With backing from large banks and other deep-pocketed sponsors, the Arlington, Virginia-based community lending organization Momentus Capital has launched a new fund that will invest primarily in companies led by diverse entrepreneurs or doing work in communities of color.
The fund, dubbed Impact Investments, is the first for Momentus, a recently formed umbrella organization made up of Arlington community development financial institution Capital Impact Partners, San Diego-based CDC Small Business Finance and cloud-based technology vendor Venture Lending Technologies. It is led by CEO Ellis Carr, Capital Impact's CEO.
A Momentus spokesperson would not reveal how much the fund has raised so far, citing “limitations of relevant securities laws," but said it would have a particular focus on firms working to improve equity in health care and access to healthy, affordable food. The fund has so far invested about $10.5 million in four firms: SameSky Health, a Los Angeles health care technology company; BB Imaging, a sonography company in Austin, Texas; Obran Health, a home health care provider serving Southern California; and 4P Foods, a Warrenton, Virginia, grocery delivery company.
Investors in the fund include three of the nation's six largest banks — JPMorgan Chase & Co. (NYSE: JPM), PNC Financial Services Group Inc. (NYSE: PNC) and U.S. Bancorp (NYSE: USB) — as well as Milwaukee-based Northwestern Mutual, the Max M. & Marjorie S. Fisher Foundation, National Cooperative Bank, the University of Maryland Medical System, the New York investment firm Westfuller and retail giant Macy's Inc. (NYSE: M).
Macy's also recently announced a partnership with Momentus under which the two will team up to provide loans and other support to a diverse network of suppliers.
In 2021, Northwestern Mutual established its Impact Investing Fund, which earmarked $100 million to invest in Black communities on both a national and local level, with the goal of addressing inequality and the racial wealth gap.
Over the next five years, Momentus plans make equity investments in about 60 companies, said Raymond Guthrie, its chief investment officer and head of capital deployment. The average size of investment so far has been about $2 million, and the firm expects to close the fund in early 2023.
Guthrie said it is aiming to support companies that are at least four to five years old that “have been around and are trying for growth." That doesn’t mean it’s looking for fast-growing tech startups; rather, Guthrie said the company is interested in companies generating steady revenue growth, even in the 6%-10% range.
He added that roughly a quarter of its investments will be in companies in the greater Washington area, including Baltimore, and that the Momentus is likely to establish other funds once the inaugural one closes.
“Ultimately this won’t be our last fund — probably we’ll raise two to three more in the future,” he said.
Momentus has a portfolio valued at nearly $3 billion and its affiliated firms have provided more than $23 billion in community development financing since 1978. Apart from its partnership with Macy’s, Momentus is also teaming with Amazon.com Inc. on an Amazon-funded accelerator program for real estate developers of color. Momentus recruited participants for the two-year program and manages it for Amazon.
