Halcyon just closed its first fund. Here’s where it’s going.

Halcyon just closed its first fund. Here's where it's going.

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D.C. social impact nonprofit Halcyon has closed its first fund more than three years after first setting out to raise it — and already has a flurry of investments under its belt.

The organization has raised $5 million in a bid to back the startups that come through its flagship residency incubator and other programs, part of a larger push to create new funding vehicles and increase access to capital for early-stage entrepreneurs, Halcyon co-founder and CEO Kate Goodall told the Washington Business Journal.

“Not only has Halcyon increased the number of fellows we serve, but the sheer number of impact-driven startups in ecosystems around the world is growing rapidly,” Goodall said. “We are seeing more competitive applicants for our programs than ever before, and that means good things for investors interested in driving returns through investments in impact businesses.”

The Halcyon Fund — the nonprofit’s third funding vehicle, alongside an angel investment network and microloan fund — underwent a rolling close so it could start deploying the capital prior to this final close, she said. It has already made 13 investments in pre-seed and seed rounds at an average size of $100,000. The companies to receive that capital, all Halcyon Incubator alumni, include:

  • ARMR Systems Inc., a medical device company with a wearable that addresses traumatic bleeding
  • BoxPower Inc., a solar energy startup focused on rural microgrid projects
  • Foodhini, a direct-to-consumer meal service with a commercial kitchen for immigrant chefs
  • Hubly Surgical, a health care startup that aims to enable doctors to more safely and effectively drill holes into the skull
  • MemoryWell Inc., a storytelling startup that connects seniors and their families with professional writers to share their stories with their caregivers, now competing in Inno Madness
  • Myya, an intimates and breast prosthetics brand that creates post-mastectomy bra sizing virtually, born out of the Cherry Blossom Intimates brick-and-mortar business
  • OmniVis Inc., a biotechnology company with a handheld device to detect dangerous pathogens
  • OxiWear Inc., a med-tech startup developing a wearable device to monitor oxygen levels
  • Rose Health, a mental health startup that helps doctors identify mental health symptoms and get their patients necessary care, also competing in Inno Madness
  • Sanivation, a company that brings sanitation services and affordable toilets to East Africa
  • Solstice, a renewable energy startup making solar energy more widely accessible for homeowners unable to install rooftop solar
  • Thimble Inc., a virtual academy that teaches students engineering, coding and tech skills
  • Wellthi Technologies Inc., a savings platform that partners with community banks to help users meet savings goals, formerly Invest Sou Sou

Of that group, 54% were founded by women and 69% were founded by people of color.

“Because of the diversity reflected among Halcyon’s fellows — 64% of Halcyon ventures have a woman founder or co-founder, and 74% have a founder or co-founder of color — this fund reflects many of Halcyon’s goals around inclusivity in the funding space,” Goodall said. “It definitely is a top priority as we grow our range of funding vehicles how important it is to create more funding for historically underrepresented founders.”

The fund plans to make another handful of initial investments within the next year, with a target portfolio of 18 to 20 companies, Goodall said. Those investments, as well as follow-on investments into its existing portfolio, will span sectors such as health care, clean energy and ed tech, among others.

Companies that have gone through any of Halcyon’s fellowship programs are eligible to apply for investment from this fund, after identifying their rounds’ lead investors. That strategy means Halcyon’s team has already been involved in making the ventures scalable and sustainable, Goodall said. “This approach is part of what makes the Halcyon Fund unique: We de-risk the investments through the extensive programming founders have participated in prior to receiving investment from the fund.”

Halcyon also intends to raise a larger fund to serve its growing pipeline, Goodall said.

Halcyon Angels, the organization’s angel network that launched in summer 2020 for early-stage startups, is both open to new investor members and seeking entrepreneurs interested in applying to pitch at the next meeting April 21. The group is preparing to make its first investments of the year “but because it’s being processed as we speak, we can’t share who it is just yet,” Goodall said. The Halcyon Microloan Fund, which went live in fall 2021, has made three loans to D.C.-area companies so far, including Nubian Hueman, an Anacostia and Baltimore retail business focused on goods made by people of color.

The nonprofit’s three funding vehicles combined represent $6 million in assets under management. Up to this point, Halcyon has not taken equity in the companies that come through its programs. But the new fund aims to fill a hole their leaders continue to point to: funding.

“The growth of Halcyon’s work in impact investing is a direct outcome of a growing opportunity as investors awaken to the potential of impact-driven businesses to match and even outperform traditional businesses,” Dahna Goldstein, Halcyon’s chief investment officer and co-managing director of the Halcyon Fund, said in a statement.

Halcyon launches the fund a couple of months after ending its arts programming, a staple of the S&R Foundation spinout since its inception.