SPRINGFIELD — MassMutual is committing $50 million to investments in businesses across the state, with half designated for Black-owned, founded or managed businesses.
The MassMutual Catalyst Fund fund will be divided evenly between two targeted programs, MassMutual said. The company has earmarked $25 million in a community growth “sleeve” called MMCF Growth that will target equity and debt investments in businesses with Black principals.
Meanwhile, a $25 million technology sleeve — MMCF Tech — will target equity investments in Massachusetts technology companies based outside Boston.
MMCF Tech is designed to help companies in areas of the state that don’t get as much attention from investors who support technology companies. That includes Springfield, said MassMutual spokeswoman Julie Staadecker.
With the equity investments, MassMutual will buy a piece of the companies. Debt investments are loans.
MassMutual said the Catalyst Fund will build a portfolio of early and mid-stage companies with investments of $250,000 to $2.5 million each. It said investment decisions will also take strong leadership teams into account and place an emphasis on racial diversity for those in the growth sleeve to increase access to capital for the Black community.
The initiative will serve as a catalyst to strengthen Massachusetts in less economically developed areas of the state through employment and business growth, the company said in a news release. It will focus on strong and sustainable investment outcomes for entrepreneurs, in addition to social and community goals.
“Impact investing at MassMutual seeks to create a positive social and environmental impact that is measurable while also making market rate financial returns,” said Rilwan Meeran, the impact investment portfolio manager at MassMutual, who runs the Catalyst Fund. “Philanthropy alone cannot solve our society’s problems; institutional capital investment should also play a role.”
MassMutual launched an online funding application to create a level playing field to access its capital with the goal of funding parity. The application page is at: massmutual.com/lp/catalyst.
MassMutual said its fund managers will implement and set goals to track diversity outcomes, to identify underrepresented groups missing in its pipeline, deal selection and portfolio.
“This will allow for the development of strategies that address the gaps,” the company said. “The MMCF’s commitment to diversity, equity and inclusion is at the core of its investment and operational practices with a belief that inclusion drives innovation, creativity and financial performance.”
This isn’t the first time MassMutual has used its investment clout to aid local companies.
The Springfield Venture Fund, announced in 2014, finished investing the balance of its $5 million commitment in 2020. Springfield Venture Fund portfolio companies continue to receive operational support from the Catalyst Fund team, Staadecker said.
Founded in Springfield in 1851, MassMutual is owned by participating policy holders and has its headquarters on State Street.
MassMutual is number 76 on the Fortune 500.