 Hello everyone. I'm Luke, COO of SoCAP and it's my pleasure to welcome you all today. Thank you for joining from wherever you may be and for spending the next hour with us. I just want to say a big thank you as well to all of our panelists, whom we'll be introduced shortly for sharing their time and expertise with us today. And a big thank you as well to World Education Services for generously sponsoring this conversation and making all of this possible. There will be time for some Q&A at the end, so please drop your questions in the chat or in the Q&A feature as you have them and we'll get to them towards the end of the hour. So, without much further ado, I want to hand it over to Smitha Das, who is an impact investor at World Education Services and our moderator today. Thank you so much, Luke, and thank you to UNSoCAP for hosting this session and creating the space to explore investing in employee ownership models to build generational wealth for immigrants and BIPOC communities. I'm Smitha Das, I lead Impact Investing at World Education Services or WES. We are a social enterprise that's been around for about 50 years doing credential evaluation services for international students and immigrants coming to the US and Canada. In 2019, we spun off a philanthropic arm to advance our mission through philanthropy and through impact investing. And so I'm excited to share the stories of a few of our investing partners, Todd at APIS and Heritage is joining us as well as Allison, we just approved an investment last week into Project Equities Employee Ownership Catalyst Fund and also a co-investor at Thaddeus who is at Living Cities. So hopefully this will be a good conversation to kick off a good year of SoCAP including an in-person session and convening in the fall. But we're really excited to bring this community together to talk about employee ownership models, the nuances between the different structures that Allison will talk us through, as well as how we can use these structures to both build wealth, but also build power through democratic governance structures. And so at WES, this is really key to how we think about impact, we're thinking about reimagining the building blocks of wealth. And as we think about historically how communities have been able to generate wealth, it's been typically two levers, one owning your own home and two owning your own business. So today we'll dig deeper into owning your own business and how we can democratize access to that as a way to generate generational wealth. So I guess with that, just to give a flow of what is to come, we'll start off with inviting Allison to share a little bit of an overview of employee ownership, but getting into some of the language, the nuances between the structures. There's a bit of alphabet soup when it comes to employee ownership, so we'll try to deconstruct all of that. And then we'll go into some examples through what Todd and Allison are doing on the ground, as well as invite Thaddeus to share the investor perspective as well as from WES's perspective, and how we think we can be deploying catalytic capital impact capital in a pretty flexible blended way to advance these models. And finally, we'll of course turn it to you all for first in Q&A and thanks to the SoCAP team for monitoring the chat for us. So I suppose with that I'll just stop there and share, let Allison take the wheel and share more about employee ownership and help us get some grounding there. That would be wonderful. Thank you. And if we could pull up some slides. Thank you to SoCAP. Thank you, Smitha, and to World Education Services for hosting this conversation today. My name is Allison Lincoln and I'm the co-founder of Project Equity, we're a national nonprofit organization with really a single goal which is to expand employee ownership, really to benefit employees and to create this kind of wealth building that we're talking about today. So people can flip through actually the next slide and then the following. Great. So what do we mean when we say employee ownership? Well, it's it's a proven but frankly little known or a little understood business structure in which a broad base of employees owns the business where they work. So when we're in this conversation today when we're talking about employee ownership, we mean a structure that gives all employees who meet basic criteria. You know, maybe they've been with the company for a certain period of time or you know work work a 30 hour schedule or 20 hour schedule or something like that, the opportunity to become owners of that business. What we're not talking about is stock options or stock grants which are typically available only to management or management or key employee buyouts. These can be great. They're just they're just different in some key ways. And next slide here and as Todd likes to say and I'm co-signing on employee ownership is a burgeoning asset class. And so the goal of our conversation today is really to help investors understand more about what this asset class looks like. The impacts it creates, why it is especially relevant now, and the range of investment opportunities. So next slide, just at a summary high level, the benefits of employee ownership to fill way more than this slide. It is one of those things that when people really get their heads around it, they start nodding and they say, oh yeah, this just makes sense. It seems like it's positive from all perspectives from all angles. So employee ownership creates stronger businesses, creates high quality jobs for employees with better pay and benefits, having a voice in key decisions, owning the assets of the business and owning assets is of course the only way to build generational wealth. As for the local community and economy it retains locally owned businesses retaining that, you know, all important local spending and local spending multiplier keeps wealth in that community versus having absentee or corporate ownership or those benefits of ownership accrued to people who don't live there. And it also reduces wealth concentration. Next slide. Why, why now why is employee ownership so relevant now and I feel like I've been saying this for years, and the reality is that it just keeps getting more and more relevant. Next slide so the great wave of baby boomer retirements known, dubbed the silver tsunami is real, nearly three million businesses with employees are at risk as the baby boomers continue to march towards retirement this represents an estimated out of every two locally owned businesses with employees so these businesses need buyers however you go to the next slide we know that selling a business is not easy. So according to a leading national business worker platform only 20% of businesses put up for sale ever sell. In other words we have this big, you know, supply and maybe not enough demand for purchasing the businesses play ownership can can address that. It's especially challenging