If you' re looking for capital for your socially responsible business, you' re in luck. A growing number of funds are providing financing for companies that address societal needs, whether they do so by providing environmentally friendly products or services or by the way they run their business. Some of the funding sources profiled here target companies that create jobs for low-income workers, while others facilitate investments in specific sectors such as education, energy, or health care. All of them, however, hold the same high standards for their socially responsible investments as they do for other ventures. Although they may not expect quite the same level of financial return, they look " first and foremost for sustainable businesses," says Jerry Colonna, managing partner at Flatiron Partners. Because we limited our list to funding sources for socially responsible for-profit companies, we did not include organizations that offer funding for nonprofits or those that focus solely on community development.
Coastal Ventures LP
Founded: 1996, a subsidiary of Coastal Enterprises
Inc. Location: Portland, Maine
Fund size: $5.5 million; CEI Ventures hopes to raise $20 million for the new fund in the first quarter of 2001.
Mission: " The three Es: employment, equity (social justice), and economics (profitability)," says CEI Ventures president Nat Henshaw
Investment criteria: Looks for companies that create jobs for low-income people. Most of the companies in the fund' s portfolio provide socially responsible products and services, focusing on areas like health care, education, and the environment. The fund also seeks companies that engage in progressive management techniques like incentive compensation, including employee ownership. Portfolio companies receiving an investment must sign an agreement to fill 50% to 75% of new jobs with low-income workers referred through Maine' s job-training programs
Average investment: $200,000 with current fund; aiming for $1 million with new fund
Average equity stake: 10%
First fund closed in February 2000 as a joint venture of the Nature Conservancy and the Inter-American Development Bank
Location: San José , Costa Rica
Fund size: Currently $10 million; aiming for $25 million
Mission: To invest seed money and expansion capital in small to midsize companies in Latin America and the Caribbean; to fund companies with operations in those areas but based in the United States
Investment criterion: Invests in companies in the sustainable agriculture and ecotourism markets
Average investment: $225,000
Average equity stake: 20%
Environmental Capital Network
Location: Ann Arbor, Mich.
Fund size: Not a fund. The network facilitated more than $82 million worth of investments in 2000.
Mission: ECN is a network of 200 members including entrepreneurs in the environmental and energy fields and the angels and venture-capital firms who want to invest in them
Investment criterion: Looks for early-stage companies whose founders want to commercialize their environmental or energy products and have at least a rough business plan
Average investment: Ranges from less than $1 million to $20 million
Average equity stake: NA
Flatiron Future Fund
Founded: April 2000 by Flatiron Partners, a venture-capital firm focused on Internet investing
Location: New York City
Fund size: From $2 million to $5 million
Mission: To spread social awareness among entrepreneurs and to fund for-profit ventures that promote technology for a greater social good.
Flatiron Partners also formed the Flatiron Foundation to make grants to nonprofit organizations
Investment criteria: Will invest in companies involved in computer and high-tech education for children, as well as in female- and minority-owned businesses
Average investment: Ranges from $250,000 to $1,000,000
Average equity stake: Will be minority stakes
Location: San Francisco
Fund size: Not a fund. Has facilitated more than $70 million in investments to date
Mission: Investors' Circle is an organization of 130-plus members that matches angel investors and venture-capital funds with early-stage socially responsible businesses
Investment criteria: Focuses on businesses in the health, education, environment, energy, and community-development sectors; also seeks out female- and minority-led businesses
Average investment: $600,000
Average equity stake: Investors take a minority stake
Sustainable Jobs Fund LP
First fund closed: 1999
Location: Durham, N.C., and Philadelphia
Fund size: $17 million
Mission: To fund companies that will create jobs in economically distressed regions of the eastern United StatesInvestment criteria: The fund' s companies must create jobs; SJF also focuses on manufacturing and environmental companies such as recycling and renewable-energy businesses. Requires entrepreneurs receiving an investment to sign a " community-development covenant" stipulating the number of jobs they will create and which of those are targeted to low-income workers. They must also agree to provide health insurance a living wage.
Average investment: $500,000
Average equity stake: Ranges from a few percent up to 30%
If you'd like to learn more about this topic, read the following article which appears in the April 2001 issue of Inc. magazine. "Can Business Still Save The World?"
Copyright © 2001 G+J USA Publishing
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