St. Louis nonprofit WEPOWER has established a new $1.5 million investment fund to provide capital to Black and Latino entrepreneurs, particularly those operating in north St. Louis.
WEPOWER on Thursday announced the launch of Elevate/Elevar Capital, saying it has raised the majority of the money for its new investment fund. The nonprofit said funding for Elevate/Elevar Capital includes a $500,000 investment from New York-based Living Cities, a collection of foundations and financial institutions focused on making investments to eradicate racial gaps, as well as significant backing from St. Louis-based investors.
“We’ve seen the immense potential of St. Louis to advance racial equity through innovative approaches to community wealth building,” said Charli Cooksey, founder and CEO of WEPOWER. “Black and Latinx entrepreneurs are more likely to be denied bank loans, offered less capital when approved, and are charged higher interest rates, keeping them from building wealth for their families and with marginalized communities. This fund will invest directly in Black and Latinx entrepreneurs, especially those committed to North St. Louis City, to help unlock our region’s collective prosperity.”
WEPOWER is focused on developing equitable education, economic, health and justice systems.
Yoni Blumberg, WEPOWER’s vice president of community wealth building, said the nonprofit’s investment fund will provide entrepreneurs and their businesses with between $50,000 and $200,000 in financing. The investment will be available to entrepreneurs across the St. Louis region, but will focus on assisting businesses operating in north St. Louis city.
“We’d be most inclined to work with entrepreneurs who are already doing business and/or living in the neighborhoods by O’Fallon Park, Fairground Park and Hyde Park. But there’s not a requirement that you're living there already or working there already. We hope to help you locate and/or prioritize hiring people from there,” said Blumberg.
WEPOWER’s Elevate/Elevar Capital will provide a “founder-friendly” approach to providing growth funding through its deal structure and underwriting approach, Blumberg said. For example, the fund’s underwriting process won’t include collateral requirements or minimum credit scores that traditional loans might require for approval. Blumberg said the fund also will be able to be flexible in terms of financing structure, but said it will focus on using a revenue-based repayment that will allow founders to either give up no equity or a small amount for funding.
The nonprofit’s new fund also was designed to have a portion of its return on investment managed by community members who could target the funds for specific projects or initiatives.
Blumberg said WEPOWER plans to deploy the capital of its new investment fund over the next two years while targeting repayment from companies over a three- to four-year timeline. San Diego-based investment firm Mission Driven Finance will provide WEPOWER with fund administration.
WEPOWER has placed a focus on assisting Black and Latino entrepreneurs. It also operates the Elevate/Elevar Accelerator, a six-month entrepreneurship development program for Black and Latino business owners. Blumberg said he expects WEPOWER’s new investment fund to help fund some companies that participate in the accelerator program as well as firms unaffiliated with it.
Moving forward, Blumberg said WEPOWER hopes to learn best practices and prove out its investment model through its initial investment funds, with hopes to eventually expand its business funding efforts in the future.
“We know that the amount of capital needed to equitably fund Black and Latinx entrepreneurs in this region and really tap into people’s potential is really hundreds of millions of dollars, if not more than that. This is a small start. That’s very intentional, to be nimble, to test an idea, to get proof of concept and gain traction. And then to use that to go out and raise significantly more later for the second iteration of this," he said.
