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					Mission-driven Venture Capital
             Rick Larson, Managing Director
                      SJF Ventures


Building Assets of People, Families & Communities
              Jessie Ball duPont Fund
               October 25-27, 2006
                               Contact information:
   400 W. Main St, Suite 604, Durham, NC 27701 Phone: 919-530-1177, ext. 406
                               rickl@sjfund.com
         What is Venture Capital?
• What? Equity investments (not debt) in rapidly
  growing private companies (not publicly owned)
• How long is it invested? 5-7 years
• Level of return? Goal: 5 – 20 X initial investment
  (15 – 20 + % per year)
• Why so high? It‟s risky. 1/3 of companies fail,
  1/3 return investment, 1/3 generate some return
• Patient capital? Yes, no immediate repayment
  required), but... VC‟s are results oriented, with
  enough control to make changes if see fit)
• Whose $$ do VC‟s invest? Pension funds,
  foundations, banks, high net worth individuals
Mission-driven VC Flavors: People, place, purpose

Community Development Venture Capital
• 82 funds; $870 M under mgmt.
• Investors: Banks and foundations, CDFI Fund; insurance cos.
• Trade association CDVCA (www.cdvca.org)

New Markets Venture Capital
• 6 funds; $150 M (SBA)
• Investors: SBA leverage, Banks

“Second-generation” Funds
• Approx. 15; $2.5 B
• Investors: Banks, insurance cos., public pension funds,
  foundations, funds of funds
      Mission-driven VC can help…

• Innovate in traditional industries
• Capture outsourcing opportunities
• Generate quality employment
  --7 of 10 fastest growing skilled positions
  are health care related
  -- 3 of top 4 occupations creating the
  most jobs are health care/fin. services
  related
SJF Ventures – Mission Driven Approach
 Industry Focus: Clean Technologies, Business Services,
  and Organic Consumer Products
 Investment Stage: Expansion stage companies with
  revenues of $1M to $20M & at growth inflection point
 Investment Size: $500K to $1.5M per company
 Strategy: Targeting companies whose rapid growth yields
  strong community, environmental and financial results:
  quality entry level job creation & environmental
  improvement.
 Return: Projected IRR to investors in mid-teens with lower
  volatility than conventional VC returns
SJF Advisory Services – Allied 501(c)(3)

 Assisting companies
  (Get Ready for Equity)
 Supporting high
  performance workforce
  (including asset-
  building)
 Showcasing/supporting
  cleantech innovators
  (Cleantech CEO
  panels)
SJF I Companies: 1,900 Jobs Since 1999
 2,000
 1,800
 1,600
 1,400
 1,200
 1,000
                                                        Jobs Created
   800                                                  Jobs Retained
   600
   400
   200
     0
         99

               00

                     01

                           02

                                 03

                                       04

                                             05

                                                   06
    19

              20

                    20

                          20

                                20

                                      20

                                            20

                                                  20
Beyond Paycheck-to-Paycheck Report

“Best Practices” survey of industry
Framework for matching CDVC funds and
 companies with best asset-building strategies
Marketing and educational pieces for funds
 and portfolio companies
Documentation of tools and case studies
Full report available at www.sjfund.com
Survey of 20 CDVC Funds
Asset-Building and Wealth-Sharing Tools
►CDVC funds utilize a broad set of asset-building tools
 90%                              86%      86%
                                                     81%
 80%
 70%
 60%
 50%                                                                   43%
 40%   33%
 30%
              19%
 20%                    14%
                                                              10%
 10%                                                                              5%
  0%
       IDAs   Home      Emp.     Broad-    Profit    401(k)   ESOPs   Financial   Other
              Owner     Credit   Based     Sharing                    Literacy
              Assist.   Unions   Options
Asset-Building Tools Used by SJF
 Broad-based stock option plans (SJF has set up 8)
 IDAs -- Individual development accounts (SJF has
  linked 2 port. cos. to local nonprofits providing IDAs)
 Retirement plans such as 401(k)s (SJF has facilitated
  several)
 Employee stock ownership plans (ESOPs)
 Profit sharing and bonuses (SJF now facilitating one)
 Home ownership assistance programs
 Employee credit unions
Company Example – Consumer Products



Location:         Harrison, NY and Yonkers, NY
Business          DDF produces skincare products, including
Description:      cleansers, moisturizers, anti-aging and acne
                  treatment products
SJF Investment:   $200K, November 2001; $610K exit, April 2004
Jobs Creation:    75 jobs at investment, 132 Jobs at exit (73% entry-
                  level)
Highlights:       • 3X return in 2.5 years for a 67% IRR
                  • Early exit through sale to private equity fund
                  • Employee stock option plan and other benefits
                  • Relocation to expanded facility in Empire Zone in
                    Yonkers, NY
Company Example -- Business Services



Location:         Kennesaw, GA, S. Providence, RI

Business          Minority owned Business to Business contact center
Description:      (voice, email) serving a range of industries: financial
                  information, faith-based, government


SJF Investment:   $875K (Aug. ‟02, Feb. ‟03, June ‟05)
Jobs Creation:    21 jobs at investment, 385 today (90% entry-level)

Highlights:       • Revenue growth - $1.5MM in „02, $15MM in ‟06
                  • Highly diverse workforce; opportunities for
                    advancement; broad-based stock option plan; EAP
                    and health/education programs