On October 29th 2015, two Innovate fund investments were named winners of the World's Largest Business Idea Competition, "43North", in which $5mm is awarded to 11 businesses as $250K-$1M investments along with business support. The business support ranges from mentoring advice from seasoned professionals in related fields, free incubator space in Buffalo for a year, as well as access to programs like the Start-Up NY program of tax-free zones. As an extra boost for the area, the contest gets 5% ownership in the companies, and they have to remain in Buffalo for the year of the contest. This means that even if the companies leave after their year of residency, the area will benefit. The competition operates through the support of the New York Power Authority is part of Governor Cuomo's Buffalo Bill initiative and drew 11,000 applications from 117 countries and all 50 states. The winning companies both belong to Z80 technology incubator lab, an Innovate fund investment. Based in Buffalo New York, the lab provides entrepreneurs the ability to build new and innovative tech companies in Buffalo. Two of the labs start-ups emerged as winners from the 43 North competition. CoachMePlus, a sports training data tracker, walked away with $250K while ACV Auctions, an app that allows car dealers to sell vehicles in 20-minute online auctions, took top prize of $1M.
On Monday November 9th, The Gym Group, a portfolio company of Bridges Ventures Sustainable Growth Fund II (Bridges II), made an initial public offering of its stock on the London Stock Exchange, at a valuation of £250million. The Gym’s shares rose to 204¼p on its first day of trading, or 5% above the 195p issuance price. Bridges Ventures is a long-time member of CDVCA, and the CDVCA Central Fund was an early investor in Bridges II. All told, Bridges II has committed £17.5 million to The Gym Group, across multiple financing rounds. As part of this public offering, Bridges II sold about a third of its stake, retaining a 14% shareholding in the company. Based on Monday’s offer price, the fund’s investment in The Gym is currently valued at 5.8x cost. The Gym Group – which was co-founded by Bridges alongside CEO John Treharne in 2007 – pioneered the low-cost gym concept in the UK. Offering flexible, affordable gym memberships, with two-thirds of its sites in economically challenged areas, it provides accessible exercise facilities (and jobs) to an under-served demographic. After opening its first location in Hounslow in 2008, it added 20 new locations within its first three years of operation; today it has 66 locations and over 363,000 members, a third of whom have never been members of a gym before.Between 2012 and 2014, the company’s revenue increased from £22.3m to £45.5m – a compound annual growth rate of 43% – while adjusted EBITDA more than doubled to £16.7m. The Gym has raised £90m from the float: it plans to use £75m to pay down debt and the remainder to fund expansion. The company, which is now the only fitness chain listed on ...
US Labor Department Releases New Guidance Note on Economically Targeted Investments for Pension Funds
On October 22, 2015, the U.S. Department of Labor (DOL) issued Interpretive Bulletin 2015-01 ("IB 15-01"), which provides clarification on the conditions under which a fiduciary of a plan that is subject to the fiduciary standards of the Employee Retirement Income Security Act of 1974 ("ERISA") may invest plan assets in economically targeted investments ("ETIs"). Put simply, the conditions required for ERISA pension funds to able to invest in ETIs. The guidance note substitutes the Bush administration's language in the 2008 bulletin, ("IB 08-01"), which is widely considered to have had a startling effect on economically targeted investing and reinstates the 1994 guidance, ("IB 94-01"). The IB 94-01 allowed fund managers to consider social and environmental concerns in their investment decisions. The DOL cites the dissuading effect of the IB 08-01 language on fiduciaries propensity to consider ETI investments, one of the main reasons for switching back to the language of IB 94-01. This new guidance clarifies to fiduciaries that there are no additional considerations that fiduciaries must examine when contemplating ETIs. Instead, social benefit might serve as a "tiebreaker" when evaluating two investment opportunities that with the same potential financial return. The Community Development Capital Alliance strongly supports this important guidance note for its ability to open the door for fund managers to consider social impact investments while satisfying their fiduciary duty to pension holders
In less than two weeks, innovative CDFI practitioners will gather for the OFN Conference. Register today for a chance to enjoy sessions such as: CDFI Public Policy Initiatives Roundtable Tuesday, November 10 White House briefings? The Office of Management and Budget? Why do these things matter when we are in the business of responsible lending? Because Federal and State policies affect how CDFIs operate on a daily basis, and can influence our industry's future. Come participate in this CDFI Public Policy Roundtable discussion. CDFI Performance and Growth: A 20-Year Longitudinal Analysis Wednesday, November 11 OFN recently completed a 20-year analysis of OFN Member CDFIs' performance, including a growth rate analysis of a set of CDFIs that have been OFN Members for the entire time period. At this session, you'll hear the results of the study, learn the characteristics of CDFIs with different growth rates, and discuss what the findings mean for CDFIs, funders, investors, and the future of the industry. The report will be released during the OFN Conference. Advancing OFN's CDFI Industry Equity Plan Thursday, November 12 In 2014, OFN began developing a diversity, inclusion, and equity strategy for itself with the stated goal of extending and expanding that work across the CDFI industry. In October 2015, the OFN Board approved OFN's plan to increase opportunities for Members to participate in Equity work, support that work, and increase understanding of and support for industry-wide Equity activity going forward. The purpose of this work is for OFN Members and other CDFIs to make Equity an integral part ...
