Sword founders create EX Capital to ‘tackle’ inequality of access to investment

  • ECO News
  • 7 April 2022

EX Capital wants to “support and invest in companies founded by entrepreneurs and founders with less representation in the ecosystem: ethnic, racial, social and gender minorities.”

The founders of unicorn Sword Health have just launched EX Capital, a private equity investment company. They want to “support and invest in companies founded by entrepreneurs and founders with less representation in the ecosystem: ethnic, racial, social and gender minorities”. EX Capital starts with an initial capital of $5 million, to be invested over five years.

“Many of the world’s most dedicated and innovative entrepreneurs have unrepresentative backgrounds, but continue to receive a smaller share of global venture capital,” says Virgílio Bento, co-founder of EX Capital, quoted in a statement. “With our new investment fund, we want to balance this inequality by supporting in particular companies founded by entrepreneurs with less representation, helping to elevate their ideas and establish a stronger and more diverse ecosystem.”

The investment partnership has the founders of Sword Health, Virgílio Bento and Márcio Colunas, as founders, as well as the founding team of the startup, André Eiras, Fernando Correia and Ivo Gabriel. It comes at a time when funding, through venture capital funds, is on the rise.

Last year, funding through venture capital exceeded 600 billion in 2021, an increase of almost 100% compared to 2020, recalls EX Capital. As an example, that year four startups with national DNA reached unicorn status: Feedzai, Remote, Anchorage Digital and Sword Health.

But with one caveat. “The share of these investments dedicated to under-represented groups continues to lag behind.”

“The reality of how unrepresented entrepreneurs receive less funding is a reality in the United States. As an example, African American and Latino founders raised only 2.4% of total venture capital, and over 80% of venture capital funding is allocated to white men. While the total amount invested in startups founded by African-Americans saw a 281% increase in 2021, the number of startups receiving funding decreased. Women entrepreneurs received less funding in 2021 than in previous years. Women founders only raised 2% of venture capital in 2021,” he describes.

It is to change this status quo that the fund is set on. “EX Capital was created to balance the inequality that exists by supporting companies founded by underrepresented entrepreneurs, helping them to elevate their ideas and establish a stronger and more diverse ecosystem. The idea arose based on the very genesis of Sword Health that was born in a context not conducive to success but that, despite this starting point, has become a global company,” adds Sword Health’s official source to People.

“The focus of EX Capital is on technological startups with less representation in the ecosystem, globally promising, regardless of their place of foundation, gender, race or ethnicity of their founders,” reinforces the same source.

EX Capital is an independent and autonomous unit of Sword Health, having only a connection to its founders, not being the aim of the fund,” guarantees a source of the company.

The entry of other external investors is also excluded. The renewal after five years will be subject to evaluation. “The company is not open to external capital and there is a financial return rationale that will be constantly evaluated.”