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Community equity fund v2.0.sst

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Friends and family funding for entrepreneurs who don't have a rich uncle.

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Community equity fund v2.0.sst

  1. 1. Community Equity Fund
  2. 2. Challenge - Nontraditional Financing Model for Black and Brown Businesses Global Pandemic 50% of Black and Brown businesses are at risk during COVID nationally Not A Time for Debt If you don’t know when your customers are coming back, taking on debt is irresponsible. Many Black and Brown businesses do not have access to loans
  3. 3. Challenge contd. - Nontraditional Financing Model for Black and Brown Businesses …the Wealth Gap In the 2019 survey, white families have the highest level of both median and mean family wealth: $188,200 and $983,400, respectively Black and Hispanic families have considerably less wealth than White families. Black families' median and mean wealth is less than 15 percent that of White families, at $24,100 and $142,500, respectively. Hispanic families' median and mean wealth is $36,100 and $165,500, respectively. Other families—the median, reflecting the concentration of wealth at the top of the wealth distribution for each group. (https://www.federalreserve.gov/)
  4. 4. The Solution EMSDC Community Equity Fund The Fund injects equity capital, not debt, the capital is returned to the Fund through dividend shares of the businesses annual gross revenues.
  5. 5. Case Study: Bread & Butter - Coffee and Co-working Space Bread & Butter, led by two African American males with business experience, located in a historical commercial business district. The business has $100k in annual revenues. Comparables value for the business are @ $150,000. Community Equity Fund, provides an equity injection of $30,000 for a 20% ownership stake in the business for the life of the transaction, approximately 3-5 years Inaugural Injection
  6. 6. Life Span – Flow of Injection After the grace period, (24 mos.) Bread & Butter’s (B & B) gross revenues grow to a minimum of $200,000 Starting in month 25, B & B begins repayment to the fund through dividend shares, 7% of annual gross revenues, funds will be payable monthly or quarterly typically for a period of 3-5 years Full repayment would be 150% of equity injected
  7. 7. $30, 000 – to Community Equity Fund – 100% $3,000 - Management Fee – 10% $12, 000 - Donor-Investor Income Pool – 40% $45,000 = 150% Allocation of Dividend Repayment
  8. 8. Replication Across the Fund From each equity injection round, the fund continues to receive 150% return from the dividend shares paid by the business owners, 100% is re-invested into Black and Brown owned businesses. What the Fund Gets
  9. 9. Replication Across the Fund Contd. 40% of the dividend shares flow to the donor-investor pooled income which pays lifetime income to donors. Your donation continues to cycle through your community.
  10. 10. Success The Fund becomes a $1M fund The Fund becomes and “evergreen fund” The number of Black and Brown owned businesses are increased in WNC and the region

Friends and family funding for entrepreneurs who don't have a rich uncle.

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