The Urban Progress Community Fund is looking to help even more African American entrepreneurs get funded in 2019.
Nationwide (BlackNews.com) — Invest in an entrepreneur of color and the rest of the dominoes will fall. Charlotte’s Urban Advisors, an impact investment consulting firm, recently announced the launch of a fund that replicates this idea.
The Urban Progress Community Fund backs minority-owned businesses that are “high-impact,” which, by the fund’s standards, means it creates jobs, hires a diverse workforce, and offers services or products beneficial for low to moderate-income people and communities.
The hope is a single investment — in some way, shape or form — can help boost the economy, bring about upward mobility and achieve social justice.
The Urban Progress Community Fund is four-years in the making. The idea was developed in response to the shooting of Michael Brown by a police officer in Ferguson, Missouri. His death, along with other police-related shootings in the following years, including the one of Keith Lamont Scott in Charlotte, sparked national conversations about social injustice in the U.S.
One of those was between Riverside Church in New York and Urban Advisor. The church, known for its commitment to social justice, reached out to the firm with a question: How could their investment portfolio be used to address social justice issues?
“We all sat down to think about, ‘How can capital be used to make a difference in our community and how can we put something in place where an investor would be comfortable,'” says David Sharp, founder of the fund and Urban Advisors.
With a kick-start investment of $2 million from the church, the institutional fund was born. Four years later, the fund had a first close of $12.5 million.
That money will be used to provide flexible loans ranging from $250,000 to $1.2 million to small businesses and community organizations in the Southeast, a region that struggles with economic mobility.
Funders of the first capital raise, in addition to the church, were New Resource Bank, MetLife Investment Management and Calvert Impact Capital. None of the investors are based in the Southeast. This could be because impact investing is a relatively new concept, especially in the South, Sharp explains.
“It really had to be someone from our community to do it, but we had to go outside the market to get it funded,” he says. “We anticipate and hope that we’ll see more Southern funders complement our investor base in the next capital raise.”
In addition to regional challenges, black and brown entrepreneurs struggle with traditional funding. They are less likely to apply for loans in the first place due to a fear of rejection. When they do, they’re three times more likely to be denied compared to non-minorities, according to the U.S. Minority Business Development Agency.
The UP Community Fund plans to raise up to $30 million. Their next capital raise is later this year.
The fund requires businesses be at least one year old and have annual sales of $300,000. The funds can be used for growth capital, general working capital, refinance or consolidate debt, and equipment, inventory, or fixed assets.
So far, Sharp says they’ve seen some invest-worthy businesses and a few deals have started due diligence.
For more information, contact David Sharp at 704-252-5296 or visit www.upcommunityfund.com