 We are going to turn over to our next presentation. I am particularly excited to welcome George Ashton III with LISC, and he is going to give us a presentation, and then after that we are going to do some Q&A with him. So please, as you are listening, drop your questions into the chat, and we will pull some of those forward and do a little bit of Q&A with him following his presentation. So I am going to turn it over to George. Thank you. Hello. My name is George Ashton. I am the President of LISC Fund Management. Here today to talk to you about a topic that I am very passionate about, leveraging private capital to create resilient BIPOC businesses. BIPOC businesses have struggled to close the racial wealth gap. We have seen a pretty impressive clip of new businesses start in black and brown communities over the last 10 years, 79% growth reaching 11.1 million between 2007 and 2017. So it is not the number of businesses that are the issue, but the question is, why aren't we seeing the outcomes that we want to see with respect to employment and economic opportunity that would close the racial wealth gap? In fact, the racial wealth gap has gotten worse over the last 10 years. And as we dig in deeper, we look at these businesses, we see that the number of jobs that they create, the revenue of the business and how often the businesses actually shudder are all signs that these businesses are not really being nurtured and growing in a scalable way to provide income and employment opportunities to their communities. And so how do we empower these businesses that do start, especially these entrepreneurs that have made it work for three to five years, how do we empower them to grow their businesses and to create the changes we want to see in their communities? If we can actually close this gap, the racial wealth gap, it means a lot of great things for the entire country, increases in GDP, millions of jobs, increases in revenue for the black businesses, increases in wealth for the black amount of communities. So the goal at the end of the rainbow is incredible, but the question is how do we get there? It's always nice that you talk about these sort of high-level theoretical problems that we have to actually zoom in and think about how real they are for entrepreneurs. And here we have an example of Zazz, which is a restaurant in the northeast. And it's a restaurant that's been around for nine years. And so you know that the entrepreneur has been battle-tested and is looking for capital to actually expand his business. And the fact of the matter is normally this capital would come from friends and family, so folks that have seen his success and believe in him. But what do you do if your friends and family network doesn't have that capital? And that's what's really hard for getting these businesses to get past the early growth stage. And we know Zazz is not alone. There are millions of BIPOC businesses that want to grow and help their communities, but struggle to find this capital. Grants are often too small to really make significant long-term business investments. And debt is an encumbrance on the entire business. And so many entrepreneurs, especially those who are risk-averse, will not take on growth opportunities with debt. So it's really a hole in the finance ecosystem that we need to fill. What does it mean to be resilient? How do we get these businesses to actually solve the racial wealth gap? It means things like the following, growing in size and number of employees, revenue and customer base. It means diversifying into multiple business lines. In any business's lifespan, there are tough periods. What really helps businesses sustain through those periods is having multiple business lines so that when one is not doing well, another one may be doing very well. Also, entering industries with higher barriers to entry. And that creates more value in the company and more predictability of profits and profit margins going forward. These are all aspects of developing resilient businesses for any population. And what's critical to these is that growth capital that's missing from the ecosystem of black and brown businesses. A little bit about LISC. Really quickly, LISC is a national organization with 37 local offices around the country. We've been doing investing for 40 years, AA rated, and really invest in all parts of the community ecosystem. And so within small business in particular, our track record has been impressive as of late because of all of the response to COVID and the desires for racial equity investing as well. So a lot of lending and grants that we've done to businesses, really they either help them get through the COVID recovery or to help them sustain their operations for other issues. But in all of this, we now need to figure out how we go from helping these businesses sustain their current models to helping them grow and become more resilient. So here are the core elements of our program. So we have patient financing. We designed a product that we think is very equity-like and is patient and allows the entrepreneur to take risk and grow their business. We combine that with technical assistance to help the business with its professional needs, supply chain logistics, et cetera. And then of course, we design the product so that hopefully the success of the business creates an investor track record so that future investors will want to invest in this business and sort of help continue to scale. The product is a form of growth capital that we actually designed that takes recoverable grants and structures them as investments into the business. We don't take ownership of the business and the size of the investments are really tailored to the business plan that we're shown from the business. What's important about these business plans is they actually offer new employment opportunities for the community itself. So the product actually is the financing of a business plan that will grow the business and make it more resilient. And if the plan works out and does really well, then we actually end up, the businesses are paying back all of the money and potentially some upside. And if the business plan doesn't succeed, then we write off the investment. And this really looks like equity from a risk-sharing perspective. And so we think that entrepreneurs will take this money and utilize it to grow their businesses effectively and create the jobs we want to see in their communities. The types of businesses that we're going after, we're not necessarily going after start-ups, although it could be applied to that, but we're really looking for those businesses that have been around for two to five years, have a few employees, and have an idea for how they want to scale their business and grow it. We think these entrepreneurs are often overlooked because people think about entrepreneurship as starting new businesses. We also like community-based businesses because those are businesses that have a local presence, which is beneficial to the community, but also create local jobs and accessible jobs for the community as well. Some of the benefits we think of the business