Founders First Capital Partners Announces Initial Close of $9 Million Series A to Support Underrepresented Entrepreneurs, Underserved Communities
The Rockefeller Foundation led financing as part of the Foundation’s Zero Gap Fund, channeling private capital for public good.
SAN DIEGO, CA | March 1, 2021 – Founders First Capital Partners (Founders First) announced its initial close for a $9 million Series A financing led by The Rockefeller Foundation and the Surdna Foundation to support underfunded and underrepresented entrepreneurs. This Series A will accelerate the deployment of Founders First’s $100 million credit facility from Community Investment Management to fund 400 companies. Diverse founders are defined as those companies led by women, military veterans, LGBTQ+ and Black, Indigenous, and People of Color (BIPOC) founders, offering them more flexible growth capital than traditional bank debt. The funding will also allow Founders First to expand into new regions across the United States.
The financing seeks not only to position businesses for scale, but also to demonstrate the value proposition in supporting minority-led small businesses. Through this expansion, Founders First will become one of the country’s largest revenue-based finance and advisory support investment platforms for underserved small businesses. In addition to The Rockefeller Foundation and the Surdna Foundation, investors include Kauffman Foundation through the Capital Access Lab Fund at ImpactAssets, LivingCities Blended Catalyst Fund, Spring Point Partners, The Impact Seat and Lindmor Foundation.
“The pandemic has shed light on the long-standing financing issues that disproportionally impact minority-owned businesses. We have reached a critical inflection point exposing the urgency of leveling the capital access playing field for these businesses which are key engines of growth in their communities,” says Maria Kozloski, Senior Vice President of The Rockefeller Foundation’s Innovative Finance Initiative. “The Foundation’s investment will support the expansion of Founders First and thereby funding of underserved entrepreneurs who for too long have lacked adequate access to traditional funding networks. Together, we will create high-quality jobs and increase wealth in underserved communities.”
Of the more than 400 companies that have gone through the Founders First programs, 83% reported increased revenues in 12 months and 53% reported increased revenues by 25% in 6 months. “We are thrilled to have the support of global social impact leaders like The Rockefeller Foundation to advance the mission of Founders First,” says Kim Folsom, Founder and CEO of Founders First Capital Partners. “With this investment we can greatly increase our reach to diverse business owners who are poised for high growth but aren’t a fit for venture capital or have the assets to meet traditional lending requirements.”
“Investing in businesses led by founders of color is one of the most effective ways to drive job and wealth creation and address long-standing racial inequities,” says Shuaib Siddiqui, Director of Impact Investing at the Surdna Foundation. “We are proud to support Founders First Capital Partners to reach this important funding milestone and their work to bridge the financial and cultural funding gap for small businesses. We believe it’s an investment that will provide social and financial returns for years to come.”
Founders First focuses on helping small businesses led by diverse and disadvantaged business owners located in low to moderate income areas less connected to the traditional funding networks of Silicon Valley and New York City. The Company combines an accelerator model—which includes educational curriculum and expert coaching —alongside direct funding to enable small businesses to grow and scale. Founders First has supported over 400 companies in the past five years, helping them achieve an average of 25% year over year growth.
BIPOC-owned small businesses were hit hardest by the COVID-19 pandemic, facing systemic barriers to accessing critical safety net support. Black-owned businesses closed at nearly twice the rate as firms overall at the onset of the pandemic, according to a recent report by the Federal Reserve Bank of New York, fueled in part by structural barriers to accessing financing at traditional banks and institutions that administered relief programs like the Paycheck Protection Program (PPP).
“Founders First is building an innovative platform that bridges a massive financing gap for US small businesses,” says Thomas Belazis, Principal on The Rockefeller Foundation’s Innovative Finance Initiative. “We are excited to unlock the company’s potential to disrupt the capital access challenge facing millions of minority entrepreneurs.”
Even before the pandemic, minority-led small businesses were woefully underfunded, lacking the financing qualifications for both traditional banks and venture capital funds. Founders First is addressing this paradigm by offering businesses revenue-based financing, an innovative funding instrument that generally requires entrepreneurs to pay a fixed percentage of revenue up to a predetermined cap. This solution offers small businesses an attractive alternative that aligns with business performance, self-liquidates, and avoids ownership dilution for small business proprietors.
This funding is part of The Rockefeller Foundation’s Zero Gap Fund. Launched in partnership with the John D. and Catherine T. MacArthur Foundation through the Catalytic Capital Consortium (C3), the Zero Gap Fund is a vehicle to channel private investment toward addressing the world’s most pressing challenges. The Founders First mission cuts across many of The Rockefeller Foundation’s priorities and helps drive their commitment to helping Black, brown, and Latinx businesses overcome the Covid-19 crisis and break down barriers to accessing capital and credit, and providing critical guidance, training programs, networking opportunities, and financial assistance.
About Founders First Capital Partners
Founders First Capital Partners is building a comprehensive ecosystem through its proprietary platform to empower underrepresented founders to become leading premium wage job creators within their communities. We provide revenue-based funding and business acceleration support to service-based small businesses located outside of major capital markets such as Silicon Valley and New York City. We focus on supporting businesses led by women, people of color, and military veterans, inclusive teams and businesses located in low to moderate income areas. Our proprietary business accelerator programs, learning platform, and growth methodologies transition these underserved service-based businesses into $5M to $50M recurring revenue, tech-enabled companies while providing, high-yield investments for fund limited partners (LPs) that perform like bonds but generate returns on par with equity investments. Each year, Founders First Capital Partners works with hundreds of entrepreneurs— and offers 3 cohort programs through our Founders Business Growth Bootcamp and 4 cohorts through our FastPath Funding Growth Experience program. https://foundersfirstcapitalpartners.com/
About The Rockefeller Foundation
The Rockefeller Foundation advances new frontiers of science, data, and innovation to solve global challenges related to health, food, power, and economic mobility. As a science-driven philanthropy focused on building collaborative relationships with partners and grantees, The Rockefeller Foundation seeks to inspire and foster large-scale human impact that promotes the well-being of humanity throughout the world by identifying and accelerating breakthrough solutions, ideas, and conversations. For more information, sign up for our newsletter at rockefellerfoundation.org and follow us on Twitter @RockefellerFdn.
About the Surdna Foundation
The Surdna Foundation seeks to foster just and sustainable communities in the United States— communities guided by principles of social justice and distinguished by healthy environments, strong local economies, and thriving cultures. For over five generations, Surdna has been governed largely by descendants of John Andrus and has developed a tradition of innovative service for those in need of help or opportunity. In 2017, the foundation launched a $100 million commitment to impact investing that works alongside its grantmaking. Learn more at http://www.surdna.org/impact-investing..
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