HarbourVest's Annual ESG Report

Diversity, equity, and inclusion

The partnership that has powered HarbourVest’s success since its founding in 1982 continues to fuel everything we do in support of our clients, colleagues, and communities. We celebrate the vital work being done to strengthen our firm and industry and reaffirm our commitment to constant improvement in pursuit of diversity, equity, and inclusion.

We must hold ourselves accountable for creating sustainable and lasting change through intentionality, perseverance, and transparency. People are our greatest asset, and we will continue to focus on driving equitable outcomes to support one another as we tackle whatever the future holds.
Kelley King
Chief Diversity, Equity, and Inclusion Officer

Investing with purpose

We are working to shape the future of private markets with a specific focus on making access to private capital more equitable. Our long history of investing in emerging and diverse managers and under-resourced markets continues today because we recognize the untapped potential of deserving managers who have been historically overlooked by mainstream investment channels, despite providing competitive financial returns. We believe providing support in this space will drive transformative changes that will benefit the private markets industry overall.

Diverse-led manager profiles

This year we are pleased to highlight LightBay Capital and Long Ridge Equity Partners as diverse-led firms to watch. HarbourVest has invested with both of these firms over multiple fund cycles because while each brings something very unique to the table, both epitomize the qualities and level of partnership that drive success.

Having recently completed fundraising for only their second fund, LightBay has quickly built an organization that looks beyond profit margins, taking steps to build a firm that has set high standards not only for performance results, but for people and giving back to the communities in which they live and work through its LightBay Foundation. Long Ridge is another example of what we would call a unique and distinctive firm in the private capital space. While the firm has recently completed fundraising for their fifth fund, they have been both measured and intentional in their growth. Launched in 2007 with a diverse leadership structure, the firm has long embraced the notion of an apprenticeship model, creating career paths and promoting from within to retaining talent that adds to their firm’s investment prowess, experience, and performance.

LightBay Founding Partner Nav Rahemtulla and Long Ridge Managing Partner Kevin Bhatt share their views on their very different paths to success, particularly as emerging and diverse managers face the challenges posed by a difficult macroeconomic backdrop.

Learn more about LightBay Capital
Learn more about Long Ridge

HarbourVest is proud to play a leadership role in the industry’s future by leveraging our platform and resources to support a more inclusive investment landscape, maintain a robust deal pipeline, and foster connection and collaboration among emerging and diverse managers.

For more information on HarbourVest’s diversity, equity, and inclusion efforts explore our latest DEI report.

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Corporate citizenship

Nav Rahemtulla

Founding Partner

Can you describe LightBay’s commitment to DEI and why it is important,
both in terms of hiring and success?

For us to benefit from differing perspectives, we must be able to not just find diverse talent but also develop diverse talent. In hiring, we know that diversity begets more diversity and we have committed to ensure open searches at LightBay include diverse and underrepresented candidates. In terms of development, we have always prioritized creating an inclusive culture that encourages a growth mindset. We provide specific training in the “softer-skills” of private equity such as public speaking and executive presence along with senior-level mentorship so that all our associates, regardless of their identity, have an equal opportunity to thrive.

When it comes to success, we believe private equity firms can distinguish themselves with a rigorous commitment to excellence in their decision-making processes. Constantly challenging each other’s biases and opinions and soliciting perspectives from individuals of diverse backgrounds improves the quality of our discussions at LightBay.

LightBay is unique in how causes and organizations are provided support through your foundation.
Can you talk about that important work and how that support is funded? 

LightBay’s mission includes a commitment to supporting our companies, colleagues, and communities to reach their full potential. When we founded the firm, we created the LightBay Foundation to align our success directly with the success of our community. A fixed percentage of our management fees and carried interest are contributed to our charitable foundation every year.