for business owners, given that their kids are not taken over the family business anymore. So, you know, these are real issues that that employee ownership can help address. And then if we go to the next slide. So, add to that, and this is really from a mission perspective where the conversation is focused on today. The challenge from from a worker perspective, right we know the storyline people who during the pandemic we started calling essential workers, when actually they've always been essential workers live teetering right on the edge. So, I won't read the stats on this slide, but we know that income equality in the United States is shocking. But the fact is that wealth and equality is even more shocking. And this is the gap that undergirds at all that really holds people back, it is so hard to overcome if you're in a low wage job. And that was just a little bit of improvement can make a tremendous difference in people's lives. Now, looking at this through the racial lens. It's the challenge is just even greater altogether so racial income and wealth and equality, frankly underpins the core of what is broken and presents our biggest need. Employee ownership is proven to address the income gap and help build intergenerational wealth for workers of color. I'm going to share a couple of stories from companies that project equity has helped to transition to employee ownership to kind of share what we really mean about this. For the next slide, we've got a slice of New York that based in Silicon Valley to pizza shops with over 30 workers if you could click the down arrow. They've distributed over half a million dollars in profit to its workers over two years. And by the way, they also did great during the pandemic because they came together and quickly and multiple times revamped how they did business to meet the ever changing landscape for restaurants. So, so this half a million dollars in profit was right before the pandemic hit so you can imagine the value of having that extra question during that time period. And on the next slide we've got Sarah Vegas again if you could kind of click through the animation here. I'm Sarah Vegas of Niles pie. So she was one of the founding worker owners at this bakery and she shared tells us great story of her first profit during check which was over $9,000. She talks about this being the biggest check that she has ever received now she's worked for food service for her whole career, which is a notoriously challenging sector whether because of the low wages or the lack of schedule. The schedule variability, job stability, you know she showed up at multiple times actually at her employer with a sign on the door that says we're out of business you lost your job sorry. So, so for her, she also happens to be a single mom. You know she sat down with her, her son he was 11 at the time and talk to him about the impact that this this big check was was having on their family. And you know, invited him to have a conversation with her about what they should do with it. So, you know, big, big effects both financially and and otherwise, but this would have been a 30% increase over, over a $15 minimum wage, just to put put that into perspective. So the, the, the point is that the conversation is not about whether employee ownership delivers impact. Instead, we're really focused on how we get more of it so that its deep impact can be spread further. And in our conversation today, the focus is on the role that investors and capital can play in creating that impact that we know employee ownership really delivers on. Okay, so briefly I'm going to go through just a little bit about what employee ownership transitions are about we go to the next slide and then one more. So, so employee owners so this is a broad base of employees were basically everyone who works there has the opportunity to be an owner. And when we transition the business we're talking about taking a successful profitable legacy business and selling all or sometimes part of the business into a vehicle that is owned broadly by those employees typically through a stock or asset sale. And most of the business is, again, I'm going to use the word typically a lot because there's lots of variations as well but typically debt finance can do equity. In some cases, and that debt is assumed by the business, not by the employees employees aren't taking out loans or asking their rich uncle, you know, a lot of them don't have rich uncles right money other mattress isn't involved here. The business is taking out the loan and paying back the out of the operational cash flow over a period of time. Now employee owned business is typically led and managed similarly to how it was prior to the sale so that in ensure some stability moving forward. So we still have a CEO or general manager we still have a management team right. And what is new is often a structure for governance of the business. So, there, there can be a layer of governance put in place. It has employee representation on it. So depending on the employee ownership vehicle members of the board will be elected from the employees, or they may represent employee interests. And then on the next slide here to that alphabet soup that Smith it was talking about. This is just a summary of the three most common forms of employee ownership structures in the United States there are others as well. But from left to right here we've got employee stock ownership plans or ESOPs which is the one that people are most familiar with it's the largest in number. The ESOPs are a trust vehicle, and it provides ownership through company shares held as a retirement asset. And these then that grows over time they're highly tax advantaged because the federal government wants more employee ownership, but that tax advantage requires compliance with tax and retirement laws. There's of course a cost to that compliance so it's really only a fit for companies with roughly 40 employees or more. And these forms work for for any size smaller all the way up to very very large and worker coops themselves include represent representative governance in the form of a board primarily composed of employee owners, elected by the full base of employee owners and it provides wealth building through annual profit sharing payments. And then the third one on the right here, the EOT stands for employee ownership trust has a little bit of both it's also a trust vehicle on the board includes the trustee of the EOT and may include employee representatives as well. And the EOT provides wealth building also three annual profit sharing. So, with that, I'm going to pass it back to Smitha to kick off our conversation. Thank you Allison for for walking us through some of that language as well as the different types of employee ownership structures. I think it would be helpful to just get into some specifics so I might pass to Todd, and have you share a little bit more about your