is that for this product, there are no payments until the business actually achieves its growth plan. Investors share that risk. The capital transaction creates a track record for the business, so they can show that to other investors. There's no collateral of personal guarantees required. We offer technical assistance, and then there's a finite repayment period. We don't take ownership in the company. We don't have to push the company to have some sort of sale or exit. It's really just paid back over time as the business succeeds. We also spend a lot of time thinking about how we help the business to succeed, so giving them money is a large part of that equation, but also making sure they have a support system around them. And all of the cities in which we're launching this concept, we are partnering with local TA networks through our economic development group to make sure that those businesses have the support they need to grow. So that was a short presentation on the topic of how to make resilient BIPOC businesses with private capital. We're excited about this journey and how it will evolve and what it will mean to these communities in the future. Thank you, George. I think we're going to have you pop on camera here with us at the moment, and I believe we have a few questions for you. Can you hear me? I can. Hi. Welcome. Great. How are you doing today? Great. Excellent. First question that I have for you is thinking about from multiple sides. You talked about multiple sides of the equations here from the investor side. What factors should investors consider when determining whether the investment is worth the risk and thinking about also risk? Risk can be defined in many ways. So what would you say about that? Yeah, I'd say it's a matching mechanism. So you need to match the risk of your investment with your expectations for getting your money back or end in some, right? So there are different types of investors in the marketplace from grant investors that are investing in the impact. So they have single bottom line, but it's all impact, right? And they don't want their money back all the way through the other single bottom line, which is people who just want the investment return. And so at risk we find from foundations and corporations and institutions and banks and insurance companies all the way through family offices that you can find differences in what folks are looking for. For this particular product, we are in the early stages of establishing an investment thesis and asset class and investing in community-based businesses this way. It's critical to changing the makeup of our country and fixing the problems in our country. So for me, it's not about whether or not we know what to do. It's whether we have the courage to do it. So we are raising mostly grant money for this first initial sort of go at it in terms of investing into this product and into this asset class with the hopes, of course, of finding the algorithm for performance that allows us to make the case for people who have less Chris tolerance to then begin to be a part of the investment and to scale it over time to make it a national solution for community-based businesses. But it's a great question. You have to match it to your expectations. Excellent. Thank you. And I think just a quick follow on question that's coming in through the chat, just where did you find the grant capital to fund those recoverable grants? Yeah, so we are finding it and have found it at corporate players, foundations, philanthropic-like capital is where we are right now in terms of finding that capital. I think I have let me kind of tack over to a different question. That is also coming in through the chat. The question is, are there certain industries, business stages, partnerships, and or structures that are non-concessional impact debt can finance to help BIPOC business help close the wealth gap? Absolutely. And we at LISC have done a ton of impact debt financing for businesses, whether it's in response to sort of the COVID crisis or even beyond that, we have the New York Fort Loan Fund, which is a fund that $100 million and it puts out low-cost debt and has been very successful in helping businesses sustain themselves through the pandemic and see the way out of it. We have a fund called the Black Economic Development Fund, which also does a lot of financing for larger black businesses that are trying to grow and scale. The major difference here is for entrepreneurs, debt is a good solution if you're scaling an existing operation. You have an understanding of how it's going to form, what it needs, and how you think it's going to grow as you really take the risk on of debt. What we need in many of our community-based businesses is we need to find resilience in those businesses through them having multiple business lines, which means they have to go beyond their current business. And so that's why they are hesitant to take on debt to do that. And so we need to come up with a new product. This exists in other communities, the Asian community, the Jewish community. They have all kinds of sort of informal networks where people can start businesses based off of friends and family sort of raising, not the case, and black and brown communities. So we're missing that and it's a key ingredient to getting growth. And I think when you, when we're thinking about that too, one of the questions that's also coming in here is about, is around the cities that you are targeting and where there might be extra growth there or ways to grow into different cities. Yeah, so from a city perspective, it's not surprising that there are certain cities around the U.S., large urban centers that have a majority of black and brown businesses. So this has been a BIPOC focused initiative, as I said before. So we're in those major cities and that's what we're looking at. So Atlanta, Chicago, LA, New York, D.C., it's not a surprise where we started. I would love to expand this to actually a rural application as well, because I think the rural community is the same issue. And so that would be sort of a future evolution of the program. But that's where we are for now, given the focus. Let's see. I have another great question that's coming in from Meg. She asks, how do you think about measuring the impact of these vehicles and what key metrics do you look at and are you looking for? I think there are lots of creative metrics. My number one is jobs. I think that the number one way that entrepreneurship can help close the racial wealth gap is through creating financial stability that comes with jobs in the community. And I think it's a next generation effect. I think the kids of those families get educated and make significant jumps in terms of family wealth in the next generation. So yes, you could have a community-based business that gets the right kind of money and all of a sudden becomes a national brand or whatever. But that's very unusual in this space. I think it's about providing jobs and financial stability. So when we look at the business plans that we are looking to sort of finance or to invest in, we're looking for business plans