The Vermont Sustainable Jobs Fund (VSJF) today announced the launch of the VSJF Flexible Capital Fund, L3C. The fund is the first business-lending program in Vermont focused on royalty financing for growth stage businesses ‘ and one of only two such investment-lending programs of its scale in New England.
Using investment tools such as royalty financing and subordinated debt, the VSJF Flexible Capital Fund (Flex Fund) provides small businesses in Vermont with access to the flexible risk capital they need to grow - without having to give up their ownership stake in the company.
The Flex Fund is also unique in that it is specifically targeted to support Vermont companies in value-added agricultural, forest products, and clean technology sectors.
‘Business owners who can’t find the right match of capital to grow their businesses now have one more option available to them ‘ a flexible, higher-risk debt instrument that won’t force an exit strategy in order to pay back the investor,’ said VSJF Flexible Capital Fund President Janice St. Onge. ‘The Flex Fund provides them with the flexible and patient capital they need, and also offers investors a tangible way to support the growth of Vermont’s green business sectors.’
The VSJF created the Flex Fund with the help of a $500,000 federal appropriation secured by US Senator Patrick Leahy in 2010. These funds were leveraged to raise $1.2 million from private accredited investors. The fund is seeking to raise another $2.3 million. When fully capitalized, the VSJF Flexible Capital Fund will have $4 million to invest in projects that benefit Vermont.
Current accredited investors in the Flex Fund include foundations, Vermont organizations and private individuals who are looking for ways to invest locally in the Vermont community.
‘This isn’t your average low-cost loan, but we’re cheaper than equity,’ said St. Onge. ‘Until now, flexible risk capital at a Vermont scale has been out of reach for many of our small businesses ‘ specifically those in our natural resource and clean technology sectors. The Flex Fund is filling a critical gap in their financing options. They need more choices of flexible capital across the risk continuum to grow and prosper, and now they’ll finally have access to it.’
Businesses receiving capital through the Flex Fund also have the added advantage of instant access to the networks, expertise, mentoring services and technical assistance programs of the Vermont Sustainable Jobs Fund.
‘In that sense, we’re very different from the traditional investment model. We nurture the businesses we lend to every step of the way to ensure a positive outcome - providing the strategic counsel, mentoring and critical infrastructure support that entrepreneurs really need as they grow their businesses.’
‘When we were looking for growth capital a few years ago there was nothing like the Flex Fund available,’ said Tom Stearns, founder of High Mowing Seeds in Wolcott. ‘We had to go out ourselves and find the right kind of patient investor that didn’t require us to sell out. It was hard work and took a lot of time and education on our part. The Flex Fund offers another way to link into flexible capital without having to make raising money a full time job!’
St. Onge said the VSJF Flexible Capital Fund is now looking for companies in Vermont’s green business sectors who are in need of flexible risk capital, as well as accredited investors who want to see their investments working directly in the Vermont communities they live and work in.
About The VSJF Flexible Capital Fund
The VSJF Flexible Capital Fund, L3C is a mission-based, low-profit limited liability company, an investment structure that combines the financial advantages of the limited liability company (LLC) with the social advantages of a non-profit entity (501c3) by focusing investment on in socially beneficial, for-profit ventures. It provides near-equity or mezzanine financing to targeted Vermont growth companies in sustainable agriculture and food systems, forest products, renewable energy, waste management and other green economy sectors.
The VSJF Flexible Capital Fund is a separate entity created by the Vermont Sustainable Jobs Fund (VSJF), which develops markets for sustainably produced goods and services to create jobs for the next generation of Vermonters. The VSJF provides grants and technical assistance to entrepreneurs, businesses, and farmers, to accelerate the development of Vermont’s green economy.
www.vsjf.org/what-we-do/flexible-capital-fund