model at APIS and heritage, particularly how you're embedding a racial equity lens into the employee ownership structure. Excellent. Thank you so much Smitha and thank you to the SOCAP team for creating this opportunity for us and good morning good afternoon I know SOCAP has a global audience so good evening good night and get tomorrow to the folks who may be watching right now. My name is Todd LeBret, I'm co principal of APIS and Heritage Capital Partners. And we're, you know, I'm excited to share with you, the way that we look at employee ownership as a as an opportunity for impact for workers and communities as well as for investment. And the main tool that we use we are a sponsor of Legacy Fund One, which is what we see as our kind of reimagining of capitalism and entrepreneurship that really pulls together the long standing tools of broad based employee ownership, as Allison was just describing specifically the models of the ESOP and the co op together, and directing it as Smitha was referring to, to the communities where we know there's the greatest opportunity for wealth building and the greatest need for wealth building, which are our communities of broad communities. So essentially, you know, what we do is we're essentially a mezzanine debt fund, and we live really at that that intersection of best in class, private credit private equity, and the world of ESOPs and co ops. And basically what we do is we buy great small closely held businesses, and we convert them into great, you know, small or medium size employee owned firms that do, you know, a variety of things, one, that outperform their peers and Allison great gave some great numbers and statistics a few more shortly on how employee owned businesses, when done the right way can outperform their peers that also distribute the fruits of that outperformance to their workforce all that all the outperformance isn't just being captured by a single person, or a small family but actually it's distributed broadly amongst the workforce. And three, there's some really good things for communities and states and cities, in terms of anchoring jobs, anchoring companies in place, and, and really getting away from some of the, some of the, the worst practices that we've seen in the world of investments and private equity which is stripping companies out pulling out cash flows, moving companies outside the communities that help build them and support them. As we always say, you know, an employee owner is not going to fire themselves so that they can move their company, you know, move their company overseas or move their company out of state so a lot of benefits all the way around. I also stated before, 50 years of stagnant real wages for working Americans, you know, the 40 years of decreasing wealth for the bottom 50%. And as we always say, you know, a common term in the black community when America gets the cold black America gets the flu and brown America gets the flu. And this is, that's the saying pre COVID so I'm sure we could change it say black and brown America get get something a lot more serious in the flu, when there are wealth issues in this country. In the reason why we love the ESOP model, as our legal structure as our tax structure is that there's there's 50 years of legislative history and tax history on ESOP as a model. And it's actually the lesser known cousin of the 401k and functions very similarly to 401k that invest just in the in the shares of the company that's connected to the ESOP, almost 7000 ESOPs in the US, and a lot of folks don't know this but a 100% employee company in an S corporation structure pays $0 in federal corporate taxes, and in 44 out of 50 states pays $0 in state corporate tax or it's deferred, similar to the way that that the tax benefit can be deferred in a 401k. And this is this kind of kind of a tax benefit that's also can also happen in co ops, as well, such as chapter T of co ops. There's a similar tax benefit that really creates an interesting investment opportunity into these models as well, because you will have to understand that all things equal employee on companies will have better cash flows, purely from a tax standpoint, but then from an actual operational standpoint, the alignment of interest between the workers who are now also owners who are now if done the right way are thinking about like owners thinking how their day to day job and operations can contribute to the bottom line of the company to the success and the long term viability of the company. So these things create that, you know, 8 to 11% faster revenue growth, 8 and a half percent profitability increase, and up to 75% productivity games, and significantly less turnover of workforces which, as we know today is is key to keeping a business alive and successful. So these things that you see employee owned companies in the research shows create a great investment opportunity from the impact side and I'll close out quickly from the impact side. Some really good research done by the National Center for Employee Ownership, as well as Rutgers and several other organizations out there show that the benefits to be specifically for workers of color is really powerful. And looking at workers of color age 28 to 34, the median household net worth of an BIPOC person of color, compared to their peer in a non employee owned firm is 79% higher for the employee owners, their medium income is 30% higher for employee owners, median job tenure is 36% higher, and employee owners are almost three times as likely to receive other kind of ancillary benefits like tuition benefits from their employer and their employers as their non non employee owned peers. So again from a from a business side and from a worker side outcome in the community side, you know that the case for employee ownership. We think is really clear and as all of us on this call are doing we're out here as evangelizing the model, these models as something that needs to be more pervasive in this country to help address some of these issues. So I won't go into a ton of details just just briefly again kind of how we invest, we invest in what we consider essential essential service industries in the lower middle market so we're looking for companies are between one and and $6 million and EBITDA that are in industries such as landscaping commercial cleaning mechanical contracting so your electric your electricians your roof is your plumbers, elder care and home care food processing childcare waste hauling industries where where really your workforce is is their interaction with the customer and they're kind of frontline nature of this workforce, making them employee owners getting them on board with the mission of the company is going to have huge impacts for for quality of service provision for your customers and can make a big difference. We're also looking we're only also looking at companies that have at least 40 workers kind of referencing back to