Fifth Star Funds described 2025 as a year of momentum and much of that is spilling over into 2026.
The nonprofit provides early-stage funding to tech founders of color, billing itself as the first friends and family fund in the United States. A friends-and-family funding round is when startups raise money from their personal networks before looking to venture capital firms or other companies.
Meeting a friends-and-family funding round goal is a big hurdle Black founders face when attempting to secure capital, according to Fifth Star, which says it’s addressing that by aiming for a funding goal this year of $450,000 so it can invest in at least six startups.
In the last quarter of 2025, it was halfway to reaching that goal, according to cofounder Kyle Backer.
“We’re really excited with all the momentum and looking forward to continuing it this year,” said Tim Huelskamp, also a cofounder.
Two milestones defined 2025 for the nonprofit — a new partnership and a new grant.
It partnered with LongJump, a founder-led VC fund in Chicago. LongJump is a “significant player” in Chicago, Backer said. The partnership will provide additional support to the startups that Fifth Star invests in, including coaching, coworking space and vendor discounts.
“This is really great for us because we want to continue providing that support after we write those checks to these overlooked founders,” Backer said, noting that LongJump “already has this operationalized support system.”
Also, Fifth Star got a $125,000 grant from the Richard L. Duchossois Foundation, announced in February, that will help the firm understand how overlooked founders validate their ideas, test assumptions, build and prepare for pre-seed investment.
Backer said the grant from a “serious institutional partner” marks a big step toward expanding nationwide, and the company is looking for a “transformational capital partner” to help its expansion.
“We really have learned how to build these relationships with foundations in the community and how to help them to see what our mission is,” Backer said. “Working in this venture capital space, maybe that’s not always understood. It’s a little different than what some foundations have seen before. For us to be able to put it in terms that can be understood and where the economic impact can be seen, I think that’s been really valuable for us.”
Artificial intelligence is a key driver of startups. Half of the startups Fifth Star invested in last year are AI-driven platforms. It has invested in companies including ThrowbackBuys, an online vintage marketplace, and Banyon Power, an electric vehicle charging company.
Even though AI can help founders build their companies more efficiently, Huelskamp said pre-seed funding is still important. And AI could be detrimental to underrepresented founders, he said, because it could enable startups with capital while founders of color scramble for funding.
“We always said that it’s not a genius problem or a lack of entrepreneurs problem, it’s just [founders of color] don’t get the shot to get the company off the ground,” Backer said. “We have to make sure that, in the changing world of AI, our founders still get those shots so it’s equitable.”