that require local jobs, ideally local accessible jobs. So I think maybe kind of going from that local piece to looking more broadly universally, there have been a number of corporate commitments and racial justice commitments that are starting to come out in different ways that organizations are following through or not. When you think about this in relationship to funding BIPOC founders and ensuring that communities have funding and generational wealth, what do we have to do more here in order to really make those commitments turn into significant actions? Yeah, so I think it's a really big question. Yeah, sorry. No, it's fine. We've actually been to the benefactor of some of those large commitments. I would love to say that, typically, the Black Economic Development Fund, the investors in that fund have been really incredible in lowering the cost of that capital so that we can do really interesting and creative things with it. So I would put those in the bucket of earnest commitments. I think for a lot of corporations, A, they do want a headline, right? So they have to get to a big number. And then to get to a big number, the question is, where's that capital coming from within the corporation? Right? And then that drives, again, this matching mechanism of risk versus what they can invest in. And so we saw a lot of big announcements with people we're talking about putting deposits in black banks, for example, right, which is and is not probably helpful to the system and is a very safe way to sort of make those investments. And so I think it runs the gamut. And I have gone away from trying to control that because I don't think you can. What I think we can do as an industry is continue to go to our our dearest friends, which are the foundations and philanthropy and do things like this, where we sort of see new investment opportunities, figure them out, make them more investment grade like and then go to those folks and say, hey, listen, we have something that has a proven track record, would you consider this as a proven less risky investment? I think that's got to be our crosswalk to some of those bigger commitments, but it's there's no panacea. But the right and I know that you are doing a lot of work on on that and in that side of the house. I think that it's also we need to really help people meet them where they're at, but then also help them see where they can go to. And I think that that's one of the things that I'm really tracking and noticing with some of the commitments and actions and others in the ecosystem that are trying to push that work as well. And speaking of big questions, I have another kind of big question for you. Within Spectrum and SoCAP, we have started conversations with in coordination with the community around reparations. And I'm curious to hear your thoughts on reparations and how can reparations play a role in supporting resilient, BIPOC led businesses? Yeah, I think it goes back to a question you asked me earlier about sort of figuring out how to work our way out of the hole we built ourselves into historically, right? And so the best explanation I heard was sort of a mathematical one, which was if you look at the well documented differences and let's say mortgage rates and mortgage approvals and home appraisals. Let's take that as a real life example. And you say, on average, black families received an appraisal that was, you know, 20 percent less than a white family for the same house and received a rate that was 100 or 200 basis points higher on their mortgage. Though not the fault of the white family who received a better rate and better appraisal, it has acted as a historic subsidy for that population, just economically, generation over generation. So for me, reparations is mathematical. It's documented and there's, you know, not a perfect way, but there are definitely some quantitative pillars to stand on and thinking about why it makes sense that you've had a population that's been disadvantaged in a recorded fashion mathematically for years. And how do you think about the amount of resources that should be utilized to help rectify that? And then the next step is then how do you deploy those resources? Right. And so that is the work that we're a lot in already, which is if we had money and the money we do have, we figure out how to deploy to fix some of those wrongs. But I do think that that would that should be a non-emotional, logical, quantitative conversation about the real math behind what's happened in documented policies in the history of this country and how we might acquire some resources to really make it better. And I think not just for the benefit of black and brown communities, this is a short sightedness of so many, but to the benefit of the entire country, like if we can get our entire team on the field and not have 30 percent of it sitting on the bench, then we're going to perform better as a country. And all of us are going to do better. But people are too short-sighted sometimes to see that. So I'm a big fan of the conversation and the link to potential resources. And then the longer conversation about how to deploy them. Thank you. As you were speaking, a quote actually came up and I looked for it really quickly. But from Taha Nishi Coates that he says, until we reckon with our compounding moral debts, America will never be whole. And I it's I think that's exactly we have to figure out how we can make ourselves whole. We are we're just about time. I know these lightning bolts go lightning fast. So I I'm curious if you have anything closing that you'd like to mention that you haven't covered yet and specifically maybe looking toward how do we as a community, as individuals, help to sustain action? How do we really continue to make action durable and not just, you know, these little little actions? My closing thoughts are this and it's probably a call to action for the CFI community, impact investors and foundations as well. There's so much trendiness and novelty that is such a big part of what people want to invest in in this space. You know, the latest idea that sounds cool. What's the next thing that, you know, might be interesting or sounds cool? And this maybe goes all the way to like family offices and where the money comes from. Right. But at the end of the day, the the challenge I have is the scoreboard, which to me is the macroeconomic data about what's happening in the country. So that's not taking away anything from, you know, the long history of community development, et cetera. But if we're not winning on the scoreboard, then there is an issue and it can't always be about novelty. Sometimes it needs to be about finding a good solution and then scaling it and sticking to it for a long period of time. And it's not sexy. But if you really are concerned about making the country better and not just doing interesting things, that's what you should be focused on. George, thank you so much for being with us today. And thank you for not just that call to action, but all of the work that you're doing. Look forward to keeping the conversation going with you. Thank you. It's been great. Take care.