As 2019 comes to a close, now is a great time to start thinking about preparing your organization for a fiscal year (FY) 2020 Community Development Financial Institutions Program (CDFI Program) or Native American CDFI Assistance Program (NACA Program) Application. The Community Development Financial Institutions Fund (CDFI Fund) is tentatively planning to open the FY 2020 Financial Assistance and Technical Assistance application round in early 2020.
There are steps your organization can take now to get ready to apply. Join CDFI Fund staff for an informational pre-application webinar on Wednesday, December 18, 2019, to learn more. Topics covered will include setting up your critical SAM.gov and Grants.gov accounts, adjusting your organizational profile in the Awards Management Information System (AMIS), and other ways your organization can prepare in advance for the FY 2020 application round.
The U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) announced today that it received a total of 206 applications under the 2019 round of the New Markets Tax Credit Program (NMTC Program). The NMTC Program advances economic development in economically distressed communities by making tax credit allocations available to Community Development Entities (CDEs) for targeted investments in eligible areas.
The CDEs that applied under the 2019 round are headquartered in 44 states, the District of Columbia, and Puerto Rico. These applicants requested an aggregate total of $14.7 billion in NMTC allocation authority, over four times the $3.5 billion in authority available for the 2019 round.
The Community Development Venture Capital Alliance (CDVCA) is pleased to announce that the Puerto Rico Fund for Growth, L.P. has invested $4 million in Semillero Investment Fund I, LLC (“Semillero”), an agribusiness, private equity fund based on the island. Semillero will focus on investing in sustainable food and agriculture businesses with a view to substitute food imports with local production in Puerto Rico. We are excited about this because, even before the hurricane, 85% of food and beverage consumed in Puerto Rico was imported. The opportunity for import substitution of just 15% of those imports is a $1 billion market, which has the potential to create jobs and economic value across the island’s economy, the significance of which is only amplified in the wake of Hurricane Maria.
The Puerto Rico Fund for Growth, L.P. is a fund of funds investing in debt, venture capital, and private equity funds that invest in businesses that operate or provide employment in Puerto Rico. The Fund is managed by a wholly-owned subsidiary of CDVCA.
The CDFI Fund recently released its summary report on the NMTC Program, providing an analysis of all reported NMTC investment activity and including breakdowns by sector, geography, and investment type (real estate vs. non-real estate; rural vs. metro areas). Of the investments made under the program, over 75% meet at least one category of Severe Distress*. To view the entirety of the report, click here.
*The following are the Severe Distress Criteria enlisted by the CDFI Fund: (1) poverty rates of 30 percent or greater; (2) median family income at or below 60 percent of applicable area median income; or (3) unemployment rates at least one and a half times the national average.
As a guest on Impact Alpha’s Return on Investment podcast, Village Capital President, Ross Baird, discusses his new book, “The Innovation Blind Spot,” making the case for small businesses as the true engines of economic growth and pointing to smaller funds and first-time fund managers that are outperforming their mainstream counterparts. To listen to the August podcast, click here.
The NMTC Coalition released its 2017 report on the impact of New Market Tax Credits (NMTCs) on Rural America. According to the report (relying on data from 2003-2014), the NMTC program has financed over 800 projects and generated almost 50,000 full-time jobs. Also, for the same period, $4.8 billion in funding, or 27% of total financing in rural communities, was allocated to projects in the manufacturing and industrial sector. To download this NMTC Coalition impact report, click here.
On August 31st, Pacific Community Ventures (PCV) released its Good Jobs Recap for the month of August. Key topics include an updates on wages and the demographic distribution of employment opportunities in the US manufacturing sector. PCV also cites a report by Walmart and the Boston Consulting Group that proposes solutions to adressing the job shortage and skills gap in the manufacturing industry. CDVCA is an equity investor in one of Pacific Community Ventures’ funds, PCVIP III. To view PCV’s Monthly Good Jobs Recap, click here.
In line with its efforts to address regulatory and administrative issues of the New Markets Tax Credit (NMTC) program, the Novogradac NMTC Group submitted recommendations to the Senate Finance Committee last August 2017. Among its recommendations were obtaining permanency for the NMTC program, increasing the program’s annual credit authority, and modifying the recapture rules to enable greater efficiency. For full details, read the article here.
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 the London Stock Exchange, plans to open between 15 and 20 gyms per year in the future.
Says Bridges co-founder and managing partner Philip Newborough: “The Gym is a great illustration of Bridges’ core thesis: that positive social impact really can drive commercial success, and vice versa.”