Three years ago, Darryl Goodner and his two partners wanted to expand their Louisville, KY, ice cream business from selling out of carts and farmers markets to their own brick and mortar storefront. They’d had trouble borrowing from a bank before. But then a potential investor suggested they contact Louisville-based impact investor Access Ventures.
After going through an unconventional, character-based loan assessment process, Access Ventures introduced the partners to a city-run small business advisory, which helped the partners put together a business plan. After that, they pitched their concept for their business, called Louisville Cream, to a panel that included members from Access Ventures, along with others from the community. The upshot: They got a $30,000 five-year, low-interest loan and, in 2018, opened up their shop. They’re just about pay off the loan this month.
Aggressively Deployed Risk Capital
Now, Access Ventures aims to help catalyze the growth of more regional entrepreneurs with Render Capital. The new $15 million regional fund focuses on providing what Access Ventures’ Managing Director Bryce Butler calls “aggressively deployed risk capital” to entrepreneurs in Louisville and Southern Indiana who don’t appeal to traditional money sources, like banks or VCs. “There are certain types of businesses where that type of capital works,” says Butler. “But for more and more companies, it doesn’t fit.”
Access Ventures was formed more than five years ago with a goal, says Tim Harris, director of marketing, of, “Getting capital into the hands of entrepreneurs who might not have been able to get it from traditional sources.” It’s made loans to 30 companies for anything from working capital to hiring employees, with a total loan pool of $350,000. Women and minority owned businesses make up 63.3% of companies and 70% of borrowers have a household income under $60,000, according to Access Ventures.
According to Butler, funding is a particularly urgent issue in areas like Louisville, with major implications for economic development. Bank lending to small businesses hasn’t bounced back since the Great Recession and the region has few Community Development Financial Institutions (CDFIs). As a result, “We lose our talent,” he says. “They move to places where they can find capital.”
Plus, to attract and retain high-growth companies, communities need to provide a thriving cultural environment, with boutique local businesses. Without customers from those potentially high-flying firms, such charming enterprises can’t survive, while, at the same time, without the latter, the former won’t want to come. “It’s a catch-22,” says Butler.
With that in mind, Render will offer funding across a variety of capital categories, from equity to debt, revenue-based financing and other alternatives, like below-marketing lending in partnership with CDFIs. It also will provide loan guarantees to local banks to encourage their support. “This is a collective across the spectrum of capital strategies,” says Butler.
In addition, there will be a Render Competition for potentially high-growth regional startups. Held annually, the first round will accept eight entrepreneurs, awarding $100,000 each.