On Wednesday October 21, 2015 The CDFI fund officially opened the 2015 round of the New Markets Tax Credit Program (NMTC Program) through the release of the Notice of Allocation Availability (NOAA). The NMTC program channels private sector capital into struggling communities by providing tax credits to taxpayers who make equity investments in Community Development Entities (CDEs). The CDEs then employ the capital raised into businesses and projects in low-income communities. To date, the CDFI Fund has given out 912 awards to CDE’s. These awards amounted to $43.5 billion in tax credit allocation. To learn more about deadlines and the application steps, the CDFI fund has posted detailed information on the NMTC program page.
On October 8th 2015, as members of the impact investing and social entrepreneurship field gathered for the SOCAP event Wharton Social Impact initiative used the opportunity to launch their first-ever report on the financial performance of impact investing. The report, titled Great Expectations: Mission Preservation and Financial Performance in Impact Investing suggests that investors may not need to expect lesser returns as a tradeoff for social impact. The result of two years rigorous research, the report looks at successful exits from impact investment funds in order to examine the balance between financial returns and mission preservation.
On October 19th 2015, The Global Impact Investing Network (GIIN), released a landscape study of the US Community Impact Investment field. Titled Scaling U.S. Community Investing: The Investor-Product Interface, the report provides insight into the barriers and opportunities to increasing investment. In the United States, investments that seeks to generate financial returns while delivering social benefits marginalized communities while have existed for a decades. The investments are executed through a range of actors including loan funds, banks and credit unions, and other financial institutions. Over 900 such product providers are certified as Community Development Finance Institutions (CDFIs) by the U.S. Treasury. In spite of the wide range of actors involved, the USCI field has not yet managed to scale its potential. The .Scaling U.S. Community Investing report explores why, while providing helpful recommendations for how to engage investors and improving investment products.
In October of 2015, BlackRock, Inc. announced the launch of the BlackRock Social Impact fund. Led by Black Rocks Scientific Active team, the BlackRock Impact Fund consists out of equity securities in companies targeting competitive market returns and aggregate social impact outcomes. The fund arrives at a time when impact investing is gaining traction as investment banks attempt to meet an increasing demand for profitable investments that generate social benefits .A few months prior, Bain capital followed announced the launch of a similar impact fund led by former Massachusetts governor Deval Patrick. Other major financial firms such as JP Morgan Chase, Morgan Stanley, HSB, Citi and UBS have launched similar initiatives, assigning entire units to social impact investing. The development reflect increased belief in the business case for the generation of financial returns alongside social value.
On October 7, 2015, Omidyar Network published a report named “Frontier Capital: Early Stage Investing for Financial Returns and Social Impact in Emerging Markets”. The report offers a strategic guide to how investors can achieve financial returns and social impact through early stage risk capital in emerging markets. Drawing from data analysis and interviews with top investors, report highlights investment opportunities while offering insight to which investment opportunities are best for particular portfolios.
The Rural Business Investment Company (RBIC) is hosting a complimentary webinar on Thursday, October 15, 2015 3 - 4:15 p.m. ET, inviting participants to get an insiders view of the program. CDVCA member Meritus Ventures was the first ever RBIC and was the only RBIC prior to 2014. Today there are two RBICs (Meritus and Advantage Capital Agricultural Partners, which was licensed in 2014), with two more conditionally approved RBICs (Meritus Kirchner and Innova, both of which were conditionally approved in April 2015) and several more funds in various stages of formation. The RBIC program boosts growth and job creation in rural America by providing capital to innovative small rural businesses. The webinar invites participants to learn how the program works, potential business opportunities and why fund managers commercial banks, and other credit institutions choose to invest in these funds. Learn more