Displaying the ‘CDVCA Ventures Blog’ Category:
CDFI Recertification Update
Update on the CDFI re-certification process The CDFI Coalition sent a letter to the CDFI Fund regarding the certification/recertification process on March 21, 2013. The Coalition requested that the CDFI Fund take steps to ensure that no CDFI was de-certified without notice of potential deficiencies in their recertification applications and an opportunity to cure deficiencies. As stated in our letter, which can be found here, there could be serious and potentially irreparable harm in de-certifying a group, such as putting the group in default of Financial Assistance, Technical Assistance or New Markets award agreements, or in default of other agreements that require the entity to be a certified CDFI. In response to the Coalition’s concerns, the Fund published a Frequently Asked Questions document yesterday. The key element of that document is the Fund’s commitment to contact any applicant for recertification at least once during the review process if there are documents or materials that are deemed necessary to complete the review. The Fund has set a 90- day timeframe for the 2013 recertification process - during such time a CDFI could cure whatever the deficiency might be. However, the Fund has indicated that, in its discretion, it may not allow a cure period for certain deficiencies, such as inability to demonstrate legal status at time of application; inability to demonstrate primary mission of community development, and/or evidence of government affiliation or control. The recertification timeframe could have a negative effect on individual CDFIs with pending Financial or Technical Assistance applications in ...
Gust Hosts Early Stage Investment Conference: Venture Forward
Gust hosts the preeminent conference on early stage investing, Venture Forward. It's the only conference exclusive to accredited angel investors and VCs. This is not your standard pitch-fest and fluffy content: we address the practical issues facing early stage investors that impact their investing strategy and returns. The conference is June 18th at the TriBeCa Rooftop. CDVCA Member Discount: CDVCA members can register directly on the site and enter the discount code "CDVCA" www.ventureforwardconference.com.
SJF Ventures Raises its Third Fund with $90 Million
SJF Ventures conducted the final closing on its third fund with more than $90MM in capital commitments, tripling the size of the previous $28MM second fund. The target for SJF Ventures III was $75MM and the fund was substantially oversubscribed at its final April closing. “We are honored that so many investors choose to join our partnership,” said David Kirkpatrick, SJF Managing Director and Co‐Founder. “We are particularly excited that a wide variety of bank, insurance, foundation, family office, pension, mutual fund, and individual investors have recognized that SJF’s impact investing strategy can yield above market financial and mission results.” SJF’s current, second fund is performing in the top quartile all US venture capital funds of its vintage year. SJF Ventures invests in high growth, positive impact companies seeking expansion capital rounds of $1MM to $10MM. SJF has invested in 36 portfolio companies over the last decade. “We realize SJF’s success is due to the exceptional results achieved by our portfolio companies such as Aseptia, BioSurplus, CleanScapes, Community Energy, eRecyclingCorps, Fieldview, Optoro, MediaMath, MedPage Today, and ServiceChannel,” said David Griest, SJF Managing Director. “We are eager to find the next set of great entrepreneurs for our third fund.” SJF Third Fund Press Release
State Budgets Overcome Deficits through Major Cuts, But Have No Plans for Reinvestment?
A National Public Radio Broadcast by Greg Allen highlights the bait-and-switch technique of massive budget cuts used only for further tax cuts (Michigan, Ohio), though some states (e.g. Florida) with upcoming gubernatorial elections plan politically strategic investments. Paul Beck, a professor emeritus of political science at Ohio State University, says that meant less money for schools and local government. "They were pretty massive cuts," Beck says. "Local governments and school districts were basically having to tighten their belts considerably. There was a substantial downturn in government jobs in Ohio, particularly at the local level." Now that Ohio has a budget surplus, the discussions between Kasich and lawmakers aren't about restoring spending to schools and local governments. Most of the money is earmarked for tax cuts. Florida — like many states — is putting much of the surplus into education. After cutting education spending by more than a billion dollars in his first year, Gov. Scott is proposing a $2,500 across-the-board raise for teachers. Scott, by the way, is running for re-election next year. To read or hear the full article: http://www.npr.org/2013/04/29/179762891/after-belt-tightening-some-states-are-back-in-the-black?ft=3&f=127088100&sc=nl&cc=ph-20130501
Nineteen Senators Request $225M Appropriation for CDFI Fund FY ’14
Senator Robert Menendez (D-NJ) and eighteen of his Senate colleagues signed a letter to the Senate Financial Services and General Government Appropriations Committee today asking that $224.9 be provided for the CDFI Fund in the Fiscal 2014 Appropriations bill. The letter was submitted to the Appropriations Committee today with the following Senators signed on: Menendez (D-NJ); Gillibrand (D-NY); Schumer (D-NY); King (I-ME); Sanders (I-VT); Hagan (D-NC); Johnson (D-SD); Stabenow (D-MI); Wyden (D-OR); Tester (D-MT); Baucus (D-MT); Landrieu (D-LA); Franken (D-MN); Klobuchar (D-MN); Durbin (D-IL); Schatz (D-HI); Reed (D-RI); Boxer (D-CA); Merkley (D-OR). Read the full letter here: http://www.cdfi.org/wp-content/uploads/2012/06/FY14-CDFI-Fund-letter-Menendez-plus-18.pdf
Community Development Investment Review Highlights New Social Impact Bonds – “Pay for Success”
Social Impact Bonds (Pay for Success) offer an attractive alternative to the status quo of paying for programs instead of results. Despite our best efforts, the poverty rate today is roughly what it was when the War on Poverty began in 1964. We are winning important battles but losing the war. A new social policy paradigm is needed. Pay for Success financing has the potential to improve the social sector’s effectiveness by rewarding programs that work, encouraging innovation, validating progress, and attracting private capital to the anti-poverty cause. As George Overholser and Caroline Whistler write in the latest issue of The Community Development Investment Review, it would “redirect and refocus our abundant resources, relentlessly, toward the innovations that demonstrate an ever-improving ability to deliver the results our communities need.” Certainly, important questions remain about Pay for Success. Equally important, however, is can we afford to pay for anything less? For full content: http://www.frbsf.org/publications/community/review/vol9_issue1/index.html