Our grant-making foundation’s mandate is to provide access to high-quality education and healthcare to all families as well as to support poverty alleviation through financial support and job training. We support a variety of local, high-impact organizations that are tackling challenges in foster care, inadequate access to mental health, and impediments to social mobility. This year, our women leaders at LightBay are partnering with the organization, Rock The Street, Wall Street, to teach and mentor young women to explore the possibilities of an investment career at the first all-girls public STEM school in California. Later this year, our entire firm will volunteer with HabitatLA during our “Day of Giving,” in East LA to help build playhouses for younger children.

What is the one thing you would advise an investor to do to increase their exposure to diverse-led firms? 

The first step to increasing allocation to diverse-led firms is to get to know more of them. This year, both GPs and LPs alike are extraordinarily selective where they invest capital and therefore expanding the funnel of potential managers should be the starting point.

Investors can attend the various investment and asset management conferences that cater to women and underrepresented investors. Organizations such as WITH, KAYO, Synergist Network, AAAIM (Association of Asian American Investment Managers), and BWAM (Black Women Asset Managers) can be great resources to identify talent. Likewise, attending general asset management conferences can also provide opportunities to connect with diverse investors during specific DEI/Women breakout sessions and panels.

Kevin Bhatt

Managing Partner

Can you describe Long Ridge’s commitment to DEI and why it is important,
both in terms of hiring and success? 

Since the earliest days of our firm, Long Ridge has recognized that building a successful team that resonates with an increasingly diverse set of founders and investors would require a proactive approach to recruiting, training, and developing team members from a range of backgrounds and profiles. Over the last 15 years, we’ve seen first-hand how the diversity of our team has been a source of differentiation as we seek to secure investment opportunities in a competitive private equity market. Our commitment to providing a platform where a diverse group of talented team members can develop and perform to the best of their ability has made Long Ridge a destination employer.

At the portfolio company level, we’ve worked to build management teams and boards that are reflective of the diverse group of internal and external stakeholders at our companies. This effort has delivered value in reducing voluntary churn and increasing employee engagement, both of which drive enterprise value growth in the long term.

How has the partnership between HarbourVest and Long Ridge helped drive success for both firms?  

HarbourVest has been an incredibly valuable partner to Long Ridge. Since the beginning of our relationship, HarbourVest has actively shared best practices regarding LP reporting, fund structuring, and DEI initiatives, in addition to providing advice on a range of pressing questions on a more ad-hoc basis. The relationship has been highly aligned and collaborative, and has helped accelerate and professionalize our firm.  

What are a few of the biggest challenges you faced in building Long Ridge during its earlier vintages? What do you know now that you wish you knew at your launch? 

One of the biggest challenges we faced in the very early days of our firm was around clearly conveying the value that a Long Ridge partnership could deliver to founders and their stakeholders. Ultimately, the first several deals in Fund I were won through a significant investment of face-to-face time and development of relationships based on trust, respect, and shared incentives. While we continue to prioritize that personal touch, we are fortunate to now have a strong roster of current and former founders who are thrilled to share first-hand how Long Ridge has helped to transform, professionalize, and accelerate their businesses.

One other challenge we faced early on was driven by our decision to hire only at the junior levels of our firm, prioritizing internally-developed talent over senior lateral hires. While it would have been expedient to bulk up our leadership ranks in Fund I and II with outside talent, we felt strongly that shared culture, values, and perspectives would be critical to building a cohesive and effective firm for the long term. Today, we are thrilled to have a consistent and cohesive internally-grown team where all of our Partners, Principals, and Vice Presidents originally joined Long Ridge at the most junior levels of the firm.

