Henri Pierre-Jacques on Building Harlem Capital and Funding Diverse Founders

The Harlem Capital managing partner explains first-fund fundraising, portfolio construction, team development and his long-term mission.

HPHenri Pierre-JacquesGast · Harlem Capital
Kanal
20VC with Harry Stebbings
Veröffentlicht
24. Juni 2022
Video
48:33
Lesezeit
7 Min.
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Englisch
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In this June 2022 conversation, Harlem Capital managing partner Henri Pierre-Jacques describes the firm’s journey from angel investing to an institutional fund focused on diverse founders. He discusses ownership targets, reserves, fund management, fundraising and training emerging investors. Fund sizes, program figures and return targets are historical; targets are not realized returns, and Pierre-Jacques has a financial interest in the firm and its portfolio.

  1. 1Portfolio mathematicsFor the then-$134 million fund, Pierre-Jacques describes check sizes and ownership targets, as well as an aspirational return range; the latter is not realized performance.
  2. 2An 18-month raiseHe recalls hundreds of meetings and 55 limited partners for the first fund, including six institutions.
  3. 3Markups versus cashHe says intermediate indicators do not answer whether a manager is successful until returns reach limited partners.
  4. 4Junior voices firstHarlem changed its investment discussions so junior staff speak before senior partners.
  5. 5Sharing diligenceThe firm consolidates its analysis in detailed memos and shares its assessment, including risks, with founders.

Das Wichtigste

  1. Fund size, ownership, price and portfolio breadth must be considered together.
  2. Target returns are assumptions in a fund model, not guaranteed outcomes.
  3. Fund management requires operating, fundraising and team-building skills in addition to choosing deals.
  4. General partner commitments can impose different burdens depending on a manager’s circumstances.
  5. Interim markups are different from cash returned to limited partners.
  6. Written diligence and junior-first discussion can improve transparency and independent input.
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01

From angel investing to a fund

Pierre-Jacques describes his background and founding Harlem Capital. He explains the transition from personal angel checks to institutional investing.

Henri Pierre-Jacques began in investment banking, then joined a Black-owned private equity firm where he and Jarrid Tingle worked together. In 2015 they began angel investing from Tingle's Harlem living room. Many of their early investments were in diverse founders, although that was not yet a formal mission.

At Harvard Business School, the pair considered venture jobs but decided to use their angel track record to raise a fund focused on women and diverse founders. They formally launched fundraising in 2018 and closed the first fund at $40 million in November 2019, after initially targeting $25 million, according to Pierre-Jacques.

The move from angel to fund manager changed the scale of decisions. He recalls angel checks averaging roughly $25,000 and a first fund check of $250,000; by the end of that fund checks reached $750,000 to $1 million. He says the second fund averaged around $2 million, and that experience gradually made larger amounts feel less intimidating.

02

Portfolio design and firm management

He discusses fund size, ownership, reserves and the skills needed to scale a manager. The return figures discussed are targets, not outcomes.

Pierre-Jacques groups seed portfolios into concentrated funds with fewer than roughly 20 investments, diversified funds with around 20 to 45, and broader portfolios above that range. These are his working categories, not universal definitions. Harlem sought a balance between enough companies to find outliers and sufficient ownership for the fund's size.

He argues ownership targets depend on fund size and price. A smaller fund can be returned by a smaller exit with a lower ownership stake, while a larger fund needs more ownership or larger outcomes. His examples are fund-model assumptions and do not ensure returns.

For Harlem's then-$134 million second fund, he describes initial investments of $1 million to $2.5 million and a target of 10% to 15% ownership, subject to price and round terms. He says the firm aims for consistent three- to five-times net returns over time. This is an objective based on its model, not reported realized performance or a promise.

Reserve planning follows the fund's strategy and capacity. Harlem often leads deals and takes board seats, so team bandwidth and administration limit how many companies it can serve. Pierre-Jacques says the team preferred not to use special purpose vehicles because of the extra work, while acknowledging other managers may choose differently.

He distinguishes selecting investments from managing a fund: fundraising, building a team and operating processes become central as a firm scales. A manager can be a strong deal picker without necessarily wanting to build a large institution. Pierre-Jacques says he aspired to build a much larger, multi-asset business; that is a personal ambition.

03

Commitments and the first fundraise

He explains the partners’ capital commitments and an 18-month fundraising process. He shares lessons on institutional support and approaching potential limited partners.

General partner commitments can be burdensome for young managers. For Fund I, Harlem based its commitment on the $25 million target rather than the eventual $40 million close, contributing $250,000. Pierre-Jacques says the team had already invested personal capital in its angel portfolio and had business-school debt.

For Fund II, he says the partners used a credit line for part of their commitment, with their own cash covering the remainder. He urges candid conversations with limited partners about different personal circumstances and believes the same percentage can impose very different burdens on managers with different wealth.

The first fundraising process took 18 months, much of it while Pierre-Jacques and Tingle were at business school. They traveled regularly between school and New York and estimate they held 400 to 500 meetings. The fund ultimately had 55 limited partners, he says; these are his recollections of that process.

