SBA Licenses First Impact Investment Fund
Tuesday, July 26, 2011
The U.S. Small Business
Administration announced that InvestMichigan! Mezzanine Fund will be the first
licensed Impact Investment Fund in the SBA’s new Impact Investment Initiative.
The fund will focus exclusively on providing capital to businesses that are
headquartered in Michigan, have a significant presence in Michigan or are in
the process of expanding their operations in Michigan so they can grow and
The Impact Investment Initiative is
part of Startup America, a White House initiative to bring together public and
private organizations to accelerate the growth of America’s entrepreneurs. It
will use the infrastructure of the SBA’s Small Business Investment Company Program
(SBIC), an established and successful program that operates at no cost to
taxpayers. The SBIC program began in 1958 with the mission to improve and
stimulate the national economy and small businesses by supplementing the flow
of private equity capital and long term loan funds for the sound financing,
growth and expansion of small businesses. In FY 2010, the SBIC program provided
$1.59 billion of financing to nearly 900 U.S. small businesses.
The Impact Investment Initiative will
drive up to $1.5 billion into the hands of small businesses over the next five
years. It will combine public and private funding for high growth companies
that will generate not only a financial but also a "social” return by focusing
on businesses located in underserved communities or communities facing barriers
Through the Impact Investment
Initiative, SBA will commit $1 billion to investment funds focused on investing
in underserved markets or in sectors that have been defined as national
priorities. Impact investments can be:
- Place-based, targeting small businesses located in or
employing residents of low or moderate income areas or economically
distressed areas; or
- Sector-based, targeting industry sectors that the
Administration has identified as national priorities. Currently only clean
energy and education have been identified as priority sectors.
To serve these markets SBA will
collaborate with private, institutional investors to identify impact
investments and provide expedited licensing and capital to fund managers who
qualify to organize and operate an Impact Investment SBIC.
High-growth firms are a small part of
the small business community, but they create a large number of net new jobs
each year. The Impact Investment Initiative will help high-growth companies receive
the funding they need to continue to expand and create jobs in America’s
underserved communities and priority sectors.
SBA will partner with Michigan Growth Capital Partners, L.P.,
an investment partnership whose anchor investor is the State of Michigan
Retirement Systems, and The Dow Chemical Company to provide up to $130 million
of investment capital over the next five years to high-growth businesses
throughout Michigan. Credit Suisse’s Customized Fund Investment Group
structured the InvestMichigan! Mezzanine Fund and will manage the fund in
partnership with Beringea, a Michigan-based investment manager. Of the total
funding, Dow will provide $15 million; Michigan Growth Capital Partners will
provide $35 million; and SBA will provide $80 million, which must be repaid.
For more information on the Impact
Investment Initiative please click here.