ICCC's Match Day: Filling an Inner City Capital Gap

Image courtesy of Fortune.com and CNNMoney.com 

Last Thursday, November 10, hundreds of investors and companies flocked to Fortune headquarters in NYC for the 7^th annual Inner City Capital Connections (ICCC) match day.

Inner city companies are nearly five times more likely than non-inner city companies to finance growth through personal assets, friends, and family. Exacerbating the problem, the number of commercial bank branches located in inner cities declined by 8% between 1998 and 2007, even as the number of commercial bank branches nationwide increased by 27%. Through targeted sessions and live investor feedback on pitches, ICCC serves an unmet need by increasing the financial sophistication of inner city entrepreneurs and introducing them to capital providers.

After a brief introduction, company presentations began by Dero Bike Rack Company, InfoPeople Corporation, Dental Kidz LLC, Victory Personnel Services, and AVPOL International. These firms ranged from one company that makes artistic bike racks to a software project development firm; the pitches and subsequent feedback not only primed companies in the audience for their own pitches later in the day, but also upended caricatures of inner city firms. Far from the uncreative, traditional mom-and-pop shops some investors might have expected, these firms set the tone for the day with their enthusiasm, preparation, and sophistication.

Next, both the investors and companies were treated to individualized presentations on “Growing Your Business” and “Limited Partner Perspectives.” At the “Growing Your Business” panel, representatives from capital providers (including CDFIs and the SBA) educated companies on finding and targeting capital. In return, the companies legitimized the event’s purpose by vigorously questioning financiers on the tightening of credit since the 2008 financial crisis.

For the finale, the companies and investors split off into small groups to directly pitch investors for either debt or equity financing. Since ICCC’s inception in 2005, ICCC participants have successfully raised $406 million in debt and equity—so these pitches were not taken lightly.

I was fortunate enough to facilitate a small group session for debt, and it really impressed upon me the unique nature of the program. My session included a representative from an angel fund, a small boutique investment bank, a representative from Bank of America’s lending practice, and an investor specializing in factoring. Leading up to the event, ICCC allows companies to practice their pitch and receive feedback. Perhaps as a result, it was evident that companies were prepared to pitch for specific investment vehicles and had been gearing up for this moment for weeks.

Private sources of capital have an influence on small companies that goes beyond money; often, private funders help entrepreneurs with things like refining their business models. This sort of mentorship and support was on full display during this year’s ICCC event. It was clear that these gained valuable experience—even if they didn’t receive assurances for funding on the spot.

Prior to attending ICCC in past years, only 6% of the equity raised by ICCC companies came from private sources; after attending ICCC this number soared to 68%. If my small group was any indication, we can expect even better from this year’s crop.

BY Sathya Vijayakumar on November 15th, 2011

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