Risks and Rewards
When Lauren Robinson '86 resigned as a partner from the Chicago law firm of Schiff Hardin LLP, she was lured away by the promise of "doing good and doing well" at the same time.
"I wanted to do something where I could have financial self-sufficiency but also use my skills for social good," she explained. In 2002 Robinson entered the growing field of community development venture capital, working with funds that perform well and have a social mission. Still in Chicago, she is now a managing director of the Inner City Fund at Next Frontier Capital, a subsidiary of Chicago Community Ventures, started in 1999.
Inner City Fund, Robinson said, is the first and only community development venture capital (CDVC) fund in Chicago. There are approximately 68 active CDVC funds in the United States, with $550 million under management, according to the Community Development Venture Capital Fund Alliance, an industry trade association. Like traditional venture capital funds, CDVC funds invest in and provide strategic advice to growing businesses. But CDVC funds, Robinson said, invest in areas that traditional venture capital funds may avoid, such as inner cities and rural areas, to generate a "double bottom line" of economic and social returns.
Robinson's experience in corporate transactional law and in commercial lending give her knowledge she needs to assess a business' potential for growth and its "competitive advantage" in its industry. After Vassar, where she was an English major, Robinson worked as a commercial banking officer for Marine Midland Bank in New York City's Garment District. She then earned her J.D. and, later, a master's in public administration (both from NYU).
She put in many hours and much hard work, and soon became Schiff Hardin's first African-American female partner. She gained valuable experience representing public and private companies in corporate transactions, including financings, mergers, and acquisitions. But Robinson was eager to address social problems — particularly urban poverty and unemployment. Which is what brought her to the Inner City Fund.
"It's sophisticated, challenging work that demands a high level of discipline, thought, and analysis," Robinson said of community development venture capital, adding, "It's risky, and it's long-term. You're investing in areas that have been mostly ignored, areas that are economically distressed, whether urban or rural."
Robinson recently saw a slogan she liked on a baseball cap: "A job is homeland security." But as she sees it, creating jobs isn't enough — they should be high-quality, sustainable jobs that provide a living wage, with benefits.
Equally important, Robinson said, is supporting businesses owned or managed by minorities and by people who live in the neighborhoods in which the Inner City Fund invests. "It's vital for people to own and control the production of goods and services in their communities," she said. "When residents own businesses where they live they have an economic stake in the well-being of that community, which motivates them to guard against urban blight."
Robinson and her colleagues are in the process of raising $30 to 50 million for the Inner City Fund — from banks, insurance companies, pension funds, individuals, and foundations. To date, the Fund has commitments of $2.5 million. Inner City Fund will invest in businesses in low- and moderate-income areas in Illinois, and minority-owned or managed or women-owned or managed businesses nationwide.
The Inner City Fund plans to invest from $500,000 to $5 million in each business, in industries ranging from light manufacturing to food production, and expects a net return of 20 percent over a 10-year period.
Robinson believes the presence of successful businesses in economically distressed communities will create new hope among residents. "We believe we can create hope and possibility by creating businesses — and subsequently jobs — where there weren't any before. It all starts with a job. A job is fundamental to participating in the economic mainstream, striving toward bigger goals, supporting one's family, and inspiring their dreams."
For more information about the Inner City Fund and Chicago Community Ventures, visit www.chiventures.com.