Spotlight

Meet Impact America: A ‘Best for the World’ Fund

Kesha Cash | October 23, 2017

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Every year, B Lab, the nonprofit that certifies B Corps, celebrates “Best for the World” companies—those that score in the top 10% of B Lab’s Impact Assessment. They also analyze investment funds. This year, 28 funds representing $1.3 billion in assets under management made the list of “Best for the World” funds; eight of them US-based. One of them is Impact America Fund. Below, Kesha Cash, founder and general partner of Impact America, talks about the fund, its investment philosophy and impact. (Read the full version on B the Change here.)

Running a tech-focused venture fund is similar to writing speculative fiction: While authors imagine a future filled with the technologies of tomorrow, tech funds invest in the people and technologies that bring about tomorrow.

We, too, wrestle with a vision of the future. So when author William Gibson writes “The future is already here, it’s just not evenly distributed,”we believe that it’s up to us to do something about it.

From the vantage point of Impact America, a fund focused on elevating economic power within low- to moderate-income and disenfranchised communities, the future is definitely already here. It’s the future that says America will be minority-majority by 2043, but that, if current financial trends continue, the median wealth for black American households will drop to $0 in 2053, with Latinos joining them in 2073.

And it’s a future where a shrinking number of 25- to 54-year old whites without college degrees don’t feel comfortable claiming that their standard of living is “much better” or even “somewhat better” than that of their parents.

It’s a future that’s bad for all of usand it’s what Impact America is actively working to disrupt by investing in founders who use technology to better the lives of society’s “have nots,” instead of using it to exploit them in service to the already comfortable.

Our portfolio companies are led by entrepreneurs whose commitment to the communities they serve are genuine and comes from having lived or worked within them. A majority of them are people of color or women. However, we didn’t invest in them because of their race or gender; we invested in them because they had valuable lived experienceand that is the standard that has consistently translated into success for us.

Our founders’ pathways are anything but traditional, but their understanding of the cultures that fuel the economic engines within underserved communities means that they see the business opportunities that traditional Silicon Valley tech investors often overlook.

By providing capital for founders who have been previously ignored by traditional venture capitalists, we are able to lift up communities that have also been left behind or worse, exploited, by the innovations that the traditional sector has funded. The future we’re creating hinges on economic inclusion and the better community outcomes it provides.

This is what our portfolio looks like on the ground in terms of concrete benefits:

 Improved​ ​Incomes​: ​The hairstylists who use the online beauty supply platform, Mayvenn, to sell hair extension supplies and wigs directly to their customers, earn, on average, an extra $200 to $300 a week in commission. These stylists, the majority of whom are black, are generating up to 40 percent more client revenue, without having to buy or purchase inventory. This increase significantly boosts their incomes and often makes the difference between living under the poverty line or safely above it.

Mayvenn team and stylists.

 Money​ ​That​ ​Stays​ ​Within​ ​Communities:​ ​By keeping capital from leaving their communities through the foreign-owned beauty supply chains that are a mainstay in black neighborhoods, Mayvenn’s stylists are recycling the black dollar in an industry where black women over-index in spending, but own very little of the $9 billion supply chain. This is important in a country where, according to the NAACP, a dollar circulates for less than six hours before leaving a black community.

 Increased​ ​Growth​ ​Opportunities​ ​for​ ​Small​ ​Businesses​: A​ study by the Association of Enterprise Opportunity found that the wealth gap between black and white adults decreased from a multiplier of 13 to a multiplier of 3 when the comparison looked solely at the differences in wealth between black and white business owners. Our portfolio companies ConnXus and Camino Financial both work to tackle the disparity in opportunity faced by minority-owned businesses.

ConnXus’ cloud-based SaaS platform connects procurement professionals with a database of 1.7 million minority-, woman-, veteran- and LGBT-owned vendors. It also allows companies to evaluate how their supplier choice impacts the economy and job creation, all the way down to their local communities. By making it easier for large corporations to contract with diverse vendors, ConnXus ultimately helps drive the expansion of minority and woman-owned companies.

Stanford Graduate School of Business’ 2016 report, “The State of Latino Entrepreneurship,” found that the five-year average growth rate in the number of Latino-owned firms been double or triple the national average for the past 15 years.

Yet, despite the numbers, and unlike white-owned businesses, these companies remained flat in terms of revenue and number of employees as they matured. The primary contributing factor? The inability of Latino firms to secure capital outside of funding from friends, family or personal savings.

By developing alternate sources for determining the creditworthiness of underbanked business owners and underwriting loans, Camino Financial is ensuring that the high loan denial rate and predatory terms of traditional banks don’t keep thriving Latino businesses from scalingand potentially contributing trillions of dollars to the U.S. economy.

● Data​ ​and​ ​Transparencies​ ​That​ ​Support​ ​the​ ​Goals​ ​of​ ​the​ ​Underserved​:The Atlantic recently reported on how big data collected on low-income people helps keep them trapped in poverty. The business models of our portfolio companies, Schoolzilla and PawnGuru, instead center on using data to provide better outcomes for the underserved.

Schoolzilla helps schools and school districts warehouse and visualize their data to pinpoint and eradicate opportunity gaps. The platform, which impacts the learning outcomes of more than one million students, two-thirds of which come from low-income families, provides the kind of granular insights that help educators quickly identify specific issues so that they can craft effective solutions. Schoolzilla has helped individual districts use their data to do everything from identifying the cause of decreased reading scores (finding: decreased library hours!), to providing insights into chronic absence and student retention factors.

For the 30 million Americans who use pawn shops to make ends meet, PawnGuru’s platform provides the ability to quickly comparison shop by receiving multiple offers from nearby pawn shopswithout having to physically visit multiple shops. With pricing disparities running up to 270 percent between pawn shops, the ability to receive more than one offer on an item can be what founder Jordan Birnholtz describes as “the difference between keeping the lights on and not being able to pay the electric bill.”

Economic Inclusion

In 2017, our portfolio employs 120 full-time people and has projected revenue of $40 million, with 66 percent of our funds invested in a vertical of Economic Inclusion. More importantly, the successes of the companies we have invested in are contributing to the story of how impact investing can help shift the paradigms of race, economics and social change in America.

See the full list of “Best for the World” Funds and read about how they are selected here.

Kesha Cash is founder & general partner of Impact America. This article is excerpted from a longer version originally published by B the Change, a Medium publication run by the nonprofit B Lab.

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