One year after announcing a venture fund aimed at boosting businesses owned by people of color in West Michigan, New Community Transformation Fund (NCTF) is nearing the first organizational milestone of raising $10 million, thanks to a substantial investment Bank of America announced today that it will make.
First year highlights and second year goals
The first-year investments and general updates on NCTF's activities were highlighted to NCTF investors and media on a Zoom call today. Notable successes shared on the call included: Securing $8.5 million in committed investments, compared to a goal of raising $5 million.
Obtaining a substantial Bank of America investment, in addition to the bank's contribution of $200,000 in seed funding provided in 2020.
Secured $1 million investments from Spectrum Health Ventures, Mercantile Bank and the Consumers Energy Foundation, which, also provided $200,000 in seed money in 2020.
Securing $100,000 in seed money from DTE.
As far as 2021 milestones, NCTF leaders offered the following:
Reaching $10 million in funding, which will allow NCTF to begin investing.
Making the first three investments in West Michigan-based, people of color-owned businesses.
Hiring staff, such as a managing director, financial analysts and administrative positions.
Implement NCTF template in other cities.
A simple premise and strong support
Inspired by an idea in 2018 by longtime Right Place president and CEO Birgit Klohs, who serves as a board member, NCTF publicly launched Jan. 23, 2020, just two months before the COVID-19 pandemic turned the regional economy upside down.
The goal of the fund, in Klohs mind, has always been simple.
'This fund aims to create a more diverse economy and drive economic prosperity in West Michigan's communities of color,' said Birgit Klohs, President and CEO, The Right Place, Inc. 'Those who have already invested in the New Community Transformation Fund share this goal, and it is my hope that many others will join us in creating upward mobility for entrepreneurs that have not been given opportunity historically.'
It was that premise that led Klohs to share the idea with longtime friend Skot Welch in 2018. The two incubated the idea and socialized it with potential funders. It quickly became clear that the idea was widely supported.
NCTF was seeded with funds from the Consumers Energy Foundation and Bank of America and has since seen investments from some of West Michigan's most notable business names, including Autocam-Medical, DTE, Gentex, Greenville Partners/Meijer, Horizon Bank, Mercantile Bank, Rockford Construction, Spectrum Health Ventures, Wolverine Building Group and Wolverine Oil & Gas.
World class leadership
Skot Welch, a leader in global measurable diversity, equity and inclusion initiatives, serves as managing partner of NCTF. In that role, Welch oversees daily operations and investor management. Kwame Anku, CEO & General Partner of Black Star Fund, serves as fund consultant. Anku's responsibilities include fund and operational design as well as fundraising.
NCTF maintains an investment committee and advisory committee comprised of local and national members and is governed by a board of directors which, along with Klohs and Welch, includes Renee Tabben, President of Bank of America's Grand Rapids Market; Garrick Rochow, President and CEO of Consumers Energy and Christal Jackson, an internationally known venture philanthropist.
Early and major support
Bank of America Grand Rapids Market President Renee Tabben was one of the first people NCTF approached. It did not take much for Tabben to see the value and perfect alignment with Bank of America's corporate strategy. The bank seeded the fund with a $200,000 commitment in 2020 and strengthens its commitment with today's announcement of additional investments highlights NCTF's continued progress.
'To continue to grow and prosper West Michigan must have healthy and diverse communities,' said Renee Tabben, Grand Rapids Market President, Bank of America, who sits on the Board of The Right Place, Inc. 'Our additional investment in the NCTF and ongoing support of ethnic and racial diversity in business ownership comes at a critical time, as the health and humanitarian crisis has significantly increased the need for greater opportunities to ensure more access to capital and essential support services are available for entrepreneurs of color.'
Along with Tabben and Bank of America, Consumer Energy's Garrick Rochow has been with NCTF since its inception. The Consumers Energy Foundation also was first to the table with $200,000 in seed money, and just this past summer, pledged more to the endeavor.
Recently, the Consumers Energy Foundation agreed to become one of the Fund's Inaugural Trailblazers, with a $1 million investment, one of the largest commitments in the Foundation's history.
'This is an investment in equity,' said Garrick Rochow, Consumers Energy president and CEO and a NCTF board member. 'It demonstrates the Consumers Energy Foundation's unwavering belief that West Michigan's continued success must be collective and inclusive of everyone.'
