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Fifth Star Funds
Fifth Star Funds is a first-of-its-kind philanthropic venture fund dedicated to addressing the racial funding gap in entrepreneurship. Today, less than 1% of...
Fifth Star Funds
Fifth Star Funds is a first-of-its-kind philanthropic venture fund dedicated to addressing the racial funding gap in entrepreneurship. Today, less than 1% of venture capital is awarded to Black founders—a systemic inequity rooted in centuries of economic exclusion. We’re tackling this injustice head-on by investing in underrepresented tech founders at the critical “Friends & Family” (F&F) funding stage, where access to early capital often determines a startup’s success. Our innovative evergreen model turns tax-deductible donations into equity investments of $25,000 in promising founders who face barriers to traditional funding. Returns from successful investments are reinvested into the fund, creating a self-sustaining ecosystem that supports future generations of entrepreneurs. We’ve invested in 27 companies, proving product-market fit and showing that our portfolio companies advance to the next funding stage at rates 10x the national average. With the support of partners like Salesforce, Goldman Sachs, and the Steans Family Foundation, we’re working to scale this mission nationally, unlocking the potential of 6,000 Black founders annually and generating $5 billion in Black wealth each year. This isn’t just about funding startups—it’s about transforming communities, driving innovation, and creating generational change. Join us in transforming the entrepreneurial landscape and bridging America’s wealth gap. — Fifth Star Funds is a registered 501(c)(3) nonprofit organization. We invest in early-stage companies whose founders have faced material barriers to accessing capital due to racial discrimination. While our research primarily addresses challenges faced by the Black community and the potential impact investment programs like ours could have on such challenges, our investment program is open to applicants of all races who can demonstrate they have experienced racial discrimination in securing startup funding.
General information
Firm type
Private Equity
Year founded
2020
Location
Region
North America
Country
United States
City
Chicago
Corporate office
Chicago, IL, United States
Frequently asked questions
How does Fifth Star Funds source its deal flow?
Fifth Star Sources deals through its partnerships with large corporations and local Chicago-area philanthropists, as well as through direct applications from founders who fit its overlooked-founder mandate. The fund focuses on identifying high-potential, untapped talent that lacks access to traditional Friends & Family networks.
What is the structural difference between Fifth Star Funds and a traditional venture firm?
The firm operates on a perpetual-reinvestment model: all realized returns are recycled back into the fund to write new first checks. Traditional venture funds eventually distribute proceeds to LPs and wind down; Fifth Star’s capital base is designed to compound and sustain itself across successive generations of founders, functioning more like an engine than a one-time fund.
Does Fifth Star Funds invest in fund commitments or only direct deals?
Fifth Star’s public materials describe a pure direct-investment model focused entirely on making equity investments at the pre-seed stage. There is no indication the firm participates in fund-of-funds commitments or purchases secondary stakes.
Which sectors does Fifth Star Funds explicitly target?
Fifth Star does not publicly constrain itself to narrow industry verticals. The firm’s mandate is structured around founder identity and stage — first-check capital for overlooked founders — rather than a specific sector thesis, which suggests eligibility is determined by talent and business viability rather than industry fit.
How is Fifth Star Funds related to the corporate partners named on its website?
Goldman Sachs and Salesforce are identified as corporate partners or sponsors supporting the firm’s mission to equalize access to early-stage capital. These relationships appear to be philanthropic or partnership-based rather than an indication of co-investment or fund-ownership ties, though the exact structure has not been publicly detailed.
What investment stage does Fifth Star Funds typically target?
The firm explicitly targets the “Friends & Family” round — a stage it argues is not a viable equalizer for Black founders because of historical financial inequity. Its investments sit at the earliest pre-seed point, before traditional angel or seed-stage capital typically becomes available.
Does Fifth Star Funds maintain any philanthropic structures separate from its investment activities?
No separate philanthropic entity is publicly disclosed. The firm’s for-profit investment vehicle itself functions with a non-extractive perpetual-reinvestment clause that mimics the self-sustaining character of an endowment, blurring the typical boundary between charitable and for-profit structures without formally establishing a foundation.
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