Inner City Capital Connections (ICCC) is a national program designed to stimulate equity capital flow to underserved inner city markets, by matching inner city businesses with investors. ICCC is a partnership between the Initiative for a Competitive Inner City (ICIC) and Banc of America Capital Access Funds (BACAF).

The ICCC process is a national brokerage mechanism designed to identify and prepare fast growing inner city businesses to access equity capital. On the company side, ICCC helps identify growth-oriented inner city businesses interested in equity capital, provide pre-event training and coaching to inner city entrepreneurs to attract equity capital and finally, provide formal and informal networking opportunities to meet with private equity investors and pitch their business to attract equity capital. On the capital-provider side, ICCC invites private equity funds – both mainstream as well as those focused on America’s underserved markets – to participate in the ICCC process as trainers and coaches in the pre-event coaching sessions, and at the ICCC event, participate in the informal and formal networking and match-making to review inner city business plans for potential deals and follow up.

The ICCC program was developed as a result of ICIC research that revealed that fast-growing inner city businesses typically had very limited sources of growth capital such as borrowings from friends and family and bank debt. Most inner city companies did not consider private equity an option for financing growth or expansion due to a lack of awareness and/or due to a lack of access to private equity networks. The ICCC program was therefore developed to promote private equity as an alternative financing option for inner city businesses. The ICCC program does not advocate equity financing for all companies and only seeks to help inner city entrepreneurs make informed choices while accessing growth capital. Its three main areas of focus are:

¨ To educate inner city business owners about private equity options

¨ To provide inner city entrepreneurs with access to a private equity network.

¨ To help inner city businesses grow to size and scale through growth financing.

Over the last two years, three successful regional ICCC programs have already occurred: ICCC Los Angeles (October 2005), ICCC New York (June 2006), and ICCC Miami (December 2006). In each of the programs, pre-event training and coaching was provided by one of two ICCC training partners: SJF Advisory Services and Pacific Community Ventures.

While the key explicit outcome of ICCC is to increase capital flow to inner city companies and help them grow to size and scale, an equally important and implicit outcome is to market the potential of inner city investments to private equity investors and to promote the development of a national market for inner city equity deals. Currently, inner city businesses have very limited access to growth capital, particularly private equity capital. This lack of access stunts their ability to go to size and scale—and thereby, hampers their ability to become strong, sustainable engines of growth in the local community.

Inner city businesses have tended to depend on more readily accessible sources of growth capital such as borrowing from friends and family, and/or seeking bank debt. Traditionally, these businesses have been starved of private equity capital in the absence of strong, established networks that link them to private equity providers. There are several deep-rooted negative perceptions that have played a substantial role in limiting the flow of equity capital. One, there is a strong misperception that there are very few inner city businesses of size and scale interested in seeking equity capital—and that therefore, there is no special market or asset class that is specifically ‘inner city investments’. Two, that inner city entrepreneurs have issues about giving up control and therefore not likely candidates for equity capital. And three, that inner city companies represent a higher than acceptable market risk based on their location, lack of sophistication and in some cases, industry type.

From inception, the ICCC program is designed to counter these perceptions and to help actively promote the market for inner city equity investments. The program is designed to convey the message to equity providers that (1) there are many, fast growing competitive businesses in America’s inner cities that represent a distinct, untapped investment category of place-based investments, (2) these businesses need capital, particularly equity capital to grow, and are very open to sharing ownership and allowing independent board governance of their company with the right capital partner, (3) these businesses lack the traditional networks and resources to access private equity capital and that there is a need in the private equity community to proactively source these deals, (4) private equity firms that acquire the skill sets and networks to access inner city deals will find that they have a unique competitive advantage in a space with very few competitors and that therefore, these inner city companies represent a growing source of deals with above market rate of returns.