Several community development venture capital funds offer investment opportunities in states served by the Federal Reserve’s Eighth District. The following is a sample of some of those funds. Please contact each fund directly for more information.
Adena Ventures is a venture capital firm serving high-growth businesses in traditionally under-invested rural areas. Its goal is to demonstrate that attractive investment opportunities exist in “unlikely places.” Adena Ventures is the nation’s first New Market Venture Capital Company designated by the U.S. Small Business Administration.
Adena’s mission is to support sustainable economic growth while generating market-rate returns for investors. By working with private sector firms and universities, Adena has provided an equivalent of more than $3 million worth of operational assistance to nearly 60 companies. These services include business planning, executive recruitment and financial modeling.
Geographic focus: Kentucky, Ohio, West Virginia and Maryland.
Industry focus: A wide range of industries, from video game development to health care services to higher education; portfolio includes a combination of true technology companies and tech-enabled service companies.
Fund size: Overall has raised more than $34 million
Investment size: $500,000 to $2.5 million.
Contact: Lyn Gellermann
Advantage Capital Partners
Advantage Capital Partners provides capital and value-added services to emerging and rapidly developing companies and entrepreneurs. Advantage invests in small companies and other ventures in low-income communities under the Treasury Department’s New Market Tax Credit (NMTC) program. BizCapital, Advantage Capital’s wholly owned nondepository financial institution licensed by the federal government to make SBA and USDA loans, administers the NMTC small business finance fund. The goals of the fund are job creation and community development.
Advantage Capital Partners seeks to develop businesses and create a venture capital infrastructure in traditionally underserved areas. Advantage operates with a dual bottom line of measuring success: economic development goals and profitability of the investments. In addition, Advantage offers its portfolio companies business development assistance, active guidance and mentoring.
Geographic focus: Variety of places but most active in Missouri, Louisiana, Alabama, Colorado, Florida, Hawaii, New York, Texas, Wisconsin and Washington, D.C. Typically focuses on markets that are underserved by other private equity funds.
Industry focus: Communication, information technology, life science and energy sectors. Invests in companies at all stages except seed financing.
Fund size: Overall has raised more than $700 million
Investment size: $1million to $10 million. Also provides straight debt investments to small and medium-sized businesses that may not be suitable for typical private-equity investments, ranging from $100,000 to several million dollars. These are made possible through BizCapital.
Contact: Carter Dunkin
Lewis & Clark Private Equities Fund
Lewis and Clark, Private Equities (LCPE) is a Participating Securities Small Business Investment Company (SBIC) as designated by the U.S. Small Business Administration. LCPE is managed by InvestAmerica Investment Advisors, a venture capital management company with offices in Cedar Rapids, Iowa; Kansas City, Mo.; Fargo, N.D.; St. Paul, Minn.; and Portland, Ore.
As an SBIC, the LCPE Fund targets small towns and rural areas for investment. Invest-America specializes in bringing in co-investors with the goal of raising outside capital and experienced investors in these underserved areas. InvestAmerica also offers technical assistance, management experience and mentoring to its portfolio companies.
Geographic focus: Nationwide, with an emphasis on small cities and rural areas
Industry focus: Variety of industries that include smaller businesses, many with annual sales of less than $10 million.
Fund size: $32 to $36 million
Investment size: $1 million to $3.5 million
Contact: David Schroder
Kentucky Highlands Investment Corp. of London, Ky., and Tech-nology 2020 of Oak Ridge, Tenn., established Meritus Ventures, LP, as a rural Business Investment Corporation as approved by the Department of Agriculture. Meritus focuses on investment in expansion-stage companies in rural areas in the Appalachian region.
Meritus Ventures is a private, for-profit, venture capital fund that makes equity investments in private companies in underinvested rural areas. The fund’s mission is to generate market-rate returns for its investors while promoting sustainable business growth throughout its target region. The fund managers also offer operational assistance, active board participation and mentoring to Meritus’ portfolio companies.
Geographic focus: Appalachian regions of Ohio, West Virginia, Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and the entire states of Kentucky and Tennessee.
Industry focus: Broad industry focus that includes manufacturing, technology and software.
Fund size: $30 million
Investment size: $250,000 to $2,000,000 in each portfolio company; generally invests in two or more rounds based on the accomplishment of milestones by the portfolio company.
Contact: Ray Moncrief
Kentucky Highlands Investment Corp.,
Southern Appalachian Fund
Southern Appalachian Fund (SAF) is a venture capital fund that provides equity capital and operational assistance to qualifying businesses. Established by a joint effort between Tech-nology 2020 and Kentucky Highlands Investment Corp., SAF is one of six New Markets Venture Capital (NMVC) companies in the United States. The NMVC program is a developmental venture capital program of the U.S. Small Business Administration that promotes economic development and the creation of wealth and job opportunities in low-income geographic areas.
SAF’s mission is to generate market-rate returns for its investors while promoting shared and sustainable economic development throughout its target region. In addition to equity investments, SAF can provide operational assistance to its actual and potential portfolio companies at no cost.
Geographic focus: Kentucky, Tennessee and the Appalachian counties of Georgia, Alabama and Mississippi
Industry focus: Early- and expansion-stage companies across a wide variety of industries.
Fund size: $12.5 million
Investment size: $200,000 to $600,000 and will generally hold that investment for four to seven years.
Contact: Ray Moncrief,
Kentucky Highlands Investment Corp.,
Small businesses in Southern Illinois have not had many opportunities to get funding through venture capital or angel investors; but, now, Southern Illinois University Carbondale is working to change that. The university’s Office of Economic and Regional Development has created Shawnee Ventures, LLC, an equity fund that is expected to increase deal flow to high-growth, scalable businesses in the region.
The fund has set a goal of raising $5 million through institutional and private investment by selling memberships. To date, it has obtained $250,000 through private investors, including Illinois Ventures for Community Action, and is negotiating with the Illinois Department of Community and Economic Opportunity for an additional $250,000 investment.
John Farrell, chief executive officer of Illinois Ventures for Community Action, is the fund manager.
Shawnee Ventures offers a “double-bottom line” approach that provides investors with market returns and the opportunity to help promote economic growth in Southern Illinois. The fund is similar to others that have financial institution investors and may allow bankers to reap an additional benefit—CRA credit. For more information, visit www.shawneeventures.com.
The Kentucky Affordable Housing Trust Fund has a new source of revenue since the approval of a new law, effective July 12. The law establishes an annual, estimated $4.4 million or more in dedicated public revenue for the housing fund. The money will come from a $6 increase in the fees counties charge to record various documents, including deeds and mortgages.
The final version of the state budget also specified that the Kentucky Housing Corporation will continue to contribute $500,000 to the fund annually.
The Affordable Housing Trust Fund provides housing for very low-income Kentuckians.For information, visit www.kentuckyhousing.org.
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FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.