Federal Reserve Bank of San Francisco Releases Brief on Effect of Recession on Low-Income Individuals
Taking a closer look at household balance sheets before and after the recession, Emmons and Noeth find that younger, minority and less‐educated families suffered the largest wealth losses during the economic crisis. They use data from the Federal Reserve’s triennial Survey of Consumer Finances (SCF) and find that these households held a large amount of real estate relative to their incomes and total assets, mostly in the form of a primary residence, and had relatively little owners' equity in their homes. Declining house prices had a relatively large impact on the net worth of these households, many of which simultaneously experienced job and income losses during the recession. Similarly, using data fromthe SCF,Grinstein‐Weiss and Key find thatlow‐wealth homeowners owned relatively few non‐housing assets and were thus deeply exposed to the broad downturn in housing prices during the recession. In absolute terms, wealthier homeowners lost more home equity during the housing crisis, but homeowners with lower initial net worth lost more as a proportion of their total wealth. These trends at the household level have important macroeconomic implications. Mian, Rao and Sufi find that poorer and more indebted households reduced their spending much more than their wealthier counterparts in response to declines in housing net worth during the Great Recession. Similarly, Dynan and Edelberg find thatafter the recession, households that were more indebted were more likely to report cutting back consumption, even after controlling for wealth, income, and other factors that would be expected to influence consumption. Case, Quigley and Shiller find that changes in housing values exert a larger and more important impact upon household ...
Bridges Ventures launches new Social Impact Bond Fund
Bridges Ventures (Bridges) and Big Society Capital have today announced the launch of the Bridges Social Impact Bond Fund. The first of its kind, the fund will invest in charities and social enterprises to deliver programmes designed to improve social outcomes in areas such as education, employment, housing and care for vulnerable young people. The new £14 million fund will be managed by Bridges with Big Society Capital acting as cornerstone investor alongside the Bridges Social Entrepreneurs Fund, Omidyar Network and Panahpur. Charities and social enterprises play a crucial role in addressing tough societal challenges and providing life-changing support to the most vulnerable. However, philanthropic capital is not enough to scale up the work of these organisations driving a growing need for new and sustainable funding sources for social sector organisations. The Bridges Social Impact Bond Fund aims to be a sustainable source of funding and support for social sector organisations delivering social outcomes-based programmes. The new vehicle is part of the £56 million investment commitments announced by Big Society Capital since its launch in April last year. Read the full press release here: http://www.bridgesventures.com/news/launch-bridges-social-impact-bond-fund
SBA Innovation Chief Sean Greene becomes Entrepreneur in Residence at the Case Foundation
The Case Foundation announced today that Sean Greene has joined the organization as Entrepreneur in Residence. Having spent more than 20 years as an entrepreneur and investor, Mr. Greene most recently served as Associate Administrator for Investment and Special Advisor for Innovation at the U.S. Small Business Administration (SBA). At the SBA, Mr. Greene was responsible for both the Small Business Investment Company (SBIC) program, a growth capital program with approximately $18 billion of assets under management, as well as the Small Business Investment Research (SBIR) program, one of the government's largest innovation programs, which provides over $2 billion of R&D funding to small businesses each year. He also led SBA's efforts focused on stimulating high-growth entrepreneurship and was one of the key leaders in the Administration's Startup America initiative. “Whether creating and supporting initiatives like the Startup America Partnership, or incorporating the spirit of innovation and risk-taking into our work, entrepreneurship is at the heart of everything we do at the Case Foundation,” said Jean Case, CEO of the Case Foundation and an active investor and entrepreneur. “Sean Greene has a thorough understanding of the innovations that happen at the intersections of profit and purpose, and we’re thrilled to have him lend his experience to our work.” In his role, Mr. Greene will help the Case Foundation evaluate and refine its efforts to revitalize communities by supporting entrepreneurship. Leveraging his experience in launching a $1B impact investing initiative at the SBA, he will join Senior Fellow Sonal Shah playing a key role ...
The Effect of Dodd-Frank on the Ability of Banks to Invest in CDVC Funds
Several of our member funds, as well as some bank investors, have asked us about the effect of the Financial Stability Act of 2010 (“Dodd-Frank”) on the ability of banks to invest in CDVC funds. This post answers that question and provides some background. CDVCA worked closely with the bank regulatory agencies—with special thanks to the OCC!— to convince congress to insert language into the final Dodd-Frank legislation exempting so-called “Public Welfare” or “Part 24” investments from the general prohibition contained in the legislation against bank investments in private equity funds, including venture capital funds. Investments in CDVC funds would be considered Public Welfare investments. The following is the relevant section of Dodd-Frank, which adds a 13th section to the Bank Holding Company Act. The most relevant language is marked in bold: SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS. The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by adding at the end the following: ‘‘SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS. ‘‘(a) IN GENERAL.— ‘‘(1) PROHIBITION.—Unless otherwise provided in this section, a banking entity shall not— ‘‘(A) engage in proprietary trading; or ‘‘(B) acquire or retain any equity, partnership, or other ownership interest in or sponsor a hedge fund or a private equity fund… ‘‘(d) PERMITTED ACTIVITIES.— ‘‘(1) IN GENERAL.—Notwithstanding the restrictions under subsection (a), to the extent permitted by any other provision of Federal or State law, and subject to the limitations under paragraph (2) and any ...
