As raising venture capital becomes increasingly difficult, Washington DC is launching its own fund to generate more growth within the city limits, district leaders announced Monday.
DC will now run a $26 million VC fund, following neighbors Maryland and Virginia in setting up its own means of investment for early-stage companies.
Called the DC Venture Capital Fund, it will be led by the Deputy Mayor for Planning and Economic Development (DMPED). Set up as a fund of funds with pooled capital, the program will be managed by K Street Capital, a seed-stage and angel investment firm and resource group founded in 2012.
Private investors will be required to at least match DC’s investments — meaning the total available will be $52 million at minimum. The initial monetary infusion came through the US Treasury’s State Small Business Credit Initiative, officials said, and the plan is to make the fund evergreen.
“The goal is that with this investment, these local companies will go on to expand, become financially stable,” Deputy Mayor Nina Albert said at Monday’s press conference announcing the initiative, “and generate returns that the district can use to continue this effort well into the future, so that it is a self feeding ecosystem.”
The fund will invest in pre-seed and seed stage companies showing a promise to scale in the next decade, and those with underrepresented founders will be prioritized.
A self-perpetuating fund with deals up to $5M
K Street Capital will identify five to seven fund managers, per DMPED Deputy Chief of Staff Jamie Scott. The money will then be deployed to those funds, with the managers acting as limited partners.
As startups generate returns, they’ll be reinvested into the initiative to create an “evergreen fund,” Scott explained, with cash flowing back to K Street Capital. Though the money is managed by the venture firm, it’s still owned by DC and overseen by DMPED.
This fund is not yet an established organization within local government like TEDCO, aka the Maryland Technology Development Corporation, established in 1998, or VIPC, the Virginia Innovation Partnership Corporation, established in the mid-eighties. That is the eventual goal, Scott explained, though there is not an explicit timeline.
At least one fund manager will be selected by the end of this year, per Paige Soya, managing partner at K Street Capital. The goal is to start deploying capital before the calendar flips to 2025.
Deals will range from $250,000 to $5 million.
Interested managers can fill out an interest form on the venture firm’s website. There will also be information sessions after the new year, Soya said.
“Washington DC is already a thriving city for venture capital and innovation, as we’ve seen,” Soya said. “But this program is going to allow us to deploy even more capital to the startups that need it the most.”
Turning DC into a beacon for diverse entrepreneurship
Mayor Muriel Bowser was clear this fund is for startups in DC proper, despite the DMV region often being framed as one conjoined innovation scene.
“We have worked very hard, not only to attract and invest in underrepresented founders, but also to attract capital to DC,” the mayor said. “Notice I say DC.”
Earlier this fall, DC invested $4.2 million in nearly 40 local businesses through a vehicle dubbed the Inclusive Innovation Equity Impact Fund. The list of companies receiving funding included several tech startups, including customer feedback platform AskHumans and medtech firm IndyGeneUS AI.
City government leaders have been pointing to how emerging technology like cyber and AI are increasingly a key part of DC’s economy, and Deputy Mayor Albert expressed hope that this new fund would further strengthen that pillar.
Plus, by establishing a fund like this in a city where more than 40% of residents are Black, she suggested, DC could become known as a place where diverse entrepreneurship thrives.
“DC is committed to a diverse economy,” Albert said. “It’s also the opportunity to make DC a place where Black founders and women founders and founders with disabilities come and seek opportunity.”
Virginia Innovation Partnership Corporation / TEDCO
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