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Venture fund eyes minorities.

Chicago-based Ark Capital Management has created a fund-of-funds to route venture capital to minorities and women entrepreneurs. Citing projected demographic shifts, Ark hopes to capitalize on the expected rise in the number of minority and women-owned businesses in the United States.

The Ark Capital Fund specifically targets companies that are owned by women and minorities, or companies that have significant minority and women participation in major decision-making. The fund's principals. Xcylur Stoakley, Michael Granger and Joyce Overly, say it specializes in diversified private equity investments, and that most of the investments will be made via partnerships with women and minority fund managers. "We see the minority community as an asset that has broad investment potential, and we want to take advantage of a demographic shift that will provide excellent returns," says Granger.

Indeed. A survey of minority-owned business enterprises conducted by the Bureau of Census in 1987 (the most recent figure available) reports that the total number of these businesses grew from 742,000 in 1982 to 1.2 million in 1987. That represents more than four times the growth rate of all of the nation's businesses.

Stoakley anticipates that the fund, which requires a minimum $5 million commitments from investors, will structure up to 15 limited partnerships with fund managers. Ultimately, he says the fund should close at $300 million. He hopes for a $100 million closing in its first year.

Kenneth Lombard, executive vice president of Economic Resources Corp., a Lynwood, Calif-based black-owned venture capital fund management firm, is one of many firms eagerly awaiting an invitation to invest with Ark. "It is crucial that we have the assistance of these fund-of-funds to gain access to pension fund investments," says Lombard.

The approximately $13 billion Virginia Retirement System pension fund has also shown great interest in Ark. John M. McLaren, managing director, alternative investments says Ark's structure is desirable because it allows him to invest higher amounts, which can net his pension plan higher returns. With interest like this, fledgling minority firms won't be far from much needed start-up capital.
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Title Annotation:Ark Capital Management creates fund to provide venture capital for businesses owned by minorities and women
Author:Fortune, Mark
Publication:Black Enterprise
Date:Aug 1, 1992
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