Rochow, also a Right Place board member, said the investment reflects Consumers Energy's strong commitment to workplace diversity, equity and inclusion. 'As Michigan's largest energy provider, we know we must play a role in fostering DE&I in our state. We have more than 8,000 employees and know these issues affect their lives and the communities where we all live and work.'
Two pandemics to face
Shortly after the fund launched, the world was turned upside down due to the COVID pandemic forcing businesses to temporarily close, and a few months after COVID hit, the death of George Floyd put a spotlight on racial murders and social inequity.
'We had to pivot all our major in-person presentations to Zoom,' said Welch. 'Not one potential investor canceled on us during that time. It wasn't about our presentation, it was our theory of supporting diverse businesses that got the attention of our investors, and perhaps the tragedy of George Floyd helped some to understand the need for more substantial and equitable investments into entrepreneurs of color.'
Investment focus
When it starts investing, NCTF intends to invest between $250,000 to $500,000 in second-stage, people of color-owned companies involved in advanced manufacturing, food and agribusiness, e-commerce and information technology, life sciences, and finance technology as well as legacy and transitioning succession businesses.
The fund will focus on West Michigan-based companies, but it will entertain investments in non-local companies if the company pledges to move most of its operations to the region.
A template for success
Welch is a big fan of utilizing programmatic templates that help drive efficiency. In the case of NCTF, there was not a template to replicate, so he created one that drives the mission and vision of the fund and is having success with it. So much, in fact, that as Welch, Anku and Klohs share with others across the country about what NCTF is doing, they are being asked to replicate the model in other cities.
'The nation is watching us,' Welch adds. 'We haven't even made our first investment, but we're getting requests to help create a New Community Transformational Fund in major cities.'
Aaron Jonker, president, Wolverine Building Group
'At Wolverine Building Group we understand deeply that the only way our community will continue to prosper and succeed is if we work to create more racial equity within it. The racial disparities in our community are significant. People of color have not been able to participate fully in the success of West Michigan - in fact, have sometimes been locked out of it completely. Investing in the New Community Transformation Fund is just one small way we can be a part of correcting that historic injustice.'
David Quade, Regional President - Michigan, Horizon Bank
'Horizon Bank is proud to be an investor in such a transformational project. It was a unique opportunity to invest in our own community and foster diversity in West Michigan. Investing in this fund will help build a stronger more diverse economy in our community. We appreciate the Right Place efforts and look forward to a successful launch.'
Steve Downing, Gentex
'The New Community Transformation Fund supports multiple areas that have long been important to Gentex, like entrepreneurship, business growth, economic development, and diversity and inclusion,' said Steve Downing, Gentex president and CEO. 'We're proud to be able to play a role in such a unique and laudable initiative.'
Tina Freese-Decker, President and CEO, Spectrum Health
'We are proud to partner and invest in the New Community Transformation Fund. Investing in and growing opportunities for diverse business leaders and entrepreneurs will help create a strong pipeline for new talent, and greater equity and economic diversity in our communities.'
Mike VanGessel, President, Rockford Construction
'Rockford Construction is grateful for the opportunity to participate in the New Community Transformation Fund. We value the alignment of the fund's vision with our commitment to invest in our local economy and support and advocate for diversity. We recognize the need for this fund in our community and believe that together we can have a big impact on creating a stronger and healthier economy with opportunities for all. We are honored to work alongside a great organization such as The Right Place and under the leadership of Skot Welch and Kwame Anku.'
Bob Kaminski, CEO, Mercantile Bank of Michigan
'Mercantile Bank is honored to participate in the New Community Transformation Fund as an Inaugural Trailblazer. When we were approached by the founders to learn about their vision and the plans, we quickly realized that this venture could present a transformational initiative for diverse business ownership in West Michigan. As one of the initial limited partners, we are extremely excited to support this ground breaking effort with the anticipation of increasing momentum for minority entrepreneurship. '
Matthew Paul, President, DTE Gas
'Through our $100,000 commitment to the New Community Transformation Fund, we proudly support this critical effort to tear down the systemic barriers preventing individuals of color from achieving their dreams of entrepreneurship,' said Matt Paul, president, DTE Gas. 'We look forward to following the successes of these entrepreneurs, and to seeing the positive impact they make on our communities and state moving forward.'
John Kennedy, President and CEO, Autocam Medical
'As an entrepreneur, I know how tough it can be to raise the money necessary to get your business off the ground and grow. It is even harder for entrepreneurs of color. I am supporting this fund because I believe investing in entrepreneurs will build long term prosperity in communities of color and will bring us closer to true equality and opportunity for all.'
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