Authors: Bud Colligan, Co-Founder, PCV, & Bulbul Gupta, President & CEO, PCV
The story of Pacific Community Ventures began with a question in 1998 at the height of the dot.com boom: how can an entrepreneurial haven like Silicon Valley provide monetary and people resources to low income communities to create a more inclusive economy? A unique capital + advising integrated approach was incubated on University Avenue in Palo Alto to answer this question: what would it take to not only provide affordable capital to entrepreneurs in, and from, lower income communities, but to build around them a network of resources and support common in the everyday landscape of Silicon Valley? Ten years before the phrase “impact investing” was coined, PCV’s founding made it one of the first impact-first investing organizations in the country.
Over that time, we have seen firsthand how other entrepreneurial hotbeds across the U.S. like Austin, Seattle, Los Angeles, New York and others have continuously thrived on the network effect of ideas, advisors, capital, and talent. Our operating hypothesis at PCV is that access to capital and a network of high-quality pre- and post-investment advisors will spur sustainable and inclusive economic development and jobs in underserved communities, cultivating the kind of wealth-building and prosperity that keeps the American Dream alive and accessible…for all.
We are proud to say that in that 25-year span, we have:
- Deployed over $100 million in capital across California between equity and lending programs; including almost $40 million in the years since we became a lender.
- Advised over 3,500 small business entrepreneurs around the country
- Helped businesses support over 21,000+ jobs
- Advanced financial health and wealth-building journeys for our entrepreneurs and their workers through good quality jobs.
Capital Deployed, Businesses Advised, & Jobs Created
In 1999 we evolved from the startup phase of our social enterprise to investing equity in 6 companies across the South Bay committed to creating good quality jobs. Our research and experience led to PCV’s prioritization of small businesses as indispensable job producers that fuel local community development. Over the next few years, PCV developed a road map to leverage its unique strengths in investing in entrepreneurs as they began their road to the American dream.
After collecting data and analyzing case studies to identify the key areas where the market and traditional economy had failed, we began to look critically at our programming to identify where we could close gaps to affect our companies’ success rate.
In 2008 PCV launched its first Good Jobs, Good Business framework, to provide small business owners with tailored advice and professional learning on growing their businesses in a way that benefits their workers and their bottom line – the “double bottom line” approach that was part of the founding of the impact investing field. With $100 million invested in job-creating companies and over 2,000 companies benefiting from pro bono advice thus far, our portfolio of small businesses not only remained intact, but also experienced job growth of 12% over our history.
From Equity to Lending & Scaling Advising
After the 2008/09 Great Recession, we realized that small business owners in our portfolio needed working capital – patient debt – to recover, more than potentially dilutive equity capital. In 2011, the Small Business Administration (SBA) awarded PCV $1 million to seed a new lending program, our “Loans + Advice” fund, that enabled PCV to pivot into becoming a statewide Community Development Financial Institution (CDFI) in California. This program bridged the “missing middle” financing of our founding impact thesis, to support startup and early stage loans all the way to small business loans ranging from $10,000 – $200,000.
Later that same year, as it became increasingly clear that national-level systems needed change, PCV doubled down on evidence-based and data-driven practices to further our mission. PCV’s InSight report with the Rockefeller Foundation, “Impact Investing,” became a White House recommended reading at the Impact Economy Summit. PCV also made the Forbes Impact 30 list featuring the world’s leading social entrepreneurs, as the U.S. launched its first national task force on Impact Investing at the Obama White House.
To match the demand for quality services and affordable advice, we also scaled our pro bono advising program and launched an initiative that became Businessadvising.org. This platform connected our entrepreneurs with mentors from startups, major banks, consulting firms, and Fortune 500 companies to provide free tailored assistance and solve real-time business challenges. Although entrepreneurs of color–specifically BIPOC female entrepreneurs– are the fastest growing segment of new businesses in the US economy, statistics clearly demonstrate the inequities in their ability to access working capital and mentor networks. Businessadvising.org takes this inequity head on by offering mentorship and lending-readiness advice to underserved small business entrepreneurs across the nation.
In 2019, PCV took our Good Jobs, Good Business framework nationwide and created the online toolkit – Good Jobs, Good Business: A Small Business Toolkit to Create Jobs that Boost the Bottom Line. It offers financial rewards and incentives to borrowers who work towards offering living wages, benefits, and wealth and career building opportunities that make for a good job. The addition of the Good Jobs, Good Business toolkit to our BusinessAdvising.org services helped to expand practical tips, guidance, and examples for reducing staff turnover and enhancing business results.
