Hartford Business Journal

24 HARTFORDBUSINESS.COM | DECEMBER 5, 2022 Focus: Philanthropy JoAnn Price and Laurence Morse, co-founders and managing partners of Fairview Capital in West Hartford, have received a $50-million commitment from billionaire Steve Ballmer and his wife Connie's philanthropic organization, the Ballmer Group. PHOTO | CHELSEA MARRIN The Deal That Almost Wasn't Here's how West Hartford's Fairview Capital landed a $50M investment from billionaire Steve Ballmer By Andrew Larson alarson@hartfordbusiness.com L ike an ill-fated date between an incompatible pair, the Ballmer Group's courtship of West Hart- ford-based Fairview Capital almost ended with the two parties going their separate ways, never to hear from each other again. The Ballmer Group — a phil- anthropic organization led by Steve Ballmer, the 10th wealthiest person in the world, and his wife, Connie — recently committed $400 million to Black investment managers and Black businesses, with the goal of increasing capital to underserved markets. Steve Ballmer is the former CEO of Microsoft Corp. and current owner of the Los Angeles Clippers NBA basketball franchise. Based in Bellevue, Washington, he has a net worth of $86.6 billion, according to Bloomberg. The Ballmers were connected to Fairview, one of the "longest-tenured Black-founded asset managers in the United States," according to the Wall Street Journal, through a mutual acquaintance at the Ford Foundation, said Laurence Morse, co-founder and managing partner at Fairview. Ballmer Group representatives approached leaders at Fairview, looking for a fund manager that would focus most, if not all, of their investment on Black entrepreneurs. They researched Fairview's record and asked questions. The groups met multiple times over several months in 2021. Initially, it didn't seem like a good fit. Ballmer Group wanted 100% of its investment to benefit Black fund managers and entrepreneurs. "... We really were not the company that would do that for them," Morse said. "Someone else might. But in our experience, that would be unlikely to be successful. And we're not in the business of doing anything other than generating success." So, the Ballmers began pursuing other potential partners. "I have to say, I don't think they were initially pleased to hear that and they thanked us very much," Morse said, with a laugh. "And they went away. And we were very much prepared to never hear from them." Fairview was brutally honest with their billionaire suitor — fund managers can't generate market- level returns by investing based on ethnicity alone. Fairview, which has managed roughly $10 billion in committed capital since its 1995 inception, invests in private markets through a funds-of-funds strategy, focusing on venture capital along with diverse and emerging managers. It also invests directly into companies, typically alongside fund managers. "We've been doing this for close to 30 years," Morse said. "And you cannot constrain really high-quality investment managers, whatever their racial, ethnic or gender persua- sion, with respect to the kinds of things they're going to pursue with investment dollars." What Fairview could offer was a diverse network and portfolio of investments that would include a "significant percentage" of companies with diverse founders and CEOs, "but it would not be 100%, and it may not even be 80%," he explained. "Black fund managers, like Latin fund managers, white fund managers and Asian fund managers, are in the business of making money for them- selves and their investors," Morse said. "And they're seeking to do the best quality deals." After exploring other options, Ballmer Group circled back to Fair- view, ready to do business. "And we said, 'Great,'" Morse said. "And so from that point, it became a matter of us kind of fashioning the terms of a partnership." Underfunded market Fairview is among four organiza- tions Ballmer Group selected for its $400 million commitment, along with Goldman Sachs, GCM Grosvenor and Ariel Investments. Ballmer Group said it chose the organizations "based on their demon- strated ability to execute the fund-of- funds strategy at scale, drive at- or above-market rate investment returns and partner effectively with emerging fund managers." Black entrepreneurs continue to be underfunded compared to their white peers, Steve Ballmer said, in announcing the partnerships in October. "We hope it will signal to other investors the value in giving Black investment managers access to capital," Ballmer said. "There are great people out there, and we are excited to catalyze this segment and look forward to excellent returns." Fred McKinney, co-founder of BJM Solutions, an economic consulting firm in Trumbull, said that lack of capital has been one of the biggest hurdles to Black- owned businesses. He cited data from the Federal Reserve that says Black households have about one-tenth the wealth of white households. "Entrepreneurial failure can mean years of getting back to where you started, so the best decision is often not to pursue entrepreneurship," said McKinney, who previously held the role of Carlton Highsmith Chair for Innovation & Entrepreneurship and director of the People's United Center for Innovation & Entrepreneur- ship at Quinnipiac University. "The impact of (the Ballmers') infusion of capital specifically designed for Black businesses cannot be overestimated. This will transform Black businesses Fred McKinney

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