what Allison was saying about size of companies that work best with the ESOP model. And we also only will invest in companies that have at least one third of their workforce, being BIPOC workers and across our portfolio, at least 40% of the workforce needs to be BIPOC BIPOC workers. To say this we're kind of coming up on the edge of our, our first two transaction closes right now. And we're looking at about 200 workers across the two companies, and with at least about 75 to 80% of those workers being BIPOC. So while we set the floors at 33 and 40% what we're finding when you look at these industries and certain areas of the country is that you can get significant significantly more impact and impact significantly more workers of color. And our goal across our portfolios to have the average worker in our portfolio be able to retire at the end of the career was somewhere between 70 and $120,000, just in their ESOP account. And statistically across the US, the average employee owner has about $140,000 in their ESOP account, plus another $90,000 in a diversified account such the 401k. So I know I've thrown a lot of numbers and a lot of statistics at you all want to give you guys a taste of us and kind of what our focus is and we can get into some of the details of how our investment product works if that comes up in the Q&A, but really excited to be here and be on this panel and share with you guys what we're doing so I will then I will now breathe and I will pass it back to Smith. Thank you so much for, first of all, just echoing Allison's argument for employee ownership I think where Thaddeus and I kind of come in as investors it's the business case the impact case around employee ownership is established these are not new models they've been around for a long time. So my question is kind of why haven't they taken hold. What is the role of investment capital to demonstrate some of these newer models newer ways to invest in employee ownership transitions, and also scale them over time and so I think that would be a really interesting conversation but before we go to the investor perspective I, I want to get Allison a chance I saw a question in the chat around new businesses and the way you can perhaps use some of these models to set up an ownership structure and Todd mentioned East stops are typically for larger companies around 40 employees and above, but some of the other models that you were mentioning co ops and employee ownership trust perpetual purpose trust could be used for smaller organizations and I know at Project Equity you're pretty agnostic to working across these different structures so I'm curious kind of could you share a little bit of the nuance of when you use different types of ownership structures for which types of businesses and if you even an example. Yeah, absolutely and you know I taught it just love hearing you talk about employee ownership and I would love to see every everyone's faces because I would imagine you know everyone was nodding bigger vigorously. As you were talking and that's that's kind of our goal here is we're trying to get you nodding vigorously about employee ownership so that you're excited to learn more about how to have an impact to make more of it so. So yeah when we when we look when we're talking with a company and kind of looking at what employee ownership form might be the best fit for them. One of the first passes we do is size, you know, if you're not 40 or more employees, then then we got two options for you otherwise we got three options for you. Three, there's other forms as well so more than three sometimes but so that size threshold is important if you're, you know, let's say you're a 50 or 100 employee company, you could be a co op you could be an EOT you could be an EOT then the next question really becomes you know, it's all about the goal right so if we're talking about we can do we can do independent transitions we can do more acquisitions where it's less about the goal right it's about buying the company and then turning it into employee ownership but if we're talking about an independent transition where the company remains independent and we're supporting capital and then it becomes an independent employee owned business after the the transaction happens. It really is about the goal, you know, the goal from the perspective of the business owner and from the perspective of the employees. So one of the things that comes up with ESOPs for some business owners is that it's not sort of perpetual in nature. Employee ownership trust uses the perpetual purpose trust as the structure. And so for some business owners really they want their business to be a wealth generating engine, you know, into the next 100 years. And they don't want to sort of risk the potential of an ESOP being acquired. But by another company having that employee ownership component be dissolved there are ways to address that and we can get into that maybe in another another webinar. So that's one of the considerations and then, you know, the worker co-op as I noted has a has a governing board by the employee owners built right into the structure. So an off the shelf ESOP doesn't require it, but you know what Apes and Heritage is doing is they're combining the two. So yes you have that governance structure. You can build a governance structure into either the ESOP or the EOT, but the worker co-op, you know, it's already built into the structure. So for companies that really feel that they want that to be a priority, they're often really drawn to the worker co-op model in order to accomplish it. So it's not about, you know, it's not about like one is better than the other. And it's also not necessarily I have to pick only one, right? You pick elements of the different structures and you can combine them to make the employee ownership that's going to be the right fit for that group of people and that particular transaction. Yeah, I think that's a really important point that not all employee ownership models necessarily build power through democratic governance that in some models like the ESOP model, it is a choice. And so that was definitely something we learned in our diligence with Apes and Heritage Capital partners, their intense, their intentionality around it, their partnership with Democracy at Work Institute and how they bring in the individuals of the co-operative model into ESOPs. I think Todd, your experience in the worker ownership space speaks to that. And I know that's something that resonated with ADS too. But so maybe I might pass to you and just have you share why you invested in project equity and what brings you to share the ownership models at large. Yeah, I'm happy to jump in and give you that of our lens as to why we ended up as an investor in project equity. And first of all, thank you guys for having me on the panel. Super excited about this. I should probably start like this is how we got into effective