The fund manager had the credentials. The record looked strong. The person reading the pitch was a professional investor. This ought to have been a fairly straightforward encounter between evidence and judgment. Then the researchers changed the manager’s race.
In a 2019 study involving Stanford researchers and Illumen Capital, asset allocators evaluated fictional venture funds. Among stronger-performing teams, Black-led funds received worse evaluations than otherwise equivalent white-led funds. The uncomfortable possibility was that achievement could coexist with a penalty for the person who achieved it. Illumen built an investment strategy around that possibility.
- Back the overlooked: invest in venture, growth and private equity managers.
- Work on the process: pair capital with tools and coaching intended to reduce bias.
- Check the evidence: distinguish changing attitudes from changing behavior and financial results.
The résumé was not the whole story
The experiment matters because it challenges a convenient explanation: there simply are not enough qualified candidates. In the Stanford account of the research, the credentials were controlled. The evaluator’s response still changed. The main study involved 180 asset allocators, people accustomed to deciding whose judgment deserved money. Expertise had not made them immune.
Daryn Dodson had already encountered the puzzle in practice. Before founding Illumen, he managed private investments for Calvert’s board, working across direct investments and fund commitments. Competitive managers were being overlooked. The research supplied a way to investigate why. Illumen’s relationship with Stanford SPARQ began in early 2017, before its first fund closed.
Selling that explanation took time. In a 2026 NAIC interview, Dodson described prospective investors who needed more than one meeting to absorb the idea. Some returned months later after encountering managers whose experiences resembled the findings. The obstacle was recognition: an abstract research result had to become something an allocator could see in an actual investment decision.
Buy the fund. Work on the decisions.
Illumen occupies an unusual seat in the startup economy. Its flagship business is a fund of funds. Foundations and other limited partners commit money to Illumen; Illumen selects managers; those managers invest in businesses. It sits upstream of the entrepreneur’s pitch, where one allocation can influence many later decisions.
For an institutional investor, the offering combines access to a selected portfolio with an effort to improve how that portfolio operates. For managers, the relationship includes IllumenIQ, a proprietary web-based platform addressing inclusive hiring, investment and company support. Coaching and learning programs accompany the tools. This is investment management with an operating relationship attached.
The distinction from a conventional fund of funds lies in what happens after selection. Illumen wants its managers to widen their opportunity set and examine how they evaluate people. Its five themes include education, financial inclusion, climate and sustainability, health and wellness, and inclusive systems. Subject expertise and social psychology share the same investment agenda.
“Everybody has the same front door.”Daryn Dodson, on standardized manager intake · NAIC, 2026
Good intentions meet the Monday meeting
Agreement is the easy part. Illumen’s 2023 impact-report announcement described nearly 95% of respondents believing they should increase diversity, equity and inclusion at their firms. Only 60% said they had changed their investing behavior in the preceding year. You can applaud a principle on Friday and run the same meeting on Monday.
Respondents in Illumen’s report announced July 2023. Self-reported attitudes and behavior; not an investment-return comparison.
The following year’s report announcement pointed to both progress and friction. Forty-one percent felt accountability was lacking among those responsible for advancing DEI initiatives. The firm described customized coaching, written tools and cohort learning, alongside visits to Montgomery, Alabama to examine the history behind modern inequalities. The work moves between organizational routines and the stories people tell themselves about those routines.
A smaller fund opens another door
The capital grew. Fund II closed at $168 million in May 2023, following a first fund later reported at $88 million. Ford and Kellogg led the second vehicle, which exceeded its initial $150 million target. These are commitments to investment funds, with capital destined for portfolios. They are not a startup’s spending budget.
In November 2024, the $32.75 million Catalyst Fund added a different entry point: first-time managers and early-stage companies. It also introduced direct investments into Illumen’s broader strategy. Backers included Health Forward Foundation, California Wellness Foundation and Winthrop Rockefeller Foundation. A vehicle designed for earlier participants could reach opportunities that the established-manager strategy approached differently.
A concrete company example arrived in June 2025. WorkWhile, which connects businesses with hourly workers, named Illumen among the participants in its $23 million Series B. By October 2026, reporting on Fund III put the next flagship at least $27.5 million toward a $200 million target. That was an interim fundraising figure, not a completed $200 million fund.
Borrow the process, then test the result
The useful lesson travels beyond finance. Write evaluation criteria before meeting candidates. Give applicants a consistent route in. Ask whether familiar networks are limiting the search. Compare stated intentions with recorded actions. Those are practical implications of the research and Illumen’s approach; copying them does not require committing to a private fund.
The limits matter equally. A manager must actually change routines. A limited partner must tolerate the long horizon of private investments. Survey improvements cannot establish that coaching caused superior net returns. Illumen’s proposition earns its interest here: if your process systematically overlooks capable people, improving the process may also improve the opportunities you see. The investment results still have to follow.