If you’ve been following the venture capital headlines in 2026, you’d be forgiven for thinking the entire industry has narrowed its focus to a single acronym: AI. With the AI sector capturing nearly 50% of all VC funding in 2025, driven by massive "mega-rounds" for companies like OpenAI and Anthropic, the market has become incredibly top-heavy. But while the herd stampedes toward the latest Large Language Model, veteran operator Stacy Brown-Philpot is placing a very different kind of bet.
Brown-Philpot, the former CEO of TaskRabbit, is steering her firm, Cherryrock Capital, directly against the prevailing current. Having closed its debut Fund I with $172 million in January 2025, Cherryrock isn’t chasing the hype cycle. Instead, they are hunting for "alpha"—market-beating returns—in a demographic that the rest of Silicon Valley has largely left behind: Black, Latinx, and female founders operating at the growth stage.
What is the ‘Capital Cliff’ and why does it matter?
You might assume that with all the diversity initiatives of the early 2020s, funding for underrepresented founders would be stable. The data suggests otherwise. According to Crunchbase, funding for startups with a Black founder or co-founder plummeted to a multi-year low of roughly 0.4% in 2024 (as reported in early 2025). That represents just $730 million out of the entire venture pie.
This drop-off has created what industry insiders call the "Capital Cliff." Many diverse founders manage to scrape together a seed round, but when it comes time for Series A or B—the growth stages where companies actually scale—the checkbooks snap shut. This is exactly where Cherryrock Capital is deploying its $172 million.
Brown-Philpot, who co-founded the firm with former IVP partner Saydeah Howard, argues that this isn’t charity; it’s an arbitrage opportunity. "Overlooked and underestimated teams are creating companies at an unprecedented pace," Brown-Philpot noted. "Lack of access to capital keeps many such founders from realizing their companies’ full potential."
Who is backing this contrarian strategy?
Despite the political headwinds facing DEI initiatives—highlighted by legal challenges like the Fearless Fund lawsuit—Cherryrock has assembled a roster of Limited Partners (LPs) that reads like a who’s who of institutional finance and tech royalty. The fund is backed by JPMorgan, Goldman Sachs, and MassMutual, alongside individual heavyweights like Reid Hoffman, Sheryl Sandberg, and Melinda French Gates’ Pivotal Ventures.
This institutional backing signals a crucial shift: smart money is hedging its AI bets. While generalist funds fight for allocation in crowded AI deals, Cherryrock’s LPs are gaining exposure to solid, operational businesses with less inflated valuations. The portfolio already includes Coactive AI, a multimodal analytics platform, Vitable Health, which focuses on primary care for hourly workers, and the exam development platform Certiverse.
How do new regulations impact the landscape in 2026?
The timing of Cherryrock’s deployment is significant for another reason. We are currently seeing the full effects of California’s venture capital diversity reporting laws (SB 54/164). As of 2026, firms are required to disclose demographic data on the founders they back. This transparency is expected to increase pressure on funds to demonstrate equitable capital deployment, moving the conversation from vague promises to hard numbers.
Margot Kane of Spring Point Partners emphasized the unique value proposition firms like Cherryrock offer in this environment: "The opportunity for alpha is the founders knowing they have someone who has their backs, understands where they’re coming from and is going to fight for them." In a "venture drought" for non-AI sectors, that alignment can be the difference between survival and bankruptcy.
What To Watch
The success of Cherryrock Capital will serve as a critical litmus test for the post-2025 VC ecosystem. If Brown-Philpot delivers top-tier returns from this "overlooked" cohort, it effectively debunks the persistent myth of a "pipeline problem" and reclassifies diverse founders as a distinct asset class rather than a philanthropic cause. Conversely, if the fund struggles to secure downstream capital for its portfolio companies in an AI-obsessed market, it may signal that the "Capital Cliff" is becoming a permanent structural barrier. Watch closely to see if other generalist firms begin co-investing with Cherryrock at Series B; that will be the true indicator of whether the broader market is ready to follow the data rather than the hype.
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