Profiting Communities. Profiting Investors.
It’s a vicious cycle for underserved communities: they need businesses to grow in order to stimulate economic development and reduce poverty. But they have difficulty attracting investment capital to build businesses. Investors often deem investments in businesses in these communities too risky and too difficult to make happen. Underserved communities continue to lack thriving small businesses and the cycle repeats.
The challenge is to tap into the power of these communities by proving that investments in such businesses produce significant social value. This is accomplished through the creation of a revenue base, physical infrastructure and good jobs — and substantial financial reward through market-rate returns — which will ultimately attract more capital to these communities.
With over 90 percent of the California’s private investment capital going to just 9 percent of the state, Pacific Community Ventures focuses on identifying high-potential businesses in California’s many underserved areas. Once these businesses are identified, we deploy capital alongside expertise to create economic and social change.
Through our three equity funds — totaling over $60 million — Pacific Community Ventures fills the “capital gap” that lower-income communities invariably experience. In addition to the financial component of these investments, members of PCV’s investment team hold board seats and are actively involved with the companies they invest in. This gives business owners and their employees access to expertise and resources generally not available to small businesses in underserved areas.
In 2007 alone, PCV invested over $6 million in businesses in California’s underserved communities. In the past year, revenues at PCV-financed companies grew by 10 percent and employment grew a total of 22 percent, far exceeding state employment growth of just 1 percent. In 2007, with repeat investments from investors in our earlier funds, plus several new investors, PCV closed our third equity fund with over $40 million. PCV also became the fund manager for the City of San Jose’s $3 million Catalyst fund.