Professional Investor Definition

“Professional Investor” under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) and its subsidiary legislation) means:

(a) any recognised exchange company, recognised clearing house, recognised exchange controller or recognised investor compensation company, or any person authorised to provide automated trading services under section 95(2) of the SFO;

(b) any intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;

(c) any authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(d) any insurer authorized under the Insurance Ordinance (Cap. 41 of the Laws of Hong Kong), or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;

(e) any scheme which-

(i) is a collective investment scheme authorised under section 104 of the SFO; or

(ii) is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,

or any person by whom any such scheme is operated;

(f) any registered scheme as defined in section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong), or its constituent fund as defined in section 2 of the Mandatory Provident Fund Schemes (General) Regulation (Cap. 485A of the Laws of Hong Kong), or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;

(g) any scheme which-

(i) is a registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap. 426 of the Laws of Hong Kong); or

(ii) is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place,

or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;

(h) any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency;

(i) except for the purposes of Schedule 5 to the SFO, any corporation which is-

(i) a wholly owned subsidiary of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong;

(ii) a holding company which holds all the issued share capital of-

(A) an intermediary, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong; or

(B) an authorized financial institution, or any bank which is not an authorised financial institution but is regulated under the law of any place outside Hong Kong; or

(iii) any other wholly owned subsidiary of a holding company referred to in subparagraph (ii); or

(j) any person of a class which is prescribed by rules made under section 397 of the SFO for the purposes of this paragraph as within the meaning of this definition for the purposes of the provisions of the SFO, or to the extent that it is prescribed by rules so made as within the meaning of this definition for the purposes of any provision of the SFO.

The first of such classes of additional “professional investor”, under the Securities and Futures (Professional Investor) Rules (Cap. 571D of the Laws of Hong Kong), are:

(k) any trust corporation (registered under Part VIII of the Trustee Ordinance (Cap. 29 of the Laws of Hong Kong) or the equivalent overseas) having been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its equivalent in any foreign currency at the relevant date (see below) or-

(i) as stated in the most recent audited financial statement prepared-

(A) in respect of the trust corporation; and

(B) within 16 months before the relevant date;

(ii) as ascertained by referring to one or more audited financial statements, each being the most recent audited financial statement, prepared-

(A) in respect of the trust or any of the trust; and

(B) within 16 months before the relevant date; or

(iii) as ascertained by referring to one or more custodian (see below) statements issued to the trust corporation-

(A) in respect of the trust or any of the trusts; and

(B) within 12 months before the relevant date;

(l) any individual, either alone or with any of his associates (the spouse or any child) on a joint account, having a portfolio (see below) of not less than HK$8 million or its equivalent in any foreign currency at the relevant date or-

(i) as stated in a certificate issued by an auditor or a certified public accountant of the individual within 12 months before the relevant date; or

(ii)  as ascertained by referring to one or more custodian statements issued to the individual (either alone or with the associate) within 12 months before the relevant date;

(m) any corporation or partnership having-

(i) a portfolio of not less than HK$8 million or its equivalent in any foreign currency; or

(ii) total assets of not less than HK$40 million or its equivalent in any foreign currency, at the relevant date, or as ascertained by referring to-

(iii) the most recent audited financial statement prepared-

(A) in respect of the corporation or partnership (as the case may be); and

(B) within 16 months before the relevant date; or

(iv) one or more custodian statements issued to the corporation or partnership (as the case may be) within 12 months before the relevant date; and

(n) any corporation the sole business of which is to hold investments and which at the relevant date is wholly owned by any one or more of the following persons-

(i) a trust corporation that falls within the description in paragraph (k);

(ii) an individual who, either alone or with any of his or her associates on a joint account, falls within the description in paragraph (k);

(iii) a corporation that falls within the description in paragraph (m);

(iv) a partnership that falls within the description in paragraph (m).

For the purposes of paragraphs (k) to (n) above:

  • “relevant date” means the date on which the advertisement, invitation or document (made in respect of securities or structured products or interests in any collective investment scheme, which is intended to be disposed of only to professional investors), is issued, or possessed for the purposes of issue;
  • “custodian” means (i) a corporation whose principal business is to act as a securities custodian, or (ii) an authorised financial institution under the Banking Ordinance (Cap. 155 of the Laws of Hong Kong); an overseas bank; a corporation licensed under the SFO; or an overseas financial intermediary, whose business includes acting as a custodian; and
  • “portfolio” means a portfolio comprising any of the following (i) securities; (ii) certificates of deposit issued by an authorised financial institution under the Banking Ordinance (Cap, 155 of the Laws of Hong Kong) or an overseas bank; and (iii) except for trust corporations, cash held by a custodian.

