MassMutual launches fund for diverse, overlooked entrepreneurs

MassMutual launched its second MM Catalyst Fund of $100 million, building on the success of the first $50 million fund launched in 2021, to invest in Seed through Series B of Black-led and overlooked startup companies located in Massachusetts.

"The Catalyst Fund is part of a broader strategy when you think about the work that we do around helping Americans with financial stability. We are investing in diverse entrepreneurs and rural entrepreneurs… It's an idea of investing in these businesses to spur economic development impact alongside financial returns," says Jason Allen, portfolio manager of Impact Investments at MassMutual. "...A couple of different interesting opportunities we've invested in there have to do around our broader alignment with making sure that Americans can feel financially stable." 

The MM Catalyst Fund has invested in 16 companies since its launch, including the insurtech Surround Insurance, which aims to provide coverage to underserved populations through insurance bundling options such as freelance worker insurance, non-owned car insurance, renter's insurance and bike insurance. 

Allen states, "We're doing impact investing, but we're also looking at this through a lens of alignment with our broader strategic initiatives. So that's why we invest in companies like Surround Insurance… because there is an element of impact there in that they're working on getting access to insurance products that weren't available before to a population of people, but also there's an alignment there [because] we're an insurance company, and we want to be able to make sure that folks are financially secure."

The Catalyst Fund considers itself industry agnostic, according to Allen, though the fund gravitates towards finding companies that create a positive social impact; currently, companies in the portfolio exist in industries such as inclusive fintech, healthcare and climate-focused areas focusing on sustainability and clean tech.

The MM Catalyst Fund will also work with MassMutual's First Fund Initiative fund managers to directly invest in Black, Latinx and Indigenous-led businesses that are also focused on generating a positive impact alongside financial returns, located throughout the United States and Canada. In over just two years, MassMutual's impact investment commitment has totaled to $300 million through the work of the MM Catalyst Fund and First Fund Initiative.

In a news release statement, Diane Henry, head of impact investment funds at MassMutual and oversees the First Fund Initiative, said, "We believe more equitable access to capital will play a pivotal role in unlocking untapped growth in the U.S. economy and are excited to continue investing in the next generation of diverse fund managers. We are moving beyond just examining the problem of a lack of diversity in capital access. With this additional capital, we are doubling down on the opportunity to back these high-performing investment managers. Through our First Fund Initiative and leadership in this space, we hope to open the door for other institutions to follow."