East Liberty-based Honeycomb Credit, a crowdfunding loan platform for small businesses, and a nonprofit organization called Upstart Co-Lab announced the launch of a new investment vehicle for philanthropic foundations to partake in so that these institutional investors can help directly fund various creative industries and emerging businesses across the country.
Named the Loan Operation Fund, the capital allocation vehicle from Honeycomb and Upstart Co-Lab has secured three foundations — the Jessie Ball duPont Fund, the A.L. Mailman Foundation and Souls Grown Deep Foundation and Community Partnership — to invest $600,000 via a monetary vehicle known as a loan participation fund. These three foundations are also part of Upstart Co-Lab's community of impact investors that are striving to support the creativity-based economy.
The funds, some of which are specifically allocated for Black-owned or women-owned businesses in certain geographic regions, will go on to pair with other crowdfunding campaigns taking place on Honeycomb's platform.
FJC, a nonprofit charity, will serve as the loan participation fund's intermediary.
“Large foundations tend to design their infrastructure around deploying capital in hundreds of thousands, even millions of dollars at a time — which is much more than any one small business needs,” George Cook, CEO and co-founder of Honeycomb, said in a prepared statement. “The Loan Participation Fund bridges that gap, allowing foundations to write large checks but allocate the money to small businesses with the help of an intermediary. This way, big foundations can invest alongside the crowd at the scale that makes sense for helping local entrepreneurs grow their businesses.”
Honeycomb claimed that this endeavor marks the first time that foundations have taken part in investing in loans alongside the group of everyday people who make up the vast majority of Honeycomb's crowdfunding participants.
“We know how difficult it is for low-wealth entrepreneurs, especially those in under-invested communities, to access affordable loans – capital that allows them to grow and create sustainable wealth that raises up the entire community,” Mari Kuraishi, president of the Jessie Ball duPont Fund, said in a prepared statement. “We are excited about promoting innovative online lending technology locally to unlock equitable and affordable capital for Northeast Florida businesspeople who are currently only able to access high-interest lenders.”
In 2022, the average loan size seen on Honeycomb's platform has been $70,000. Since 2017, the Pittsburgh startup has directed $11.3 million raised across 180 loan campaigns throughout the nation, of which 46% went to those who have low-to-moderate incomes. Additionally, 49% of these loans went to women-owned businesses and 24% went to those belonging to a racial group other than white.
