Black Professionals in Private Equity & Finance – Dealmaker Spotlight: Kneeland Youngblood

May 2, 2022

The following series features interviews with Black dealmakers and trailblazers in the private equity and finance community. To help us spotlight professionals making a difference in their career pathways, please email Greg Kilpatrick at [email protected] and Gerald Thomas at [email protected].

Kneeland Youngblood

Q: What attracted you to PE?

Dr. Kneeland Youngblood: I was practicing medicine, and life was good. I had gotten involved in politics, I was contributing to people’s campaigns and I was organizing events for politicians. I was invited down to a meeting in Austin, Texas. Then one day, I was in the hospital and got a call. The nurse handed me the phone and told me the person on the phone wanted to talk to me about the Austin meeting.

The person on the line said, “My name is Don Williams. I’m the CEO of a company called Trammell Crow (a commercial real estate development and investment company). I’m going to the meeting as well. Why don’t we just go together?” I responded, “Sure. What American Airlines or Southwest Airlines flight are you on?” His response: “No, I own a jet. Just come fly with me.”

I got on the jet, and that’s when I realized I was in the wrong business. I had no idea at the time about the world of finance. Once I got exposed, I said, “I want to figure this out.” I knew I couldn’t afford to go back, get an MBA and work on Wall Street. So, I had the governor of Texas appoint me to the board of the Teacher Retirement System of Texas, which is the largest pool of capital in the state. I sat on the board for six years, and I learned. I looked at public equity, fixed income, real estate and then PE.

When I was exposed to PE, I knew that was right for me. I knew that’s what I wanted to do because there’s the opportunity to create multigenerational wealth but there was also much more stability relative to other types of investment strategies, such as hedge funds and real estate. I had six kids and a lot of responsibilities. PE attracted me because contracts are basically for 10 years, so I could plan things out relative to my obligations for my family. So that’s what began my career in PE.

Q: Why is it important for more Black professionals to pursue careers in PE?

KY: While I think it’s important that Black professionals pursue and participate in PE, I would broaden my response and say I think it’s important that Black professionals pursue careers in finance and business in all dimensions, be it as entrepreneurs, on Wall Street or in the PE space. Among the most important foundations of America is capitalism. We must be thought leaders in the space. Otherwise, if we’re not, we become “less than.”

I think it’s enormously important that we provide leadership in all aspects of business and PE especially. PE and the venture capital space are areas in which enormous amounts of wealth are created, enormous amounts of impact are created and there is an enormous amount of influence. I think that we need to be in that flow. Otherwise, we will be marginalized.

Q: What do diversity, equity and inclusion mean to you, and why are they important?

KY: The strength of America is built on a foundation of new ideas, new people and new approaches to freedom and liberty. Diversity, equity and inclusion help to reinforce and expand the aperture of freedom for all, and represent the continuing evolution of America at its greatest.

This is not a perfect land, but it continues to reinvent itself; it continues to evolve; it continues to challenge itself in ways to represent the truest form of liberty. Diversity, equity and inclusion represent a continuing effort toward those goals and those aspirations that we as a nation have enshrined in the Declaration of Independence and the U.S. Constitution — these extraordinary letters that are seeking to unlock the fullness of human potential in the most collaborative of ways.

Q: Why do you actively support providing capital to Black entrepreneurs?

KY: I think it’s enormously important to provide capital to Black entrepreneurs because both the perception of access to capital and the reality of access to capital are some of the most challenging obstacles within the Black community to taking risk. If you’re going to be a successful entrepreneur, you need to be prepared to take risks. You need be prepared to have courage. Access to capital helps to mitigate the challenges and overcome the risk that one takes. Access to capital is not determinative in terms of success, but it certainly helps in that regard.

One of the challenges in the Black community is the lack of friends and family money. What I have striven to do with others is to either personally or through various vehicles promote access to capital. I serve on the board of Caltech (California Institute of Technology). It has an endowment. I am promoting access to capital at the endowment level for a more diverse slate of asset managers because I think it will generate the very best returns for the institution. I’ve served on the board of the Teacher Retirement System of Texas, the board of the city of Dallas pension fund and the Dallas police and fire pension fund — all with the same mantra.

Additionally, we have, through the Black Economic Alliance, begun the Center for Black Entrepreneurship, housed initially at Spelman College and Morehouse College. We’re seeking to raise $100 million in classroom experience and online education connected to other historically Black colleges and universities as well as Black people everywhere who can get a certificate in that area.

We’ve also created a fund precisely to be the first dollars in risk-based capital for entrepreneurs. We have a target of about $50 million. We’re fortunate we’ve received the initial $20 million anchor commitment, and we’re on our way.

Providing access to capital funding for Black entrepreneurs is in our collective best interests, to uplift people — people who’ve been most challenged — and help them to recognize the fruits of capitalism and the liberties that come with this great country.

About Kneeland Youngblood

Kneeland Youngblood, M.D., is a founding partner of Pharos Capital Group. He is chairman and CEO of the firm and responsible for overall firm strategy. Youngblood is a member of the investment committees of Pharos’ funds and currently serves on the boards of Egenera, Reel FX and TotalTrax.

Youngblood was chairman of the American Beacon Funds, a $30 billion mutual fund company managed by American Beacon Advisors, a $65 billion investment affiliate of American Airlines. He was a director of Starwood Hotels and Lodging, one of the largest hotel companies in the world, with more than 725 properties in 80 countries and 120,000 employees. He also served on the boards of directors of Burger King, Gap and the Teacher Retirement System of Texas. He is a former director of the U.S. Enrichment Corp., a global energy services company taken public in 1998 in a $1.4 billion initial public offering in the largest U.S. government privatization since Conrail. He served as a presidential appointee with Senate confirmation in his role on the board. He currently serves as lead director on the board of Scientific Games Corp. and serves on the boards of directors of The Black Economic Alliance, California Institute of Technology, Core Scientific and the Prostate Cancer Foundation.

Youngblood is a member of the Council on Foreign Relations. He graduated from Princeton University in 1978 with an A.B. in politics/science in human affairs and earned an M.D. degree from the University of Texas, Southwestern Medical School in 1982.