The money for the San Diego, California-based fund for diverse founders comes from the Rockefeller Foundation and the Surdna Foundation. The series A funding will accelerate the deployment of Founders First’s $100 million credit facility from Community Investment Management to fund 400 companies.
Targeted founders include women; military veterans; people who identify as LGBTQ+; and BIPOC and Indigenous individuals. The fund offers more flexible growth capital than traditional bank debt. The funding will also allow Founders First to expand into new regions across the United States.
The money will help businesses scale while demonstrating the value proposition in supporting minority-led small businesses. Through this expansion, Founders First will become one of the country’s largest revenue-based finance and advisory support investment platforms for underserved small businesses.
In addition to the Rockefeller Foundation and the Surdna Foundation, investors include the Kauffman Foundation through the Capital Access Lab Fund at ImpactAssets, LivingCities Blended Catalyst Fund, Spring Point Partners, the Impact Seat, and the Lindmor Foundation.
Maria Kozloski, senior vice president of the Rockefeller Foundation’s Innovative Finance Initiative, said in a statement that the pandemic has shed light on longstanding financing issues that disproportionally impact minority-owned businesses. She also said there’s an urgency when it comes to leveling the playing field for the capital that can be the engine of growth for minority communities.
Of the more than 400 companies that have gone through the Founders First programs, 83% reported increased revenues in 12 months and 53% reported revenue increases of 25% in six months. Founders First CEO Kim Folsom said in a statement that the investment will greatly increase the fund’s ability to reach business owners who need money for growth but often don’t get access to venture capital.
Founders First focuses on helping small businesses led by diverse and disadvantaged business owners located in low- to moderate-income areas that are less connected to the traditional funding networks of Silicon Valley and New York City. The company combines an accelerator model that includes an educational curriculum and expert coaching alongside direct funding.
BIPOC-owned small businesses were hit hardest by the COVID-19 pandemic and face systemic barriers to accessing critical safety net support, the company said. Black-owned businesses closed at nearly twice the rate of overall firms at the onset of the pandemic, according to a recent report by the Federal Reserve Bank of New York.
This funding is part of the Rockefeller Foundation’s Zero Gap Fund. Launched in partnership with the John D. and Catherine T. MacArthur Foundation through the Catalytic Capital Consortium (C3), the Zero Gap Fund is a vehicle to channel private investment toward addressing the world’s most pressing challenges.
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