What is Community Ventures's expected financial
return?
What sort of equity position does Community
Ventures require?
What is the relationship between CEI Community
Ventures and CEI Ventures (CVI)?
What constitutes a targeted or distressed community?
What if I'm not in one of the target communities shown on your
maps?
What
is Community Ventures's expected financial return?
Venture capital financial returns vary according to the risk we
perceive regarding a given investment opportunity. Risk is assessed
in several areas including (but not limited to): industry/market/sector,
management, product/service, business strategy/model, financial,
and stage of development. Accordingly, there is no single answer
for a given company.
What sort of equity position does Community Ventures require?
From
its own capital, Community Ventures typically will invest in minority investment
positions ranging from 20-45% of a company's outstanding shares.
Investments are most often structured in some form of preferred
stock (or subordinated debt with warrants), which gives minority
shareholders certain rights and preferences as apart from majority
common shareholders.
What
is the relationship between Community Ventures and CEI Ventures
(CVI)?
Community Ventures and CVI are
both for-profit venture capital subsidiaries of Coastal
Enterprises. These complementary sister funds
share some common elements:
- Both operate and invest primarily, though not exclusively,
in the New England market. Community Ventures has a more constrained targeted
geography than does CVI.
- Born of the same parent, both share a common mission and
shared access to CEI's resources (e.g. workforce, technical
assistance, etc.)
- Both seek to co-invest with each other where there is a shared
interest on the part of the funds and on the part of the company
seeking funds.
Among the differences:
- CVI manages a larger pool of capital, approximately twice
that of Community Ventures. Accordingly, CVI's average investment, over time,
will be larger.
- Investors in both funds are not identical, though some are
shared.
- As part of SBA's SBIC program, Community Ventures has some constraints,
ie. SBA limits the size of company (defined by net
worth and earnings) in which it can invest in and, as
noted, limits the geography in which Community Ventures can invest most of
its capital.
- Each fund has its own investment approval process managed
through separate Boards of Directors.
What
constitutes a targeted or distressed community?
A given community
is designated as distressed according to one of three criteria:
- Historically Underutilized Business (HUB) Zones
- Rural and Urban Enterprise Zones and Empowerment Communities
- Any census tract or equivalent county division:
- That has a poverty rate of at least 20%, or
- That qualifies for the Low Income Housing Tax Credit, or
- That is a non-metropolitan area and has a median household income of no more than 80% of the statewide median household income
The
headquarters and most of the employees need to be located in
the target community to qualify.
What
if I'm not in one of the target communities shown on your
maps?
1. Research: The
target communities are based on the 1990 census. An area
not qualified in 1990 may—based on the 2000 census—be
considered qualified for the purposes of this fund. To
research a given area's Median Household Income (MHI),
go to http://www.ffiec.gov/geocode/default.htm and
enter a street address. Once entered, click on census data
and note the MHI for that address. Then
calculate whether that MHI is less than 80% of the 2000
census' statewide MHI as shown below:
- Maine: $37,240
- New Hampshire: $49,467
- Vermont: $40,856
If
the address' MHI is less than 80%, the site you've entered
may be qualified according to the MHI test, provided that
the location
is not in an urban area (for which the test is "less than
60%" of
statewide MHI.)
2.
Move to the region: Community Ventures encourages companies to consider
moving to qualified areas. If you need relocation assistance,
please check our Business
Resources section to find local and state organizations
that may be able to help you to find capital, networks and
resources to facilitate your move.
3.
Out of target? While Community Ventures is obligated to invest
80% of its capital in qualified
areas, 20% of the fund can be invested anywhere in
the country, with the same size
constraints noted above. Of necessity, Community Ventures will be
especially selective about investments it makes outside
its target regions.
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