I have been reflecting on the difficult conversations we have internally as we execute our mission. There is no road map for how to do what we're doing. Usually, our team is very much aligned but sometimes we experience constructive tensions around timing, decisioning, and selecting the best way to support the entrepreneurs we serve.
We are working on a deal right now where it would be easier to take the conventional route and say no. That’s what investors do all the time, after all. But we’re digging deep and sharpening our creative thinking to come up with a solution that meets the entrepreneur’s need and reflects ICA’s mission and values. But it’s not easy. There is no roadmap for how to do what we’re doing. We're doing it anyway!
We are pushing forward with a conversation that has been happening for years: are there new – less conventional – ways to assess risk that go beyond the bias of perception? Can our due diligence capture a deeper understanding of what is - and is not - actually risky? Can we make underwriting more inclusive? Can we make capitalism itself more inclusive?
We know that our current models of risk assessment are structurally racist and sexist. This, I believe, is an consequence of the financial system having been created by a subset of our population that does not reflect the needs, desires, or identities of many of its users.
Data → action
It is heartening to see our greater community realize what CDFIs like ICA have known for so long: our financial system does not work for too many people. Decades of data reflects this.
The system is inaccessible to too many and it is time we do something about it. We know the problems; now, we have to turn data into action and make the system more accessible for everyone.
What does this look like? At ICA, we use data and feedback loops from the entrepreneurs we serve to evolve both our advising programs and our investing approach. This spring, we launched The Lab at ICA to fill a gap for earlier-stage businesses that we identified while running our flagship accelerator program over the past five years.
Also this year, we piloted a new approach to investing in earlier-stage companies with a new seed capital product – read more about the six companies we’ve just invested in here! What’s more, we’re working on another big initiative: the creation of another new capital product which aims to tie impact to investments, and which we hope to share with other community investors across the country (stay tuned!).
Difficult but necessary
What we are doing at ICA is not easy. We’ve been at this for 25 years now. It is easier to say no to companies that don’t fit the standard mold. It's easier to underfund an entrepreneur – making the sometimes misguided assumption that some funding is better than no funding – than to figure out how to truly invest in their full vision.
At ICA, we don't stand for that as an organization – we have the hard conversations, we make difficult decisions, and we push ourselves to do more for our entrepreneurs, always.
We are getting in the thick of it to figure out how our innovative model can provide the needed support to get us all to a better outcome than one we've thought of so far. It's out there. We just need to find it.
Importantly, we are not doing this alone. We are standing with our CDFI community and have the support of our partners and supporters who are helping us develop new strategies to expand access to capital and coaching for small businesses. We are particularly grateful to our donors who provided the funds for ICA to develop and launch The Lab and new investment products this year.
The work we’re taking on requires us to work together and to push our selves to turn our words into actions. There is more to do, and it’ll be challenging, but we will get it done . Often, difficult roads lead to wonderful destinations.