A $20 million fund encourages investing for "ordinary people"
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Illustration: Eniola Odetunde/Axios
Investing is no longer just for millionaires, and we’re not talking about crypto.
What’s happening: The Boston Impact Initiative is raising money for a $20 million fund, and the nonprofit impact investment group is recruiting a number of middle-income residents for smaller investments, CEO Betty Francisco tells Axios.
- The minimum for these lower- and middle-income residents, or “non-accredited investors,” is $1,000.
- That’s a lot of money for the average person, but it’s far smaller than typical venture capital fund minimums, which range from $500,000 to $5 million or more.
The fund will go toward startups and projects owned by entrepreneurs of color and community-governed real estate projects that prevent displacement in the Northeast.
The intrigue: It’s the latest example of VC funds, particularly impact funds, tapping into middle-income residents who want to get involved in low-risk, mission-driven investments that could uplift their communities.
- “This gives an opportunity to ordinary people — a market that we’ve always kind of ignored — to have the ability to invest in impact [startups and projects],” Francisco says.
The big picture: A growing segment of investors, especially millennials, are interrogating a company or fund’s social impact before handing over their money. That includes whether they’re supporting climate-focused ventures, startups owned by people of color that pay local workers livable wages and other factors, Francisco says.
Details: BII launched the fund late last year with a community investing option ranging from $1,000 up to $25,000. The note has a five-year term with a 5% interest rate.
- BII is asking so-called accredited investors, or higher-income earners, to invest anywhere from $10,000 to $3 million for a 10-year term with an interest rate of 1% to 3%.
The money goes to a variety of portfolio companies. Here are a few examples:
🙋🏾♀️ Boston While Black, a local membership network for Black professionals.
🥢 ChopValue Boston, a company that recycles used chopsticks to make and sell wood products.
⚰️ The Kingstown Green Cooperative, a Connecticut-based co-op that makes eco-friendly, wooden biodegradable caskets.