investing. We have two, the Living Cities has two, like a family of investment funds. Fund one we opened in about 2008. That looked originally to focus on sort of affordable housing, scaling CDFIs and social impact funds to pay for success. Then we opened up our second fund in 2015 to kind of carry forward that vision. But in 2018 Living Cities went through a firm-wide pivot to focus on ratio equity and inclusion. So that meant sort of changing the investment basis of the fund pivoting it to REI as a means of cutting that lens across our entire business model. That is to the tail end of our commitment period for fund two. We're looking to, as well as provide some financial support for diverse fund managers who have the spirit of access to capital market. We wanted to look at various vehicles of wealth creation for BIPOC persons and communities. The idea that not everybody would invest in the private equity or VC fund, but there are certain there are a couple of different vehicles that are more tangible to end users and a broader base in users. So what kind of drove us to private project equity? And this is probably going to be a lot more what Allison and Todd have both hit on. They're focused on the majority and majority low to moderate income workers and the prioritization of companies that have a majority BIPOC workforce that really aligned with our commitment to serving communities of color. We had a wealth creation thesis around that centered around home ownership and owning where you work, where you live as a means of creating wealth and project equity. We kind of found the number of different channels. It also offered an opportunity for people to own where they worked. And that was a massive amount. That was a massive point of generating wealth that we weren't thinking about when we did our thesis shifts. So we're kind of very happy to run into Allison's new project equity. Our biggest sort of what stood out in the diligence and continues to stand out as having been in this deal with the project equity for a bit now. We definitely believe that small businesses are the backbones of local communities. And to Allison's point earlier about the demographic aging of baby boomers without succession plans, what happens when a business owner isn't turning the keys over and the reins over to the to the Normally, what happens is that a larger government from another area comes and buys his company and they take all the wealth creation out of the community. We view employee ownership as a complete natural fantasy of this and to keep up with the community and also to generate individual wealth with the NRI focus. Thanks for that. I think it's interesting you were touching on the different types of capital that you're looking to pull to deploy Allison you mentioned this to there's kind of a range you can invest in funds that are doing employee ownership transitions or building this space. Through debt through equity. I see a question in the chat around the role of grant capital. So I'm curious like maybe we'll start with getting into the specifics because you both have funds Allison and Todd that look very different as investors in both. And so it just kind of tests us out west to be really flexible with the types of capital we deploy into funds that are doing employee ownership. I'll mention for direct investments and employee ownership there's also a variety of ways you can invest. For example, just with worker cooperatives you can invest in through debt, but you could also invest through non voting preferred stock and other kind of quasi equity structures and so I feel like through my journey through employee ownership I've been learning about more and more ways to invest in a more non dilutive way and so I'm curious if you could also share the reasons why you structured your funds the way you did as well as kind of where you see the role and to the question in the chat for grant capital because that's something we also are certainly looking to blend into our approach. I can I can go ahead and kick us off with that. As far as kind of how and why we structured our product the way we did you know the question of the employees on the firm but you're trying to get in outside capital how does that work and Smith I think you did a great kind of summarizing kind of high level how that works. How we invest in companies is we use a mezzanine a mezzanine instrument that has of course debt like features to it, but also enables us to get warrants in the firm so we are able to take advantage of equity upside specifically equity upside that that we were able to help facilitate by investing in the firm so our warrants actually run kind of side by side with with the equity that the owners hold in the trust or the worker owners holding the trust. So if the worker owners have not built any wealth in the trust, because the performance of the company hasn't, you know, the company hasn't grown, then our warrants are also worthless as well, whereas if we help grow the company while we're there, our warrants will grow so so we believe and I think one thing that employee ownership really really speaks to when I when I was a when I was in grass school he always talked about that the costs that are associated with having misaligned interest in organization so the investors want one thing that the executives want another thing, the employees want want something else. So all those costs that are associated with that and we believe that investing in a model where everybody's interest or profit properly aligned, including including ours as an investor and our investors as investees as well as the executives work force helps eliminate a lot of those those those misalignment costs, all that to say we we invest using a mezzanine instrument, because it's our goal on day one to have 100% of the firm owned by the workers in the trust. So I think that's important just from, you know, telling the story of employee ownership and what it's about from actually letting the workers know you are real owners of this company, but also going back to some of those tax benefits. Those tax benefits are connected to the percentage of the company that is owned by the workers. So it's important for us that 100% of the equities in the hand of the workers, because then 100% of that tax benefit applies. If 50% of the hand of it was in the hands of the workers, then 50% of the benefit apply so again we see an alignment between the interest of investment and the interest of the workers and making this 100% employee owned. And so yeah that's kind of how we get the investor investor debt into the company at what we we know and believe is a properly kind of risk adjusted return where you get that that debt like piece and that equity like piece. So quickly to the actually had typed a long answer out to the, to the role of philanthropic grant funding so I won't say it, but I'll, I'll have answered it privately somebody I'll