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CNote's new impact investment vehicle provides funding to underserved women of color and low-income women entrepreneurs across the US.
While women are the fastest-growing group of entrepreneurs in the US, less
than 5 percent of small business lending — only $1 in $23 — goes to women.
Now, CNote — a financial platform that allows anyone
to make money investing in causes and communities they care about — is working
to fix this disparity with the Wisdom Fund,
a new impact investment opportunity launching this week.
Created in partnership with mission-driven lender CDC Small Business Finance
and four innovative nonprofits, the Wisdom Fund funnels money from accredited
investors — institutions, funds, foundations, family offices and individuals —
into business loans for low- to moderate-income women and women of color. The
loans are provided by nonprofit community lenders with decades of experience
delivering the capital and resources that women small business owners need.
“We hear a lot about the gap in venture capital funding for women, but the vast
majority of women who need capital are not forming hyper-growth startups; they
are starting small businesses to pursue economic freedom, flexibility and
independence. The financial system is not serving them well, and we’re very much
failing women of color in particular,” said CNote CEO and co-founder Catherine
Berman. “With the Wisdom Fund, we’re taking a major step toward fixing a huge
injustice — women’s businesses receive far less funding than they deserve,”
Berman said. “We’re working with an amazing group of nonprofit community lenders
nationally to entirely rethink lending to women.”
With a mission to close the wealth gap, CNote — a certified B Corp that
directs every dollar invested toward funding female- and minority-led small
businesses, affordable housing and economic development in financially
underserved communities across America — is also already earning support from
major corporations, as well as nonprofits.
“Access to capital is one of the top challenges female small business owners
face, and we’re excited to see CNote working to combat this with the
introduction of their Wisdom Fund collaboration,” said Amy Neale, VP and
startup engagement lead for Mastercard Start
Path, which supports high-potential startups around
the world, including CNote. “At Start Path, we look forward to helping CNote
scale their business to ensure a more inclusive economy, because when you invest
in women the returns are priceless.”
During a three-phase build-up, Wisdom Fund partners will collect, share and act
on data about what works for female
In the first eight months, participants will fill in the knowledge gap —
gathering information on how women interact with the loan process, what hangs
them up and what eases their path. In phase two, the partners will experiment
with new ways to serve women that remove barriers. Around the one-year mark, the
focus will shift to scaling the program by continuing to add new lending
partners, increasing investment and implementing best practices across the
“There’s lots of data on how women are shut out of venture capital; we don’t
know as much about why women are shut out of debt capital,” said Allison
Kelly, SVP of strategy and innovation at CDC Small Business Finance. “What are
the product-level needs? Who are the business owners and what barriers are they
experiencing? Why are women opting out of taking on debt? The whole financial
system is set up to serve a certain segment of the population. Maybe we need to
rethink the distribution of capital and how we assess risk. The Wisdom Fund is
an opportunity to create new debt products by working collaboratively with the
women we aim to serve.”
As CNote points out, community development financial institutions
(CDFIs), such as the ones the company is working with, are perfectly
positioned to take on this work. They’re distributed across the country, they’ve
always invested in financially underserved communities, and they have enormous
unrealized potential for financial and impact returns.
“We looked at the trends and realized that CDFIs are undercapitalized,” Kelly
said. “The sources of capital were mismatched to CDFI needs — it was all big
capital sources deploying larger chunks of capital to fewer and fewer CDFIs.”
That’s where CNote comes in. Since its September 2017 debut with a product for
retail investors, the fintech startup has invested
more than $18 million in underserved communities through a growing CDFI network
covering more than 35 states. Those investments have helped to create or
maintain over 2,000 jobs and fund more than 400 small business loans.
Investors in the Wisdom Fund will earn an estimated 4 percent annual return,
over a 60-month term, on a loan portfolio that’s diversified across established
Email [email protected] to
learn how you can help fund more women-owned businesses today.
Women seeking loans should contact a participating CDFI. Partners in the Wisdom
Fund’s first phase include:
· Carolina Small Business Development
Fund, which provides small business
loans and financial training to startups, existing businesses and community
organizations in North Carolina.
· LiftFund, a Texas-based organization that empowers underserved
entrepreneurs with capital and support services in 13 states.
· TruFund, a national nonprofit organization that provides affordable
capital and business development services to small businesses and nonprofits in
Alabama, Louisiana and New York.
“Entrepreneurship is a key driver of prosperity and community resiliency in the US; however, we recognize more can be done to create conditions in which women entrepreneurs will not just survive but thrive,” said James H. Bason, President & CEO of TruFund Financial Services, Inc. “TruFund proudly joins the Wisdom Fund collaborative effort to rise and empower women-owned business enterprises.”
In addition, Pacific Community
Ventures will match all borrowers
from the Wisdom Fund with pro bono business advisors. Pacific Community
Ventures, a Bay Area–based CDFI, invests in small businesses in California that
are past the startup phase and creating jobs, and manages a national network of
pro bono expert advisors who mentor small business owners on any topic,
challenge or opportunity.
Wisdom Fund is the latest in a spate of platforms designed to facilitate impact
investing. 2018 saw the release of JUST Capital’s Environmental
— which allows business leaders, policymakers, advocacy groups, investors and
the general public to see how the largest US companies stack up when comparing
their environmental impact; and Swell Investing’s Impact
a portfolio offering investors 400 companies poised for impact and returns. And
earlier this month, financial services company John
Hancock launched COIN —
a platform that lets customers invest directly, at any level, in companies
contributing toward eight Impact Areas aligned with the UN Sustainable
Published Mar 21, 2019 4am EDT / 1am PDT / 8am GMT / 9am CET