Mellody Hobson, co-CEO of Ariel Investments, has launched Ariel Alternatives. This groundbreaking initiative aims to reshape the private equity landscape. Hobson’s move comes as a response to the racial equity demands sparked by the 2020 George Floyd protests.
Pioneering Change in Private Equity
Ariel Alternatives closed its inaugural Project Black fund at $1.45 billion in 2023. This makes it one of the largest private equity fund closings for a first-time manager in history. The fund’s goal is ambitious yet clear: to scale sustainable minority-owned businesses.
These businesses will serve as leading vendors to Fortune 500 companies. In doing so, they’ll generate jobs and drive economic growth within underrepresented communities. Ultimately, the aim is to close the racial wealth gap.
From Humble Beginnings to Wall Street Force
Hobson’s journey to the top of Wall Street is inspiring. She grew up in Chicago as the youngest of six children to a single mother. Despite financial hardships, Hobson excelled academically and attended Princeton University.
“My story is the story of so many Americans, of the American dream, and what is possible, not without great struggle and sacrifice and a tremendous work ethic,” Hobson says.
Her career at Ariel Investments began as an internship at age 19. Now, as co-CEO, she’s leading the charge for systemic change in the financial world.
Project Black: A New Approach to Minority Business Growth
Project Black takes a unique approach to scaling minority-owned businesses. Instead of focusing on small businesses, Ariel Alternatives aims to buy and grow middle-market companies.
Hobson explains, “When people think about minority businesses, they think small. We’re going big or going home.”
The strategy involves buying businesses that may not be minority-owned initially. Through Ariel Alternatives’ ownership, these companies become “minoritized”. This approach allows for rapid scaling to meet the needs of Fortune 500 companies.
Demand Aggregation: A Key Feature of Ariel Alternatives
One of Ariel Alternatives’ innovative features is demand aggregation. The firm works closely with Fortune 500 companies to understand their supply chain needs. This information guides their investment decisions.
“Before we buy a business, we can get a sense of what kind of demand would be there for that product or service,” Hobson notes. This strategy reduces risk and increases the potential for success.
Impact Beyond Business: Hobson’s Commitment to Financial Literacy
Hobson’s efforts extend beyond the boardroom. She’s set to release a children’s book, “Priceless Facts About Money”, in October. The book aims to teach children about money through interesting facts and stories.
“Money is the one thing that is universal,” Hobson states, emphasizing the importance of financial literacy.
Her commitment to education and empowerment shows that Hobson’s vision for change goes far beyond the world of high finance.
