For venture capitalist Marcos Gonzalez, the decision to establish a seed-stage fund to address the growth capital cap for minority-led businesses came about slowly.

When Gonzalez left his private equity job in Latin America about six years ago, he returned to his Pershing Square home to figure out his next career gambit.

As he watched the changing ethnic neighborhoods in his native Los Angeles, Gonzalez found the inspiration for VamosVentures, a downtown-based “impact investing” firm.

Gonzalez, 53, grew up in the downtown enclave of El Sereno, graduated from Alhambra High School, then went off to Ivy League institutions Brown University and Harvard University to study business.

He co-founded an ecommerce company in the heavy equipment industry in Boston during the first internet wave of the 1990s. From 2005 to 2008, Gonzalez was senior vice president with Darby Private Equity where he focused on opportunities in the U.S. Latino market and Mexico. He also worked for Boston Consulting Group as a consultant and project manager in Mexico, Buenos Aires and Dallas.
 
His goal with VamosVentures is to invest in companies that offer measurable social or environmental benefits as well as financial returns. In April, the firm raised $50 million for its first fund, aimed at early stage investments in technology-enabled companies led by Latino and other diverse founders.
 
The fund’s priority sectors are health and wellness, future of work, consumer packaged goods, financial technology, and media. Its partners include Apple Inc.; Bank of America Corp.; Ford Foundation; Twitter Inc.; pension funds run by the states of Illinois and Oregon; W.K. Kellogg Foundation; and TPG Next, a Fort Worth, Texas-based arm of private equity firm TPG that invests in diverse businesses.

Gonzalez sat down with the Business Journal to discuss his vision for Vamos-Ventures, the opportunity for impact investing, the possibility of investing in cannabis and the likelihood of a second fund.

Where did the idea of VamosVentures begin?
I was working at a private equity fund, and it was clear that the future for that fund was in Latin America and not the U.S. Although I had lived and worked in Latin America previously, ultimately, I’m an American, and I didn’t think the future for me was in Latin America. So, I decided to leave the fund and take time to think about what’s next. One day turned into a month, and a month turned into six months, and after a while I realized, “Holy smokes, I’ve got to figure something out here.”

What was that process like?
When you’re in your mid-40s, you’re not necessarily as marketable in these kinds of industries as you once were, so you start to think about, “OK, what do I really want to do?” I was reading an article about tech and investing in tech that got me thinking about opportunities. I had been a tech founder of the late ’90s who actually started a company with two co-partners in Boston.
I started spending time in the Bay Area, and that’s when certain things became very clear to me. Despite the abstract understanding through headlines and news reports that wealth is being created in tech and that tech is running our lives, you don’t really internalize it until you sit in the middle of it. I was really struck by the amount of wealth and the fast pace of wealth creation.

What inspired you to focus on the Latino community?
I was very struck by just the complete lack of diverse folks, and, in particular, Latinx folks in this ecosystem. To me, having been involved in the Latino community all of my life in some way or another, it was a wakeup call.
Understanding the alternative asset world, understanding the startup world, understanding wealth creation, and having a connection to the Latino community, and understanding the demographic trends, was to me a train going full speed on a rail headed right to a cliff.

Sounds like you saw an opportunity to make real change.
To me, it was like if we don’t do something about this, we’re going to be in big trouble. If we are not investing in and supporting and participating in Latino and Latina startups, that’s a mistake. Not only is it an imperative to invest, but it’s a mistake if we don’t invest, especially since there are great entrepreneurs in this community. The fact that very few of them are being backed or encouraged to participate in this industry seemed to me to be a big mistake and a lost opportunity.

So, the creation of VamosVentures was an evolutionary process for you?
Yeah, it really was the convergence of a number of things that just lined up. If this would have happened 10 years ago, there wouldn’t have been enough market growth. I don’t think I would have been successful in raising funds for VamosVentures, to be honest. It just so happened that it was a little early in 2015.
That’s when I started really thinking about this, and it wasn’t until 2018 that we were able to really get some traction. And today, you look around, and there’s many diverse managers getting off the ground. You didn’t see that five years ago, certainly not eight years ago.

Did the racial policies of Donald Trump or the social justice movement influence your thinking about VamosVentures? 
I don’t think Donald Trump was a large influence to asset owners to begin to put money to work behind diverse managers and diverse founders. I think it was one of several considerations, but on the list of priorities or main drivers, I don’t think it was one. Now, there may be some out there who would say it was, but I’d say what was a big driver was George Floyd (a Black man murdered by Minneapolis police during an arrest in May 2020), and a lot of other tragic events of the last year, year and a half. That was much more a driver and motivator for asset owners to do something.

Did you see that personally with your fund? 
Yeah, absolutely. You know, there’s two parts to it. One is that asset owners aren’t just writing checks. They are fiduciaries, doing their due diligence and so on. It’s not a free for all. I think we’ve benefited from having spent years building relationships with asset owners in the market, and building a track record and a team and a strategy. But it’s also clear that momentum over the last year, I think, facilitated some decisions among asset owners putting money behind diverse managers who are investing in diverse factors.

Did the Black Lives Matter movement create momentum for investing in diversity?
I think the BLM movement, the social justice movement, the increasing polarization of America, all those things, absolutely influenced investment decisions. I don’t know to what extent. I think there was an influence, for certain.
It’s interesting to see that there are asset owners out there who have already been on a journey, a five- or eight-year journey, of moving their investment strategy to an impact strategy. And I think what happened last year, really kind of confirmed their conviction around what they’re doing.

What do you think about cannabis investment? 
My on-the-record response would be initially, “No.” But it’s clearly on the radar. It’s a trend that is going to happen. It’s hard to imagine it’s going to get reversed. Second, there are certainly angles here that this could be interesting from an impact fund’s point of view, and that’s investing in supporting entrepreneurs of color who come from communities that have been historically penalized by the justice system related to cannabis. This doesn’t necessarily mean that VamosVentures is going to invest in the cannabis industry, but it is on our radar.

What ethnicity and gender are entrepreneurs identifying with who show interest in your fund? 
As an impact fund, we try to track this information. No one’s obligated to give it to us, but we do want to track it as best as we can and do an analysis over time, and by industry, by geography, and things like this. We have investors in our fund who are very interested in this.

Do you have plans for a second fund? 
I believe that by this time next year, we’ll be in our silent phase when we’ll be looking for our anchor limited partners to raise for a second fund.

What is the persistent gap in access to growth capital for minority-led businesses?
That gap is a very small word that means a lot of things, and the gap could be anything from just not having proper guidance on how to think about raising capital, or utilizing capital, or the sources of capital, and when they’re appropriate, and when they’re not. There also is a gap to actually get in the door and have meaningful conversations and start relationships to facilitate the access to that capital.