The team learned to identify investors willing to back first-time managers and supportive of its diversity thesis. Pierre-Jacques says some prospective investors doubted there were enough diverse startups that could scale, and others wanted a narrower sector focus. He disputes that assessment, describing the founders they sought as an underserved opportunity.

He acknowledges that Harlem presented several characteristics some limited partners viewed as risks: the founders were young first-time fund managers from private equity without prior venture or startup operating roles. He says six institutions ultimately backed the first fund, along with general partners and family offices.

Pierre-Jacques credits TPG, the anchor investor, with making introductions and joining fundraising meetings. He says three of the fund's six institutional relationships came directly through that relationship. His advice is to research a potential introducer's network and request specific, relevant introductions instead of asking them to identify contacts from scratch.

Early on, the team repeatedly changed its deck in response to advice. A prospective investor told them to ask for a commitment rather than only advice. Pierre-Jacques says they learned to combine confidence in their plan with humility, and to make a clear request to potential backers.

Fund I held three closes and increased the minimum check as the raise progressed. His reasoning was that early small checks helped build momentum, while a later investor should not necessarily receive the same minimum after waiting. Stebbings notes exceptions can be worthwhile for smaller investors who provide valuable introductions.

04

Investment judgment and team culture

Pierre-Jacques discusses uncertainty, early mistakes and distinguishing markups from realized returns. He describes changes designed to make room for junior perspectives.

Even after raising capital and winning deals, Pierre-Jacques asks whether he is truly a good investor. Markups and intermediate indicators are not the same as money returned to limited partners, he says. Until investments are realized, market changes can materially alter apparent value.

One early mistake was looking for too many ideal attributes at once. Harlem considers the founder, market, business and ownership; he says it may invest when at least two are exceptional rather than requiring perfection across all four. He believes experience and exposure to more companies helped him become more comfortable with uncertainty.

He calls stubbornness both a strength and weakness. Quantitative evidence helps change his mind, though he recognizes that not every important judgment can be reduced to data. The team has debated how to interpret economic conditions and communicate them to founders.

Pierre-Jacques acknowledges that senior partners can unintentionally suppress junior views. The firm now asks associates and other junior members to speak before general partners in investment discussions, giving them room to express independent judgments before hearing the most senior opinion.

05

Mission, interns and diligence

He describes Harlem’s long-term mission and its internship program. He explains how written investment memos support diligence and founder communication.

Harlem's mission is to back 1,000 diverse founders over 20 years. Pierre-Jacques worries about falling short of what the organization could accomplish and believes visibility, mentoring and scale can broaden opportunity. This is an aspiration, not an achieved result.

He identifies access to capital and talent as barriers to that ambition. As the team grew, his role shifted toward enabling colleagues rather than personally helping every founder. At the time, he says the firm had seven employees and had engaged 76 interns over four years, hiring five of them.

The internship program ran three part-time, remote cohorts a year, with six interns per class. It began to help with fundraising materials and later became a source of research and recruiting. Pierre-Jacques says applications increased from 125 for the first cohort to 1,250 for a later one; the numbers describe that period, not current recruiting.

He says 24 of the 76 former interns were then working at other venture funds. He sees that as a way to expand the number of investors able to advocate for diverse founders beyond Harlem's own investment capacity. This is his account of the program and its intended impact.

Harlem uses detailed PowerPoint investment memos that can run 50 to 60 pages. Pierre-Jacques says they consolidate diligence, references and reasoning in one place and demonstrate a repeatable process to institutional backers. He says the firm can still complete some deals quickly; speed does not remove investment risk.

After investing, the firm shares its memo with the founder and discusses both the upside and the risks it identified. Founders can also share it with potential co-investors. Pierre-Jacques argues that an investment decision does not mean the investor saw no weaknesses; it means the team judged the potential reward worth the risk.

06

Life, advice and a recent investment

He discusses productivity, relationships and managing rejection. He closes with his views on limited partners and a recent portfolio investment.

In a rapid-fire discussion, he says moving from New York to Miami changed his view that productivity depends on working the longest hours. He blocks time for workouts and personal commitments and uses a shared calendar with his wife. He describes their relationship as a long-term partnership built on support and challenge.

His advice to first-time fund managers is not to take rejection personally. He recalls being hurt when people close to him initially declined to invest; one later joined the fund. His father's encouragement helped him continue, though he presents that as personal experience rather than a fundraising formula.

He would like limited partners to take more risk on emerging managers, including diverse managers and smaller or solo funds, rather than relying only on familiar checklists. He also argues that investors asking founders to take risks should be willing to accept risk themselves. This is his view as a fund manager seeking capital.

As a recently announced investment, Pierre-Jacques names an NFT marketplace for artists converting physical work into digital tokens. He praises its founder and her relationships with galleries. Harlem Capital's investment gives it an interest in that assessment; his enthusiasm is not evidence of future financial performance.

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