drop it in the chat, and I'll let, I'll let Allison jump in. Awesome. Yeah, so from from project equities perspective so the employee ownership catalyst fund. It's structured since an evergreen debt fund, and we structured it really to bridge the real capital barriers to employee ownership that we've seen in our work over the last 10 years. So, you know, imagine you're a business owner and you're trying to, you're trying to sell your company this way and you're like, oh great I'm going to, you know, just do a knee sop or co-op or EOT and I'm going to just walk down to my bank and like get them to finance this thing. So the banks going to look at you like you got three heads because you know they're not used to dealing with 50 owners. They're like well who's going to sign the personal guarantee like whose house is going to be on the line like if, and that's, it's just, it's just a different model and approach. We want to get to the place where you can't walk into your bank and your bank knows what this is and that the SBA loans. Somebody noted a question about SBA loans that the SBA loan guarantee programs can support all of the models of ownership. We're not there yet. We're working on it. We're not there yet. So, so the Kavos Fund is by design structured to be flexible. So we can put out capital that is debt. We can put out capital that is equity. We can do revenue or profit based financing. So really maximum flexibility. We can provide working capital alongside the transaction. We can do working capital actually before the transaction to help to help with the cost of getting this set up, you know, for companies coming out of COVID cash flow is always king but it's like really super king now. So, so, so, you know, flexibility is, is the name of the game. And, you know, ultimately, we are, we have structured the fund to with an aim to maximize the money that stays in the employee owners, you know, hands. So because the end of the day that's why we're in this work. So this is impact first capital it's long term patient financing. I think the other thing that I will will sort of comment on is, you know, different capital fills different needs. So, you know, catalyst fund impact first filling this gap in the capital market. One of the most exciting things that I've seen in impact space and entrepreneurship in the last year or so was was a quote, actually that was was came out of came from a pension fund that invested in a San Diego company that that transition called Taylor guitars, and the pension fund was quoted as saying something like, we chose to invest in this employee ownership transition, because it is low risk. And I saw that in writing somewhere and I was like, hallelujah. There is there is perceived risk of employee ownership because it is unfamiliar. And, you know, will will send you the tone of the case for employee ownership that has all the data points in it. All the studies right. One of the ideas is that that you know what Todd has been talking about and what you know the sides that I shared like that increased employee engagement, you know when done right the magic happens when you got the structure and the ownership culture. So when you've got those two components really working together. This is something that is low risk. Demonstrating really to investors that this that employee ownership is an investable impact when that truly delivers impact, you know, not just today. It's not a one time impact we're creating this employee owned company that's going to deliver impact into the future and over the long term. So yeah. Thanks for that I think I'll just add from the West perspective. There's also a variety of different ways you can invest in these types of funds so Allison mentioned she structured her fund as the evergreen debt fund, which has three tranches there's the senior note the junior no and a grant grant tranches well and then for Todd it's more of a traditional closed fund LP GP type structure which looks like a private equity fund. And so there's different types of investments and also types of capital we can deploy as a flexible impact investor program related investments mission related investments depending on on the risk appetite and the strategy and so just to say as we look at how do we crowd in more investors and different types of investors there's as Todd thinks about fun to three I mean he's already starting to talk about how do we get more. I think capital and just more kind of traditional sources of capital to scale, and because the numbers we're talking about, you know, are still relatively small in regards to the funds that you both have but in regards to the opportunity. And so just as we think about you know what's the role of maybe catalytic capital to demonstrate the model work with first time fund managers that then can take their track record and run with it. That's definitely something we're thinking a lot about at West, both in regards to the types of structures we want to demonstrate in the market so I think Alison the way that you're being really flexible with your model Todd with the unique approach you have to ease up blending it with the ethos of a co op if you will, you know, there's ways that I think we're looking to learn via you to see what works, and what could be scaled, but also thinking critically in what type of investment capital makes sense. And I'll just mention that grants are definitely part of the equation to increase capacity. As we look at some of the teams that we're working with perhaps there's grants that we can do for fellows and we're exploring this with a couple partners to think about adding extra capacity on on teams, so that we can support approximate leaders to join teams build that track record alongside these incredible fund managers, and then maybe spend off future funds. So we're thinking about different strategies and trying to be creative about ways to blend the types of capital that we have at West to try to solve the problems that we see with kind of the fund managers from a capacity constraints to, of course, the market and where we see the need for demonstration so I'll just kind of add that from from the high level of the way investors can engage in these types of funds but I don't know if they just you have anything to add there otherwise and happy to start taking some questions in the chat I'm seeing some good activity. So what I'm going to add is, we saw a very big need in the market for people to take personal risks. And so we, as our chief had our investment thesis evolved and we see our fit in the market, being willing to say we're willing to take the first and continue. We'll also put you through an institutional process as well we're not like on the foundation and offer grant capital that can be forgiven. We have investors in our funds that expect to get the money back so we have to maybe can't yet we can't call us we put our investor capital at risk so