to change since the murder of George Floyd in 2020 renewed attention to racial equity. Even so, several VCs have told Insider that those special funding initatives are not a replacement for the long-term capital provided by institutions that traditionally back VC funds, including endowments, pensions, and foundations.

“The George Floyd wave of capital — it’s already been drained,” Marell Evans, the founder of the seed-stage VC firm Exceptional Capital, said.

As HBCU endowments grow, Smith believes they could help close that gap. For now, they’re venturing into private investments just as market turbulence has cooled off company valuations. But that shouldn’t deter schools from jumping in the ring, he told Insider.

“You can’t market time a lot of this,” he said. “You have to build out your program and then actively invest in it over the long term.”