Key milestones to realizing this commitment are: a) complete the organization documents and agreements - August 2009; b) expand investment pipeline - September 2009 (and ongoing thereafter); c) initial closing - October 2009; d) make first investment(s) - December 2009; e) final closing - July 2010; f) hire analyst and office manager and establish basic processes - September 2010. At that point the fund is ready for ongoing investment sourcing, maintenance and exiting activities, including annual impact audits.
The fund intends to make 10-12 investments, committing between -6 million to each including follow-on investments. The fund will invest in companies that: (1) have strong growth potential in a large and growing market; (2) provide financial services that provide a positive impact to underbanked and low and moderate income consumers; and (3) have a scalable business model with an attractive risk and return profile.
In 2004, the Ford Foundation capitalized ShoreBank affiliate, CFSI, to help the financial services industry in the US increase the quantity and quality of products and services for the 40 million underbanked households. Since its inception, CFSI has educated the industry with its research and dual profit perspective. It has built networks by forming several formal roundtables which include Bank of America, Capital One, Citi Group, Experian, H&R Block, MasterCard, US Bank, Visa, Wal-Mart Financial Services, and Wells Fargo. And it has funded innovation through for-profit venture investments, and through non-profit grants to cutting edge charitable organizations.
CFSI made eight venture investments, based on funding from the Ford Foundation and KeyBank, in some of the most scalable, most consumer-friendly and high-growth companies targeting the underbanked in America. For example, AccountNow provides a feature-rich debit-like card to poor Americans, which allows them to build credit, pay bills, and avoid check cashing and overdraft fees. Another investment is Progress Financial, which provides Latino consumers with small loans at approximately 25% APR, the ability to build credit and avoid pay-day loans. And L2C, which provides credit scores based on non-credit bureau data, for the millions of 'credit underserved' denied access to fair credit opportunities.
CFSI's investments have grown significantly: two have been sold (to Virgin USA and Microbilt, respectively) and four more have achieved profitability. Because of CFSI's unique position in the industry, it receives significant investment deal-flow and its industry partners help the portfolio companies through strategic insight, business development and are potential acquirers.
SEEKING: Financial Resources
CFSI is seeking like-minded organizations which believe in the strategy of Core Innovation Capital, as potential investors, as future co-investors and as potential collaborators (marketing, business development, impact measurement, acquisitions, etc.)
OFFERING: Financial Resources, Implementing Partners, Best Practice Information
CFSI also wishes to offer financial and strategic resources to organizations seeking to understand or deliver innovative financial services to the poor, both domestically and internationally. As nationally recognized exper on the underbanked consumer market in the US, CFSI is able to offer tremendous insight as internationally oriented organizations start thinking beyond microfinance.