In a Nutshell: Zeal Capital Partners invests in exceptional, diverse management teams that are rethinking the building blocks of wealth: the education to employment pathway, financial inclusion, and health equity. This inclusive investment firm specifically seeks out tech enabled high-growth businesses that have been neglected by heritage venture capital firms. Zeal exclusively invests in the fintech, workforce, and healthcare categories. Zeal typically looks to underwrite investments in companies that have paying customers and a minimum viable product. Businesses not only receive investment capital from Zeal, but also receive guidance from experienced fintech, workforce, and healthcare experts within the firm.
Income inequality in the United States is not only substantially higher than in almost any developed country, it is continuing to rise at alarming rates. Over the past 40 years, fewer Americans have been able to achieve financial freedom.
According to the Financial Health Network, only 29% of those surveyed said they felt financially healthy. The other 71% reported feeling either financially vulnerable or financially coping, demonstrating struggle within their financial lives.
There are several problems to solve but few solutions coming forward. Businesses that aim to solve issues for low-to-moderate income families don’t see the same backing that large tech companies see in Silicon Valley, limiting their impacts on society.
Zeal Capital Partners, a venture capital firm, aims to change that through its Inclusive Investing™ strategy. Inclusive Investing™ allows Zeal to cast a wide net when sourcing companies, while keeping outsized returns and impact front and center in investment decisions.
Zeal’s data shows that diverse fund managers earn better returns, and companies that have diverse leadership typically outperform their peers. The firm built its diverse team based on race, ethnicity, background, and unique skill-set perspectives.
Zeal focuses on sourcing founders that have been proximate to the problem they’re solving and see a clear market opportunity. The categories Zeal invests in have an outsized impact on turbo charging economic mobility for students, workers, consumers, and patients.
Inclusive Investing™ is a five-pronged approach that is implemented with the goal of narrowing the wealth and skills gaps. By focusing on structural inequalities, Zeal Capital Partners can help democratize access to capital among all communities.
“Access to capital is a huge problem across the industry with more than 98% of capital going to a similar profile of individual,” said Andy Will, Zeal Capital Partners’ Principal Investor. “We think you can find these specific skill sets across the country, but opportunity is not as easily available.”
Using a Five-Pronged Approach to Inclusive Investing™
About 80% of all venture capitalist dollars go to four states: California, Massachusetts, New York, and Texas. That leaves the other 46 states to vie for only 20% of the pie.
Zeal Capital Partners sources and funds those startups that plant their roots in secondary and tertiary markets. The firm’s fintech and workforce technology investments work as a means to bridge the country’s wealth and skills gap.
Zeal uses a five-pronged approach to investing, and follows the strategy to fund successful companies.
The startups Zeal funds must make impact a core of its business model. Each company must also sign a diversity pledge and a pledge to scale technology solutions into underserved communities.
“If the core business model and monetization strategy can yield large-scale impact to millions of people, you’re going to drive equal parts – impact and financial returns,” Will said. “We aim to help our portfolio companies realize outsized financial returns in conjunction with those impact returns.”
Zeal operates on the belief that talent is evenly distributed across society, but opportunity is not. The firm said other venture capitalists are missing out on financial returns by not investing in talented people with unique perspectives to solve problems within communities.
The only way to start factoring marginalized communities into the equation is to invest in more diverse entrepreneurs. Zeal said these communities are missing out on economic growth because investment firms neglect large swaths of the population that don’t have access to capital.
Zeal Capital Partners is doing its part to back founders who attack problems that low-income communities face on a daily basis. Most of the founders the firm has invested in usually felt those pain points for themselves.
“If you’ve uniquely felt this pain point, you understand what it’s like,” Will said. “Your friends and family felt this pain point, you see what it would take to resolve the problem in a scalable fashion that is repeatable for a large slice of the population.”
Focusing Efforts on Fintech and Workforce Technologies
Zeal Capital Partners takes its time with founders to understand their companies and determine why the firm should invest in them. Zeal aims to find how founders think about the world and what they plan to accomplish in the long run.
The firm prefers investing in companies that already have a few customers, earn more than $100,000 in recurring revenue, and have a minimum viable product. Founders need to demonstrate how their product or service helps people and the pain point it is trying to solve.
“We want to see a roadmap, a growth strategy, and a customer pipeline where our capital can enable the company to reach product/market fit and a meaningful acceleration in growth,” Will said.
Zeal said it is not just funding startups, but the firm also wants to be collaborative with entrepreneurs. It wants to work with people who have an impactful problem that Zeal’s infrastructure and investment will help solve.
When other venture capital firms turn down visionary founders who do not fit the traditional mold, Zeal Capital Partners wants to step up and lead investment rounds with high conviction and run a concentrated portfolio.
Zeal’s in-house executives know how to build successful workforce and fintech companies and help founders reach their potential. The firm also has a strategic group of partners that share the same mission and values to help startups grow and scale.
Zeal Capital Partners goes all-in with fewer companies so they can provide the most value – as opposed to investing a small amount of money into a greater number of companies.
“We are a category-specific firm, by keeping the portfolio very concentrated and having high conviction, we’re able to dig in, build with our entrepreneurs and help them think about problem solving,” Will said. “We want to be the first call for good and bad news and really lean in to help.”