The Buzz with Robert Bailey, President of the Washington DC Coalition for Capital
The Washington DC Coalition for Capital (the Coalition) is a non-profit coalition of business and non-profit leaders supporting economic development and job creation through long-term access to capital for District entrepreneurs and emerging companies. Two participants in the coalition, Advantage Capital Partners and Enhanced Capital Partners, are Washington DC Certified Capital Companies (CAPCOs), and the Coalition assists with the implementation the WDCEP Business Plan Competition. Below, Robert Bailey, President of the Coalition, discusses the DC CAPCO program.
What is the goal of the DC Certified Capital Company (CAPCO) program, and what industries does CAPCO consider an investment priority?
In CAPCO, the District of Columbia has an effective economic development tool that creates jobs by extending private sector investment capital to companies that are just outside the range of traditional bank financing. CAPCO has catalyzed growth in dynamic DC small businesses by investing in excess of $28 million in 32 local businesses. The program has created hundreds of DC based jobs, and CAPCO-funded companies have raised millions from outside investors in the form of follow-on capital. CAPCO is able to do this through its unique public-private structure that brings in experienced private equity fund managers to choose successful investments.
The CAPCO program encourages fund managers to focus on the following ten industries: healthcare services, information technology, environmental services/technology, internet information providers, communication services, biotechnology/research services, multimedia/graphics software, business management services, financial services (excluding those primarily engaged in insurance), and restaurants.
How can CAPCO assist small businesses in the post-financing period to enable them to experience continued growth?
Often a CAPCO investment doesn’t stop with the signing of an equity investment or a loan agreement. The CAPCO’s have local DC offices from which they both look for new qualified investments as well as assist current investments sustain and grow their operations. This assistance can be as simple as advice on how to position a business or it can, and often does, take the form of a second round of financing. CAPCO’s have frequently provided companies with multiple rounds of financing.
Are there any mandatory areas of investment that are imposed on a small business that receives CAPCO funding?
As long as a business meets the statutory requirements of the CACPCO program, such as being headquartered in the District and at least 25% of employees being District residents, CAPCO investments are very flexible and can be used to fund a variety of initiatives.
What is the role of the Department of Insurance, Securities and Banking (DISB) in regard to the investments that CAPCOs provide?
DISB is the branch of the DC government charged with oversight of the CAPCO program. They certify proposed investments meet the criteria for CAPCO investment, collect annual reports, and provide regulatory oversight.