The Future of Community Development Venture Capital
When President Barack Obama called for sweeping new restrictions on the ability of commercial banks to make a variety of investments, some started worrying that the restrictions could include investments in community development venture capital (CDVC) funds.
The Wall Street Journal reported in “Bank Rules Could Sink Community Development VC Funds” that such effect would be ironic at a time when job-creation is at the top of the administration’s agenda. “The funds make equity investments, ranging from a few hundred thousands of dollars to a million or two, in companies in low-income urban and rural areas.” “Unlike typical venture-backed start-ups that have few employees, these are often manufacturing and service businesses that create much-needed jobs in areas that mainstream VCs tend to ignore,” told Kerwin Tesdell, president of the Community Development Venture Capital Alliance (CDVCA) to the WSJ.
The CDVCA announced that it will be working to fashion an exemption for investments made in furtherance of a bank’s CRA responsibilities.