Institutional Investor / Accredited Investor Definition

An institutional investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(a) the Singapore Government;

(b) a statutory board as may be prescribed by regulations made under section 341 of the SFA, as prescribed in the Second Schedule of the Securities and Futures (Classes of Investors) Regulations 2018;

(c) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is —

(i) to manage its own funds;

(ii) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or

(iii) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country;

(d) any entity —

(i) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and

(ii) whose funds are managed by an entity mentioned in sub‑paragraph (c);

(e) a bank that is licensed under the Banking Act 1970;

(f) a merchant bank that is licensed under the Banking Act 1970;

(g) a finance company that is licensed under the Finance Companies Act 1967;

(h) a company or co‑operative society that is licensed under the Insurance Act 1966 to carry on insurance business in Singapore;

(i) a company licensed under the Trust Companies Act 2005;

(j) a holder of a capital markets services licence;

(k) an approved exchange;

(l) a recognised market operator;

(m) an approved clearing house;

(n) a recognised clearing house;

(o) a licensed trade repository;

(p) a licensed foreign trade repository;

(q) an approved holding company;

(r) a Depository as defined in section 81SF of the SFA;

(s) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere;

(t) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors;

(u) a designated market‑maker as defined in paragraph 1 of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations;

(v) a headquarters company or Finance and Treasury Centre which carries on a class of business involving fund management, where such business has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43D(2)(a) or 43E(2)(a) of the Income Tax Act 1947;

(w) a person who undertakes fund management activity (whether in Singapore or elsewhere) on behalf of not more than 30 qualified investors;

(x) a Service Company (as defined in regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations) which carries on business as an agent of a member of Lloyd’s;

(y) a corporation the entire share capital of which is owned by an institutional investor or by persons all of whom are institutional investors;

(z) a partnership (other than a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2005) in which each partner is an institutional investor.

An accredited investor as defined in Section 4A of the SFA and Securities and Futures (Classes of Investors) Regulations 2018 is:

(i)  an individual —

(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —

(BA) a deposit as defined in section 4B of the Banking Act 1970;

(BB) an investment product as defined in section 2(1) of the Financial Advisers Act 2001; or

(BC) any other asset as may be prescribed by regulations made under section 341; or

(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(ii)  a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —

(A) the most recent audited balance sheet of the corporation; or

(B) where the corporation is not required to prepare audited accounts regularly, a balance sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance sheet, which date must be within the preceding 12 months;

(iii) A trustee of a trust which all the beneficiaries are accredited investors; or

(iv) A trustee of a trust which the subject matter exceeds S$10 million; or

(v) An entity (other than a corporation) with net assets exceeding S$10 million (or its equivalent in a foreign currency) in value. “Entity” includes an unincorporated association, a partnership and the government of any state, but does not include a trust; or

(vi) A partnership (other than a limited liability partnership) in which every partner is an accredited investor; or

(vii) A corporation which the entire share capital is owned by one or more persons, all of whom are accredited investors.

Continuation solutions encompass a host of transaction types in which a GP secures interim liquidity and/or additional primary capital for their LPs in a strongly performing asset, or set of assets, that the GP will continue to own and control. Specifically, they include continuation funds, new funds created by GPs for the purpose of acquiring the asset(s) that continue to be managed by the same GP and capitalized by one or several secondary buyers, or equity recapitalizations involving a direct equity or structured equity investment into a portfolio company. These transactions can also include a parallel investment from the GP’s latest fund into that same pool of assets (a “cross-fund trade”).