New Investment Fund Helps Social Impact Businesses in Underserved Communities Grow

Access to financing enables business owners to significantly expand their businesses, but 83 percent of startups don’t access bank loans or venture capital, according to an Ewing Marion Kauffman Foundation report. Instead, nearly 65 percent use personal and family savings. In addition to wealth and demographic barriers when accessing capital, entrepreneurs entering the traditional venture capital arena may risk losing full control of their businesses.

Since 2022, Momentus Capital has tested a new impact investment approach to support growth-stage, social impact businesses in underserved communities. The organization’s $171 million impact investing fund, the Equitable Prosperity Fund, provides purpose-driven businesses with non-dilutive capital, so business owners can keep full ownership of their companies. The fund aims to exit after three to five years of supporting the company's growth.

The Momentus family of organizations has over 40 years of experience in small business lending and recently learned that traditional debt products don't meet the needs of small businesses — especially those that are serving underserved communities, Yrenilsa Lopez, managing director of investments at Momentus Capital, told TriplePundit. And small businesses are typically not inclined to give up equity. 

Investment in action

One of the differentiating features of the Equitable Prosperity Fund from traditional venture capital options is its focus on businesses that are growing past the startup stage and prioritize social impact instead of solely pursuing profits.
To date, Momentus Capital has invested in 10 companies improving access to healthcare, insurance, healthy and affordable food, and growing the number of cooperatives and employee-owned companies. 

One of the fund’s investments includes BB Imaging, a medical imaging company increasing access to high-quality ultrasound services. The Equitable Prosperity Fund enabled the company to develop a telecast technology that allowed it to expand in underserved areas, Lopez said. Now, BB Imaging photographers can conduct imaging tests remotely, without needing to be physically present with patients.

Another investee is 4P Foods. Tom McDougall, its CEO and co-founder, connected with Momentus Capital during the COVID-19 pandemic. 4P Foods faces challenges like needing to change the traditional food system and accessing infrastructure, including warehouses, refrigerators and trucks, McDougall told 3p. Capital support from the fund allowed McDougall to invest in infrastructure and technology, cover costs, and expand his business with farmers.

"Momentus has been a great partner in our journey, in terms of wanting to understand what our impact is, on an ongoing basis, where our challenges are on an ongoing basis. And how they might adapt the tools they provide to sort of fit our evolving shape and size," said McDougall. 

Flexible financing keeps the focus on social impact, innovation and growth

Each investment from the fund is tailored specifically to the investee due to the fund’s overall flexibility, Lopez said. "Because it's a growth product it's meant for companies that are taking that next level in their operation, so it's not working capital,” Lopez said. “We are looking for companies that really want to grow, whether that means they want to open a new branch, a new location, whether they want to invest in infrastructure, invest in people, invest in new technologies that will specifically result in growth." 

The investment does not operate like traditional debt. There are no collateral or guarantee requirements, and redemption periods are aligned with each company's growth. To qualify for investment, companies must generate annual revenues of over $4 million.