Impact Ventures wants to make Dallas a hub for “under-estimated” founders by providing funding that helps break down the structural barriers to raising capital for women and people of color.
Using non-traditional funding routes to democratize access to capital and creating community wealth, the Dallas-based nonprofit accelerator is targeting a $20 million goal for its Dallas Inclusive Capital Fund.
“Entrepreneurs of color are over-mentored and undercapitalized. While others are saying, ‘Here’s a program or mentorship,’ we’ve been one of the first groups to say, ‘Here’s that, plus capital, to get you there,’” Benjamin Vann, founder and CEO at Impact Ventures, told Dallas Innovates via email. “This helps us reach our ultimate goal of community transformation. This allows for impact at multiple levels of community involvement, which is a much, much larger vision than just investing in a few good companies.”
‘Building community wealth and shifting power’
With an underwriting process based on relationships and with part of its return on investment measured in things like enterprise health, economic justice, and community impact, the integrated capital fund already has between $3 million and $4 million in soft commitments. Partially using its accelerator program as a pipeline, the fund focuses on providing flexible debt and “patient equity” investments, using a founder’s character and drive during the underwriting process.
“We believe that business moves at the speed of relationships and put being in the right relationship at the center of our work and investment process,” Vann said. “We rely on flexible risk capital to create win-win opportunities for us and our founders.”
Ultimately, Impact Ventures will seek to make pre-seed investments of $100,000 and seed-stage investments between $250,000 and $500,000, along with loans between $50,000 and $250,000. Vann said the fund will target consumer product, service-based, and tech-enabled businesses owned or managed by a woman or person of color that are at least two years old and have a minimum of $250,000 in revenue. It will look to deploy debt investments, which will make up 75% of the fund’s investments, in North Texas and equity investments across Texas and the U.S.
Unlike traditional funds, which often rely on personal networks and referrals to investors, Impact Ventures will provide due diligence, while investment decision making will be made by a community advisory board, which is still being formalized and will include business leaders and investment professionals. Vann said investment criteria will include collective justice, health, and impact.
“We aim to build a flexible financing vehicle that meets the needs of under-estimated women, Black, and POC founders—most that don’t fit traditional loan or venture capital models,” Vann said. “We also see our fund as a means to not only deploy capital to communities of color and women, but to build community wealth by engaging non-traditional investors, and shift power by allowing community to be the ultimate decision-makers in how capital is allocated.”
Dallas as a destination for diverse entrepreneurs
Overall, Vann said the goal of the fund is to remove barriers to raising capital like requiring personal guarantees and high credit scores that have historically disproportionately affected women and people of color when building a business, in addition to helping to build generational and community wealth. He added that he sees the opportunity the fund has on making North Texas known as a hub for diverse and underserved founders and investors.
“As big as a city and region we are, economic opportunity through entrepreneurship for communities of color is nascent compared to other major metros,” Vann said. “By inspiring our business and philanthropic community to think more broadly and creatively when it comes to community development and closing our wealth divides, we can use ‘risk capital’ to create a market that simply does not exist. If initiatives like this and others are successful, we can get there.”
Impact Ventures’ funding efforts are already having an impact locally. Over the past few months, the organization has been deploying capital from a $533,000 pilot fund, with Impact Ventures being the first investor for 90% of the companies it has invested in. With $200,000 left that’s set to be deployed this month, Impact Ventures has made $100,000 investments in Dallas-based trading algorithm marketplace AlgoPear and Fort Worth-based student loan debt reduction app College Cash, in addition to small equity investments and grant funding made through Impact Ventures’ accelerator.
Creating a more equitable entrepreneurial ecosystem
Impact Ventures was founded in 2017 with the mission of accelerating and investing in “all shades of genius.” The organization is now on its fifth cohort of companies going through its accelerator program, adding to the more than 80 companies it has supported since then. Last year, Impact Ventures split its 12-week program into two tracks. Its Local Entrepreneur Accelerator Program focuses on small businesses that are looking to grow through flexible debt capital, while its Inclusive Innovation track focuses on tech-enabled pre-seed and seed-stage companies.
The work of Impact Ventures adds to other efforts around DFW to increase diversity, equity, and inclusion in the region’s startup and small business community. In the last year, the [email protected]—the Dallas Entrepreneur Center’s southern Dallas outpost—has launched a program to help Black founders get their businesses off the ground, PeopleFund launched a BIPOC-focused accelerator in South Dallas, and Dallas Mayor Eric Johnson formed the Task Force on Innovation and Entrepreneurship, which is co-chaired by Kanarys CEO Mandy Price and The DEC Network co-founder Trey Bowles and has made recommendations to the city to help bring more inclusivity in the ecosystem with things like creating new incubators
“When investors from across the country look at our region to park their investment dollars in diverse-led businesses, I want people to see Dallas as not only a viable but a competitive market,” Vann said.
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