that kind of forces us to have a very institutional lens of how we approach diligence. Our biggest wins are when we come in with a decent size commitment relative to our fund hold limits, and then that's able to galvanize other capital parties, even with bigger markets to deals or trades that we're in. And we do we love doing that and love sitting on those calls with potential investors, co investors that are going to follow us into into the open. And like I said, they were really happy about the ownership model and looking to do more of that out of our third fund Great. And anything else time Allison before we pass to audience for questions. I'll jump in with one of their kind of just to share with with the audience about like that. There are different approaches to creating employee ownership and and the breadth of early investment opportunities can align with those so you know I talked a little bit about this idea of an independent transition, which is one approach, the company become employee, it becomes employee owned remains independently owned throughout kind of the investors and acquiring the business at any stage. And there are other approaches that start with acquiring the business in order to get that transaction done quickly, and then pretty immediately transition or at that time transition to it to employee ownership. And there are there are yet other approaches that acquire the company kind of more like a private equity firm might acquire it and hold it, you know, perhaps to tune it up operationally or tune it up, say environmentally, and then after some period of time exit, exit the fund to employee ownership. So, so that's another just sort of way that employee ownership approaches can differ. And you know the great news is they all end up with an employee owned company. And they can have different, the capital relationship and investor relationship can be different in those different scenarios. I'll add on top of that before before we get to the Q&A and I, I'm not going to take more than 60 seconds, because I have so much to say so it's going to be really really brief, but kind of kind of like four things as a as a field. So in our country, utilizing employee, we have to do one we have to and I think organizations like it's a heritage and project equity and investors are doing this is we have to bring down the cost of capital for this transaction and the way you bring down the cost of capital. And if somebody has a detailed question we can talk about that a little bit more is by de-risking the model is by taking all the perceived risk, which is much higher than the actual risk so if you look at the default rate on again just using ESOP because there's a lot of data the default rate on ESOP loans is significantly lower is less than 1% significantly lower than even like the SBA kind of requirements are but again there's not a lot of SBA funding for these loans a lot of traditional organizations and finance and banks don't don't finance these loans so we have to de-risk it then we have to make it more accessible and start to see you know our goals that one day you won't need to impact funds to do these conversions your local bank or your local CDFI will be able to finance, you know, most if not all of these sorts of loans so we have to bring down the cost of capital. I use that most of my time on that something quick, we have you have to invest in TA and technical assistance. So we partner up with the democracy at work Institute, which is a national nonprofit that that incubated APIS and heritage capital partners they incubated the funds a really interesting story about how philanthropic dollars and nonprofits can help create organizations that are that are investing in the in the traditional impact markets and traditional markets, but you have to invest in the technical assistance of the workforce and helping workers to transition their thinking to workers to worker owners, helping them build that that confidence and that skill set to understand what's going on in the company the way an owner would to get a lot of the benefits that that employee ownership brings to companies that you get a cool retirement account that you get a statement for and you get you get paid out when you retire. That's great, you know that's a positive, but to really get the business benefits you have to do the training and the technical assistance and that's why now is is our partner. You have to if you don't focus on racial equity and workforce of color is not just going to happen. It's not a part of your investment thesis and your investment criteria, then you say you're going to you're going to help deal with the racial well gap is not going to happen if it's not built into the model. And then finally a Smith a reference which is a fellowship program we're working on with the West. We're at the very beginning of this of this asset classes as Allison alluded to now is the time to get your diverse, your diverse players and all senses your diverse finance professionals your diverse board members your diverse CEOs that you may need to bring in. Get those folks in now at the ground floor. So as this continues to emerge and grow the field will be diverse from from the very beginning we won't have to kind of try to catch up on the back end. That was more than a minute sorry about that. I'll stop right there. So I'll answer a couple real quick so I'll include in the chat to the question about how you can learn more about West funds and applied to these funds we try to be as transparent as possible about our impact investing priorities. Grant making priorities on our website and also have an open call for ideas so that's a great way to get in touch but I'm also on LinkedIn and you can reach me there. I was being available. I saw a couple questions about that. I'm Allison, I'll say yes. We were happy to share but they also have project equity and a business heritage have great resources on their website and project equity has a case on employee ownership that they launched last year so we can maybe include that PDF as well which goes a little bit deeper. So there's a question here about from Scott Moon in the chat about any thoughts on how to incentivize or drive additional founders to consider the ESOP model. I'm curious, Todd, you're kind of in this right now looking to get a couple deals out the door as within your first fund and more to come so maybe I'll pass to you to answer that one. Smith, can you repeat it for me one more time. I was. Yeah, so his question was about you know what basically founders seem interested in the succession. They're driven by legacy objectives financial liquidity but any other thoughts and how to incentivize or drive additional founders to the ESOP model. No, that's right so I'll tell you kind of kind of our take is there there are a number of frictions to transitioning your business to employee ownership that don't exist in other forms of