Base10 Becomes First Black-Led VC Firm To Cross $1 Billion AUM With New Fund

Late last year, venture capitalist Adeyemi Ajao traveled back to his native Spain to tend to his 92-year-old father. The elder Ajao asked his son about recent investments by his venture firm, Base10 Partners. “I said: ‘Oh, I’m actually doing fintech deals in Africa,’” Ajao recalls. “And he’s like: ‘So, I left Nigeria for Europe, you left Europe for the U.S. Now you’re going all the way round back to put money in Nigeria? You are crazy.’”

Ajao thinks otherwise and is betting on fintech in Africa as one of the six to eight emerging “megatrends” into which he plans to invest the capital from Base10’s third early-stage fund. On Tuesday, the firm announced the closing of that fund, a $460 million vehicle which takes its total assets under management to more than $1 billion. It marks the first time a Black-led venture capital firm has crossed the ten-figure threshold. “It’s crazy that in a world where venture capital raises $150 billion a quarter, we are the first one. There should be multiple by now,” Ajao says.

Founded in 2018, Base10 Partners is helmed by managing partners Ajao and TJ Nahigian. The San Francisco-based firm uses a data-driven approach to invest in automation tech across sectors such as food and retail. “There are way too many companies out there,” Ajao says. “By our calculations, there are 110 new deals per day that our VCs have to look at, so we have to find a way to focus and filter that.” To do so, the firm built an automated software tool to track startups in real time with a set of predictive data points; the 64 investments Base10 has made represent 0.4% of the more than 15,000 companies that it follows.

Most of those investments go into sectors the firm has identified through its software to be an emerging megatrend, which Ajao defines as “trends that are growing fast in terms of hiring and raising money, but still have a majority of early stage opportunities versus later stage.” In the first two funds, for example, the firm invested heavily in food tech. Base10 led the seed round in restaurant marketing startup PopMenu (now valued at $525 million) and incubated cloud kitchens company All Day Kitchens ($375 million). Now, according to the firm’s research, the sector is saturated with mostly later stage opportunities. With the new fund, the firm has eyes on other spaces such as African fintech—entrepreneurs Ajao knows, he says, have as much as 95% of their capital in fintech apps rather than in bank accounts—as well as environmental, social and governance software and logistics.

Base10’s new early stage fund follows a $137 million Fund I in 2018 and a $250 million Fund II in 2020. In the past, the firm invested in about 30 companies per fund with large lead checks of up to $15 million that would give it 15% to 20% stakes in a startup. The larger size of the new fund will mean investments in a few more trends and deals, Ajao says, but if anything changes significantly in its cadence, “it’s even more ownership.”

Some 60% of its investments have gone to companies with minority founders, but Base10 is not inherently a minority-focused firm. Still, it has made prominent efforts to bolster the pipeline for Black people to access tech and entrepreneurship. The firm donates 1% of profits to causes supporting diversity. Last year, as part of the launch of its first growth stage fund of $250 million (it’s grown since to $300 million), the firm said it would route 50% of carried interest into endowments and scholarships at HBCUs. It could have a marked impact on these institutions, which are strapped for liquidity. In 2020, the cumulative size of all historically black college and university endowments totaled just 11% of Harvard University’s endowment, according to an analysis from Black tech news website The Plug. “They have $5 million max to deploy to venture capital,” Ajao says.

Ajao says the HBCU endowment managers tell him no other firm has yet launched a similar initiative (companies like Notion, too, have singled out the commitment as an added reason to pick Base10 as a backer). He is well aware that the signaling for action on inclusivity in venture capital has not always resulted in actionable changes. Still, he’s encouraged by the steady rise of Black investors and Black-led funds. Enough have emerged that a group of about 20 fund managers now meet up regularly. “I think that it’s going to take no time to see the second Black-led fund cross $1 billion,” he says, shouting out 645 Ventures, Harlem Capital, Kindred Ventures, Plexo Capital and Precursor Ventures as rising stars.

At a dinner last month with these other Black investors after he’d made it to $1 billion in AUM, Ajao says the occasion felt bittersweet because of the work left to do. On one hand, limited partners are increasingly asking him to connect them to other fund managers of underrepresented backgrounds, he says. “I was not hearing those questions four years ago.” Still, it’s only one step for an industry that called for many more in the wake of George Floyd’s murder two years ago. “We shouldn’t let people forget that all these things were said and all these promises were made,” Ajao says. “We have to keep going because if not no one will.”