Centering Civil Rights & Racial Equity in All We Do
Upon founding, PCV was one of America’s first impact investing organizations. Community Development Financial Institutions (CDFIs), were created out of the Civil Rights Movement with the expressed purpose and federal declaration of getting capital to low-income and communities of color for wealth building. In late 2019, when we re-examined what it meant to bridge the worlds of impact investing and the civil rights focus for CDFIs, we reassessed everything. Are we truly designing for, and delivering towards, gender and racial wealth building outcomes – for, with, and by communities most impacted, and holding ourselves accountable in word and action to this mission?
With so many communities of color struggling with injustices stemming from the past, our new strategy launched in 2022 to Reimagine, Democratize, and Be Restorative advances PCV’s foundational values into our principles for the future. We are actively working to make more inclusive the underwriting behind our lending capital program, using portfolio analytics and community feedback; to democratize access to both affordable lending and business advising programs through deeper trust-based partnerships with community organizations; and to be restorative in the places we show up, to ensure we are leaving wealth-building journeys behind. We now embed this three-part approach into the design and delivery of all our products and services, and continually strive for feedback to improve and deepen impact.
In 2021, PCV launched our first place-based impact-first Fund – the Oakland Restorative Loan Fund amidst the COVID-19 pandemic – a no fee, 0% small business loan fund for loans from $10,000 to $100,000 across five of the lowest-income tracts in the city. The Fund was co-created and deployed with six local Black and Brown led organizations closest to their communities. The Fund prioritized the needs of entrepreneurs of color to stay in business and help counter further displacement and gentrification in our homebase City of Oakland. With 37 loans to small businesses in historically redlined neighborhoods across the city, we demonstrated that place-based, impact-first, and democratized fund structures can work.
We are redesigning the narrative for inclusive entrepreneurship, and co-designing economic mobility strategies for wealth-building with the communities we serve. As PCV celebrates our 25th Anniversary this year, we honor our roots as one of the U.S.’s first impact investors, and an organization aligned with the dream of the Civil Rights Movement – an America accessible to all. Over the last 3 years, we have not only doubled our loan portfolio and advising programs while keeping write-offs low, we have also maximized impact metrics: 92% of capital deployed is to entrepreneurs of color and women, 98% of capital deployed is into low-and-moderate income communities, and we have tripled the number of small businesses on Good Jobs journeys with our support.
What Will the Next 25 Years Hold for PCV and our Field?
Bud – I would like to see the PCV model proliferate and be supported nationwide by the business and venture community. A strong network of experienced advisors exists in every city and can be unleashed to assist entrepreneurs in lower income communities. How do we scale a robust advisor network nationwide? How might we bring substantially more capital to bear on the issue? Opportunity Fund, for which I serve for many years on the Advisory Board, has really started to scale to the “opportunity” in front of it. How could PCV do the same? PCV’s secret sauce may be its advisor network. There are many organizations that provide capital, but technical assistance is equally important.
Bulbul – My vision for PCV is to embody our impact investing founding roots; redouble our focus as a CDFI that distributes funds equitably; and provide a nation-wide exemplar for impact-first investing – what we call restorative capital. My family came to this country as immigrant entrepreneurs in the late 80s, with a belief in the American Dream, one I have continued to fight to make accessible to all Americans throughout my career.
We must invest in the 50% of underresourced Americans who not only represent the new majority in this country over the next 20 years, but could unlock a significant boost to our economy, our competitiveness and innovation on the world stage. As well as the 50% of Americans working at the base of the economic pyramid through wealth-building jobs created by the small businesses who know their communities best. As an organization, we will make strides towards this vision through the following:
1. Fund Innovation – As referenced above, PCV will continue to invest in innovative financing methods such as seed place-based restorative loan funds to support more communities across California (and outside of California through other CDFI partners).
2. Initiating, establishing, and maintaining partnerships with local community organizations who know their communities and entrepreneurs best, but often lack the resources and power to fully serve them.
3. Building a continuum of capital for under-estimated entrepreneurs to unlock talent, innovation & competitiveness with the half of America most left out of the market.
4. Changing Policy & Systems: advance policy advocacy for the CDFI field by recentering Civil Rights in Community Reinvestment Act reform and other major federal policies and programs; improve governance and impact measurement for our field.
We remain committed to reimagining, democratizing, and creating restorative financial practices with the people and places we serve. Join us on this journey! Come celebrate our 25th Anniversary with us in Oakland this year, and meet the amazing community partners and entrepreneurs who inspire us daily. Save the date for our November 11th community celebration!