transition. I won't go into all of them but kind of one of our big thing, one of our big things is our goal is to make selling to your workers as easy as it is to sell to some private equity firm, or to a strategic buyer, or to a competitor, all of who we see many in the business. I don't want to do this, but I don't, you know, there's nobody in my family that pass it off to take this business over. So it seems like I'm stuck between all these rocks and hard places, because I know what's going to happen if I sell to my competitor or to this P firm or to a strategic. And they know what's going to happen to their legacy and oftentimes it's going to happen to their workforce. So really addressing the frictions how can we make it as fast and as easy to sell the owners as it is to these other options is what we're dealing with. Part of that is liquidity. So in the ESOP world, ESOPs are traditionally heavily financed by a seller's note. The owner is financing a lot of the acquisition capital, and every owner can't do that. And every owner is not willing to do that, especially when you look at, you know, black and brown communities where you may have had a successful business. That doesn't mean you still have a ton of wealth. The wealth may still be tied up in the business. So the idea that you're going to, you know, you're going to put a loan for five or seven years and not get you up is not, is not possible. So our fund is we're bringing liquidity to owners, like they would get in a P transaction or strategic transaction. So that's, that's one of many. Some of the costs in figuring out how to do the transition. I know that goes into our due diligence that goes into project equity as part of your process of figuring out there's an investment and so we take that off of the owner's plate. So, you know, figure, you know, knowing where all those are and addressing those with the investment and how you're investing is how you can get owners to really open their eyes. Even once they figure out they like it, we can say, hey, you can like it and we can help you do it. Well said, I'd love love exactly to absolutely postline and everything you just said and I'll just add one other thing which is awareness like the first pieces. Nobody knows about employee ownership. And if they do they may like not really understand it or have misconceptions. And so we spent a lot of time on awareness and we actually have a brand campaign for employee ownership that we launched last October with some peers in the field is called EO equals employee ownership equals.org is the website, really to focus on those business owners who who aren't already Googling employee ownership right we want to get more people who have heard about and have positive association with it, because that's going to open up the top of the much bigger as well. And so, I think we answered the question on Svalon so I might skip to to a question more about the history so is there a history of having employee ownership corporate structure combinations that can work long term. For example, a company set up with employee ownership for primary business, which then holds subsidiaries or partner firms with traditional corporate structures. So curious if you could share some of that background. I mean I can talk about what we see in other countries. Yeah, certainly there are small examples of this in the United States of acquisitions happening and there is is more of sort of an interest and an effort to support employee owned companies to do acquisitions that is that is happening right now. But in other countries, we absolutely see this and you know that the sort of best known example is in the Basque region of Spain is called Mondragon, which is essentially a, you know, a corporate entity that is made up of all employee owned companies and a company with one manufacturing business and now I can't remember off the top of my head but you know tens of billions of of dollars in in euros in revenue, a year across, you know, 200 plus businesses that all exist, sort of within this employee owned structure. So absolutely there's that that is is a is a model that happens, and and is one that we'd love to see more of in the United States as well. I'll add to that there's a lot of innovative things being done with with employee ownership and and traditional structures. Employee owned businesses, ESOPs are are have been shown to be really powerful also M&A and acquisition tools so the ability for these firms to acquire other firms, partly because of some of the amazing benefits that can be given to the owner of the selling company that are out there that make their offers really attractive. This mix between between employee owned and not employee owned subsidiaries. And they very well paid lawyers out there, who I'm sure, if they haven't already figured out, they will figure it out if you ask them. We know, we know a lot of those lawyers and those attorneys to be really good work around the space so, so we're happy to connect folks up to folks who could get really really innovative with structures that to achieve the goals. Before, before we wrap I'll ask one more question from the chat which is around, and can you speak to earlier stage or organizations speak to see capital channels available for for profit organizations are looking to build an employee ownership. So, so yeah the question if the question is about startups. I might refer folks to startup co op as a wonderful, wonderful resource. I know that they, they do a lot of really amazing, you know, technical support and community building. And I believe they also have a fund, you know designed to support startups. So if it's really more about companies that are established and are trying to dip their toe in the water, and, and learn more about what this could look like maybe get started with a small portion of employee ownership. You know, they're, similarly there are, are wonderful funds you know including the play ownership catalyst fund that are designed to, you know, to help with that CDF is a number of CDF is that are have loan funds to support employee ownership. So there's a couple funds in the space in addition to start co op like I see a group and looking at good scout capital that are looking at earlier stage organizations that might be interesting to look at there. But I know we're basically at time so I'll pause the questions there so sorry we didn't get to all of them. Just to quickly wrap up. Thank you so much for all of your time and engagement in the chat during the session. I look forward to continuing this conversation in the socap community, and, and using Todd's language, developing employee ownership as a robust asset class. Well on our way, but certainly need more co conspirators so hopefully this session just inspired you to join us connect with us and and work with us to expand opportunities for for employee ownership. Thanks so much. Thank you everyone.